Rural providers especially need to be proactive in addressing physician turnover, says this incoming hospital leader.
Though succession planning is often considered in relation to the C-suite, it's also a term providers should be emphasizing for replacing departing physicians.
Particularly for rural hospitals, the impact of losing physicians can be devastating, potentially leading to a shuttering of services and a loss of care. As more physicians leave their organization, retire, or exit the industry, providers must take the long view in building up a pipeline of candidates.
That's where Cole Stockton has placed much of his focus after taking over the reins of Highpoint Health – Riverview and Highpoint Health – Trousdale. Stockton, who was appointed CEO of the Tennessee-based hospitals in February, recognizes the challenges that are specific to rural providers and the importance of physician continuity in the communities they serve.
"When you look at rural communities and rural hospitals, what you see a lot of times is you have a provider that's been in that community and has been a staple for that area for long periods of time," Stockton told HealthLeaders. "Often, you'll see that they tend to get closer to retirement and you really have to start thinking about and planning ahead for what that succession plan looks like.
"A lot of those providers also wear many hats, so many are primary care providers, they're OB providers, they can even dabble in general surgery at times. That generation, they're multifaceted in their skillset, which is really, really impressive, but you have to start thinking about what that succession plan looks like and dive deep into the provider recruitment side."
When physician retention drops, it can lead to care deserts in rural areas. For example, research by healthcare advisory firm Chartis found that between 2011 and 2023, 293 rural hospitals stopped providing obstetrics, representing 24% of the country's rural OB units.
"It is a common thing for when providers do roll off, it is very easy for a service to fall by the wayside if you don't look at trying to recruit somebody else," Stockton said.
Pictured: Cole Stockton, CEO, Highpoint Health – Riverview and Highpoint Health – Trousdale.
Rural hospitals face an uphill climb and are often at a disadvantage in comparison to larger hospitals in urban areas, but CEOs like Stockton can still improve the sustainability of their organizations by strengthening workforce strategies.
It starts with being proactive, according to Stockton. By identifying if physicians will roll off in the next five or 10 years, providers can get ahead of the problem instead of having to play catch-up when the time comes for a physician to leave.
Even in cases where ending a service line is unavoidable, leaders can find ways to fill in the gaps.
"If we are going to look to draw down that service line, maybe it's a mid-level model where we have telemedicine capabilities with an actual MD provider," Stockton said. "There's different ways you can be creative, but it starts with being proactive with your planning and also tapping into the resources that you have within your organization like we have."
Stockton's hospitals have a luxury that many rural providers aren't afforded by being jointly owned by Lifepoint Health and Ascension Saint Thomas as part of their joint venture.
Through its connections, the Riverview and Trousdale hospitals can offer telemedicine and leverage technology, while also utilizing Ascension's providers for outreach to clinics, Stockton highlighted.
Making use of every resource is a must for rural CEOs, but even when hospitals can't rely on affiliations with larger health systems, there are other strategies they can employ to fortify recruitment and retention efforts.
One of those strategies for Stockton at his hospitals is to address workplace safety and culture. The Riverview and Trousdale locations use Lifepoint's Culture of Safety and Engagement (CoSE) survey, designed to help leaders understand how they can create a better working environment for staff.
"We have our CoSE survey, that Lifepoint provides to all our facilities, so staff can showcase and share a lot of their positives, but also some of the negatives and things that they want us to work on as a hospital administration team," Stockton said.
After all, ensuring a steady stream of providers isn't just about bringing enough physicians through the door, but also about keeping them satisfied enough to stay.
New analysis reveals that organizations are holding off on dealmaking amid an uncertain economic environment.
As the country attempts to adjust to economic and policy changes under the new administration, hospital M&A has nearly screeched to a halt.
The first quarter of the year featured just five deals, marking the fewest transaction in recent history and a major drop-off from the spiking levels of activity in 2024, according to a report by Kaufman Hall.
For comparison, 20 deals were announced during the first quarter of last year. In total, 2024 saw 72 transactions following steady year-over-year growth since dealmaking plummeted to 49 transactions during the height of the pandemic in 2021.
The third quarter of 2021 represented the previous low point for deals in recent history, when seven transactions were announced.
"The low number of M&A transactions involving hospitals and health systems mirrors global trends across industries," Anu Singh, managing director of Kaufman Hall, said in a statement. "Economic uncertainty around tariffs and healthcare policy has likely contributed to a relatively quiet quarter."
In addition to dealmaking in the first quarter being minimal in volume, it was also small in transaction size. The average size of the smaller party in the deals was $279.3 million, or around half of the average seller size of $559 million for 2024.
Among the five transactions, there were no mega-mergers, or deals in which the smaller party has annual revenues over $1 billion. The total transacted revenue of the transactions was just under $1.4 billion, less than half of the recent low of $3 billion from the first quarter of 2022.
Due to rising costs and other financial challenges stemming from the current economic landscape, organizations are moving away from mega-mergers and pursuing strategic partnerships that prioritize efficiency.
That has also caused more health systems to seek out joint ventures and innovative collaborations that come without the risks of consolidation. The report highlighted two such partnerships in the first quarter of this year: UNC Health and Duke Health creating a new children's health system in North Carolina, and Kootenai Health and MultiCare Health System announcing the development of a new medical campus.
What continues to drive a significant portion of hospital M&A deals is financial distress. Last year saw a record-breaking 30.6% of transactions driven by financial distress. Four of the five deals in the first quarter featured a financially distressed party, while three of the five involved a divestiture or portfolio realignment.
Kaufman Hall's National Hospital Flash Report for February found a 44.6% gap in operating margin between the 5th and 95th percentile hospitals. That divide is expected to generate more deals motivated by financial distress going forward.
Though analysts believe that organizations are still eager to make deals, whether they do will depend on if market factors eventually normalize.
"The uncertainty felt today is reminiscent of the uncertainty that surrounded healthcare organizations at the height of the Covid pandemic, when M&A activity also slumped," Kaufman Hall wrote. "The climb out of that slowdown showed that the appetite for M&A activity remains; revival of activity in 2025 will likely be dependent on a restoration of some certainty about the nation’s economic direction and the financial stability of the healthcare sector."
Combating deceptive marketing by Medicare Advantage plans can benefit patients and providers, says one hospital CEO.
In this episode of HL Shorts, Cottage Hospital president and CEO Holly McCormack explains the importance of hospitals educating patients on Medicare Advantage plans to counteract deceptive marketing.
A new report reveals that CEO departures through the first two months nearly kept pace with last year's start.
Market volatility and the financial climate may be impacting leadership changes across industries, but hospitals have yet to see significant CEO movement to start the year.
The first two months of 2025 featured 25 hospital CEO exits, just shy of the 26 over the same period in 2024, according to a report by executive coaching firm Challenger, Gray & Christmas.
Hospitals reported 15 departures in February, which matched February 2024's mark. January had 10 exits, up from the three reported in December and a tick below the 11 from January 2024.
The healthcare/products industry experienced 26 CEO changes in February, up 44.4% from both January and February 2024's figure of 18.
Across all sectors, February's 247 CEO exits represented the second-highest total for any month since the firm began tracking the trend in 2002. The current monthly record is the 248 departures that occurred in February 2024.
"Companies appear to be reacting to the barrage of indicators suggesting the potential for difficult times ahead, including falling consumer confidence, the impact of tariffs and rising prices," Andrew Challenger, senior vice president and labor expert for Challenger, Gray & Christmas, said in a statement.
Notable recent CEO changes
Two noteworthy provider organizations to make CEO moves in recent weeks are AdventHealth and Cano Health.
At AdventHealth, the board of directors appointed David Banks as the new president and CEO, effective April 3. He replaces Terry Shaw, who announced his retirement in December to end a 40-year tenure with the health system.
Banks most recently served as group CEO for the Primary Health Division and the Multi-State Division of AdventHealth, while also serving as the as its chief strategy officer for the past eight years.
Meanwhile, value-based primary care provider Cano Health announced the appointment of Eric Jenkins as CEO, effective April 2.
Jenkins follows Mark Kent, who guided Cano through Chapter 11 bankruptcy and led the reorganization as a private company after being appointed CEO in August 2023. Kent stepped down from the position in March to focus on his next business venture.
Before joining Cano, Jenkins held roles with Aetna, Humana, ArchWell Health, and CenterWell Senior Primary Care.
Four hospitals will transfer to the Indiana-based nonprofit while Ascension persists with its divestitures.
As Ascension continues to pare down its presence in Michigan, Beacon Health System is taking the opportunity to grow in the state.
The two sides reached a definitive agreement for the Indiana-based nonprofit to acquire Ascension's Southwest Michigan Region, which includes four hospitals, 35 outpatient clinics, and an ambulatory surgery center.
The deal, which is expected to close in the summer pending regulatory approval, represents a significant expansion into southwest Michigan for Beacon. Currently, Beacon consists of seven hospitals, 146 care sites, more than 1,175 providers, and more than 8,100 employees. Following the completion of the transaction, the system would swell to 11 hospitals, more than 180 sites of care, more than 1,400 providers, and more than 10,800 employees.
"Expanding our reach deeper into southwest Michigan broadens access to high-quality, affordable care for communities served by Ascension, extends our service area and provides growth opportunity to further strengthen the health system," Kreg Gruber, CEO of Beacon Health System, said in a statement. "This acquisition will create a bright future for these communities by ensuring access to quality healthcare services for generations."
The hospitals in the sale include 422-bed Ascension Borgess Hospital in Kalamazoo, along with Ascension Borgess Allegan Hospital, Ascension Borgess-Lee Hospital, and Ascension Borgess-Pipp Hospital.
"As a regional provider, Beacon Health System is positioned to serve patients through an integrated care delivery system to ensure that southwest Michigan has access to sustainable, quality health care long into the future," Ascension Michigan COO Scott Cihak said. "After an in-depth review, we found that our organizations are well-aligned culturally, which will streamline the integration process. Our communities are in good hands."
Meanwhile, the move allows Ascension to divest more hospitals, particularly in Michigan where it has been active.
The Catholic nonprofit completed a sale of eight hospitals to Prime Healthcare for more than $370 million last month. Though one of the hospitals that was in the original deal, Ascension St. Elizabeth, was shut down in February, Prime also acquired four senior living and post-acute facilities, along with multiple physician practices.
Last year, Ascension completed its divestiture of three hospitals to MyMichigan Health before teaming up with Henry Ford Health in a $10.5 billion joint venture. The organizations underlined that the partnership was not a merger or acquisition, and that no cash was exchanged.
Ascension has been pursuing hospital sales with the aim of turning around its financial performance, which has struggled in recent years.
The system logged a $143 million operating loss in the second quarter of fiscal year 2025, compared to a $38.5 million operating gain in the same period last year. For fiscal year 2024, Ascension suffered a $1.8 billion operating loss and a $1.1 billion net loss.
New analysis shows how finances for hospitals and health systems with early fiscal year ends are trending.
Nonprofit hospitals saw their financial performance perk up in the past year, providing reason for optimism going forward.
However, potential Medicaid cuts could negatively impact margins, even as reduced labor costs continue to boost profitability, according to a report by Fitch Ratings.
The analysis by the credit ratings agency revealed that the median operating margin for nonprofit hospitals with early fiscal year end dates in 2024 was 1.2%, a turnaround from -0.5% in 2023. Though that figure is trending in an encouraging direction, finances for even the best performing hospitals are "well below pre-pandemic levels," Fitch noted.
Workforce challenges remain at the forefront for CEOs, who dealt with a rise in median base salary and wage expenses of 6.9% year over year. Where organizations have made steady progress is in the declining usage of contract labor, which helped drop personnel costs as a percent of total operating revenues from 55.4% in 2023 to 54.5% in 2024 for nonprofits with early fiscal year endings.
CEOs are getting better at recruiting and retaining talent workforce, allowing them to make worthwhile investments in their workforce that will pay off in the long run.
"Fitch expects workforce development to remain a central focus for health systems to address labor shortages, enhance staff capabilities and maintain sustainable profitability levels," the report stated.
Providers with early fiscal year end dates also experienced median revenue growth of 9.1% last year, stemming from higher patient volumes, improved revenue cycle management, and favorable updates to payer contracts.
Gains in revenue are enabling organizations to pour resources into developing ambulatory networks and bolstering IT, such as AI and cybersecurity, Fitch highlighted.
Where hospitals, and especially nonprofits because of their obligation to serve their communities, may run into trouble soon is with Medicaid. The current administration has set out to reduce spending and the Medicaid program could fall into the crosshairs.
Providers with more exposure to self-pay and Medicaid reimbursement have less capability of bringing in revenue from other payer sources. Post-pandemic, the median Medicaid reimbursement as a percentage of gross patient revenue has "held relatively steady," according to Fitch, decreasing from 16.6% in 2023 to 16.2% in 2024.
Meanwhile, median self-pay reimbursement as a percentage of gross patient revenue has fallen from pre-pandemic levels and dropped from 2% in 2023 to 1.8% in 2024.
"Federal budget cuts that may decrease Medicaid reimbursement and increase uninsured care would reduce hospitals’ ability to recover operating costs," Fitch wrote. "Providers, particularly those with a higher share of Medicaid patients, could cut services, close locations, or reduce staff."
Getting ahead of potential issues can help organizations avoid employee unrest and strengthen retention efforts.
In this episode of HL Shorts, Saline Memorial Hospital CEO Char Boulch shares initiatives for provider organizations to improve staff communication and workforce culture.
The agency's decision to terminate thousands of federal workers could put pressure on providers' finances and operations.
HHS has begun its seismic reorganization and the implications for providers are far-reaching.
The Trump administration's decision to lay off 10,000 full-time employees, consolidate HHS from 28 divisions to 15, and combine multiple agencies into a unified entity will have major ripple effects that impact hospitals and health system CEOs.
The Food and Drug Administration is cutting 3,500 jobs, the Centers for Disease Control and Prevention is losing 2,400 jobs, the National Institutes of Health is eliminating 1,200 jobs, and CMS is reducing 300 jobs.
Meanwhile, a new agency called the Administration for a Healthy America (AHA) will combine the Office of the Assistant Secretary for Health, the Health Resources and Services Administration, the Substance Abuse and Mental Health Services Administration, the Agency for Toxic Substances and Disease Registry, and the National Institute for Occupational Safety and Health.
Providers may not feel the toll of the changes right away, but over time, these significant shifts in how HHS oversees healthcare in the country will result in more unpredictability.
Public health concern
The most worrisome potential effect of the HHS reorganization is the worsening of public health with fewer resources dedicated to keeping communities protected from sickness and diseases.
"Massive cuts to programs that prevent disease would make Americans sicker," former CDC director Tom Frieden wrote on X. "Cutting things isn’t likely to improve them. Actually improving takes expertise and investment."
A sicker public, as healthcare witnessed to an extreme extent during the COVID-19 pandemic, places more burden on hospitals to care for patients. It's not just about more patients being admitted to hospitals, but longer lengths of stay to care for sicker people.
Many hospitals are already dealing with high occupancy rates and a sicker population could accelerate a shortage of beds. According to a recent study published in JAMA Network Open, the average U.S. hospital occupancy rate is 11% higher after the pandemic and unless the hospitalization rate or staffed hospital bed supply changes, the national hospital occupancy rate will reach 85% by 2032, constituting a bed shortage.
Investing in more outpatient facilities would allow organizations to free up beds for patients that really need it and help keep hospital operations from being too bogged down.
Strain on workforce
Many providers are also working hard to keep their head above water when it comes to maintaining a sustainable workforce.
Healthcare workers were stretched thin during the pandemic and although turnover and retention rates have since stabilized, workforce challenges continue to be top of mind for hospital CEOs.
If public health declines, clinicians will be tasked with caring for more patients, potentially resulting in burnout and diminished work-life balance.
In a joint statement by the American College of Physicians, American Academy of Pediatrics, and the American College of Obstetricians and Gynecologists, the provider groups said: "Laying off over 20% of the HHS workforce will not make America healthier, but it will threaten our members’ ability to care for their patients at a time when we need to be strengthening the physician workforce and our national healthcare infrastructure as we confront a growing measles outbreak."
Hospital CEOs are already focused on improving recruitment and retention rates, but they should bolster efforts and prepare for a greater load on their workforce going forward. Investment in technology like generative AI can reduce the time clinicians spend on administrative tasks, allowing them to see more patients and have greater job satisfaction.
Even though CEOs can't fully anticipate how the administration and HHS will act in the foreseeable future, they must be proactive in planning for potential consequences to providers.
The health system has taken the contract dispute public while the two sides continue negotiations.
Jefferson Health took the bold step of going out of network with Cigna with the aim of strengthening its position with the payer.
The Philadelphia-based hospital operator is hoping that the potential loss of Cigna's commercial members will be offset by more favorable reimbursement rates in the long term if a new contract agreement can be reached.
Though Jefferson and Cigna split after more than 20 years together, they said that they will continue to negotiate.
Both sides, however, have criticized each other for the impasse. In announcing the split, Jefferson argued that it made the decision due to Cigna's reimbursement rates increasing by around 3% since 2020, compared to the hospital wage index going up by 20% over that period.
"Over the past five years, inflationary pressures have significantly increased the costs of healthcare related to labor, medical supplies, and operations," Edmund Pribitkin, MD, chief physician executive and president of Jefferson Medical Group, said in a video statement. "Cigna's reimbursement rates for commercial members have failed to keep pace with these economic realities, making it difficult to sustain high-quality care."
Cigna pushed back against the claims, with a spokesperson saying that "Jefferson Health chose to leave our network due to their unreasonable rate hike demands that would raise health costs for the people we serve. Almost all our employer clients' benefits plans are self-funded, which means any increase in cost of care is paid directly by local employers, their employees and their families."
In the meantime, emergency care at Jefferson remains in-network for all Cigna members, while some patients my qualify for programs to maintain in-network benefits.
By going public with the dispute and dropping Cigna, Jefferson is hoping to leverage public opinion against the insurer—a strategy some providers have employed to wrestle back some negotiating power.
Pribitkin and the announcement on Jefferson's website encouraged Cigna members to contact the payer directly to advocate for in-network access.
Sometimes, providers drop insurers with little desire of negotiating a new deal because the contracts are too onerous. That's particularly the case with Medicare Advantage plans, which more and more providers have recently shed to absolve themselves of the financial and operational challenges that come with the private program.
The strategy isn't without its drawbacks, such as isolating a segment of patients and losing revenue. It is, however, one of the few avenues providers can pursue to potentially balance the scales in the dynamic with payers.
A combination of policies in place and willingness from payers to be accountable is needed, says one hospital CEO.
In this episode of HL Shorts, Winona Health president and CEO Rachelle Schultz shares changes to Medicare Advantage that would make the private program more tenable for providers.
