At HFMA 2025, finance executives are confronting a turbulent investment landscape, and exploring new strategies to optimize portfolios and manage risk.

The first day of HFMA 2025 is off to a fiery start.

Healthcare finance executives convened in Denver to discuss strategy in an industry fraught with financial hurdles across areas like payers, federal reimbursement, and labor costs.

To set their health systems up for clearing these hurdles, finance executives are turning towards nuanced strategies and even overhauls in their investment portfolios. But, execs are also acutely aware that navigating risks and finding liquidity in their portfolios is easier said than done and new strategies are needed.

One thing here is certain: The market is volatile, and has been for some time.

In a session titled "Observations on Health Systems Investing in the Current Landscape," Adventist Health Senior Finance Officer Brandon Seibold and Sarah Siwinski, director at BlackRock investment management, discussed how health systems across the country are performing operationally, (especially in examining expense growth, days cash on hand and cash to long term debt), how they're allocating their investment pools to achieve strategic growth goals, and how investment portfolios will continue to evolve.

Zooming out to an industry point-of-view, a few key enterprise themes in healthcare cited by BlackRock were continued operational pressure on health systems, persistent market volatility, structural industry, demographic and policy shifts, continued M&A activity, and a growing focus on strategic and venture initiatives.

Seibold dove into how Adventist revamped its investment portfolio, saying that the biggest challenges are getting Adventist's investments to reflect its core goals and deploying new strategies to achieve extremely efficient asset allocation.

Two of Adventist Health's top challenges are Medicaid and labor costs, according to Seibold. With more than 30% of its patient base using Medicaid, and a $25/hr healthcare worker minimum wage mandate in California, he says navigating the shifting headwinds is particularly difficult and called for new strategies to find liquidity and efficiency within the system's portfolio.

Seibold says faith-based Adventist Health began with a very conservative portfolio with investment restrictions, and he sees substantial room for improvement staring back at him from the balance sheet.

The session advised CFOs to ask their finance team: "Are we taking the right risk through an enterprise perspective?"

One strategy that helped put investments in perspective for Seibold's team was a cone chart to visualize volatility and risks. When finance teams examine these types of charts together it's easier to collectively examine positive and negative deviations. These charts became a great communication tool across the finance committee, Seibold says.

If returns are within the standard deviation, Seibold says leave them alone. Strategy only changes when there is a big change in the business. CFOs should keep in mind that market volatility doesn't always mandate a strategy change.

BlackRock research suggests that health systems are moving toward investments in private markets that have provided notable returns.

The session urged finance leaders to use peer groups for investment comparison. Through this, CFOs can examine how their system compares to peer groups and the risks they are taking.

Seibold shared that he realized, after looking at this data, Adventist Health owns more real estate compared to its peer groups, translating to lower risks due to no renewals. This data enables the finance team to move forward and feel more comfortable taking more risks.

Two additional tips from Seibold were to involve stakeholders and ensure consistent, clear communication on investment strategies, and set expectations around what volatility means for the finance team and stakeholders.

The CFO To Do List

The session closed with a little homework for CFOs as they navigate their portfolios in today's volatile market. While every organization will differ in its goals, resources, and strategy, CFOs can consider these steps:

* Fine tune governance and risk management;

* Redefine portfolio buckets and optimize strategic asset allocation;

* Align liquidity while limiting cash drag;

* Grow and diversify sheet assets with private markets;

* Adopt innovative structures to maximize returns.

As Senate Republicans push forward with the 'Big Beautiful Bill' CFOs across the country are sounding alarms about the potential effects.

The Senate GOP's "Big Beautiful Bill" now proposes more severe Medicaid cuts than the House version, including capping provider taxes and reducing supplemental payments to hospitals.

The phased reduction of the maximum allowable provider tax rate is one of the most contentious components in the bill; the Senate draft proposes a provider tax rate drop from 6% to 3.5% in Medicaid expansion states. This is a huge drop off from the House bill, which would only freeze provider tax rates at current levels, according to Politico. Although nursing and intermediate care facilities would be exempt, the Senate plan would start phasing in the cap in 2027 and fully enact it by 2031.

While moderate Republicans express concern that the bill's Medicaid changes could harm rural hospitals, (which rely heavily on Medicaid funding), more conservative senators argue that the bill doesn't go far enough in reducing the national debt. With a slim majority, Senate Republicans can only afford to lose three votes, and disagreements over Medicaid provisions and the debt ceiling could further complicate matters.

The bill, which includes more than $200 billion in federal spending cuts to Medicaid over the next decade, has triggered alarm bells in health systems already operating on razor-thin margins and serving large Medicaid populations.

Ongoing negotiations and revisions indicate that the final version of the bill may differ significantly from both the House and Senate proposals.

The CFO POV

Following HealthLeaders’ prior coverage on the looming crisis of uncompensated care, CFOs are now preparing their organizations for the potential financial fallout. For one major Arizona health system, the stakes couldn’t be higher.

“With more than 25% of our patients covered by Medicaid, we are watching the federal debate very closely and have engaged with our delegation,” said Brad Hipp, CFO of Tucson Medical Center (TMC).

Arizona’s situation is particularly complex. The state already has a Medicaid work requirement on the books, set to take effect next year, pending federal approval. That policy may be accelerated—or constrained—depending on the final decisions in the reconciliation bill.

Hipp emphasized the importance of state flexibility.

“We are concerned that any federal requirement has the flexibility to be customized by states to meet their unique challenges,” he said.

Advocacy in Full Force

Unlike the behind-the-scenes maneuvering that so often typifies budget season in Washington, this time hospitals are going public with their concerns. Hipp said his organization’s multi-tiered advocacy effort includes lobbying and grassroots engagement with the local business community.

“Our team has been very proactive in lobbying both as an individual health system and through our associations,” he said. “We have brought our business community together so they understand the impact cuts to hospitals have on the broader communities and businesses—and they have stood with us.”

This broader messaging strategy reflects a shift among healthcare finance leaders: Medicaid is no longer seen solely as a safety-net program, it’s a critical pillar of state and economic stability.

Operational Efficiency In The Spotlight

Even as they lobby to prevent cuts, health systems are bracing for impact.

“We are actively advocating but also continuing to focus on operational efficiency and cost savings so we can weather any changes in reimbursement,” Hipp said.

This includes everything from re-evaluating vendor contracts and staffing models, to expanding care partnerships that offer more predictable revenue streams.

The Real Cost of Medicaid Cuts

For CFOs, the potential effects of the bill extend far beyond their balance sheets.

“It’s important for lawmakers to understand that cuts to Medicaid don’t just impact the individual who loses coverage—it impacts all of us,” Hipp said. “We know from experience that when you cut Medicaid, emergency rooms get more crowded and wait times grow, hospitals reduce staff, and in some cases close.”

UW Health is cutting contract labor costs by investing in internal pipelines, predictive tools, and cross-functional workforce planning.

When workforce expenses dominate operating costs, reducing overreliance on contract labor is one of the most urgent financial to-dos for health systems.

At UW Health, Vice President of Finance Jodilynn Vitello is helping lead a multi-faceted labor strategy that balances cost containment with long-term workforce sustainability, an increasingly complex equation during the ongoing national labor shortage.

The Financial Toll of Contract Labor

Vitello is candid about the financial burden: “The levels of contracted labor that we're using definitely remain significantly higher than where we were even pre-pandemic, five to ten 10 times higher. It’s a significant impact on margins.”

While contract labor helped UW Health remain operational during staffing crises, the extended use of high-premium positions has strained financials and tested long-term viability.

“We continue to see those shortages across our organization,” she noted. “It’s not just nursing, it’s respiratory therapy, medical assistants, surgical techs, —; we’re seeing shortages across the board.”

Building Internal Pipelines: Apprenticeships and Retention

UW Health is now shifting its investments toward sustainable pipeline programs.

“We’ve created a number of apprentice programs focused on hard-to-fill roles,” said Vitello. These programs are tailored to bring new talent into the mix earlier and support their progression through clinical education.”

Equally vital are UW’s retention efforts. The health system has maintained a consistent compensation game-plan, implementing market-aligned adjustments year-over-year.

“That includes across-the-board raises, salary range shifts, and, when needed, targeted retention bonuses,” Vitello explained. While used sparingly, retention bonuses are tracked alongside other workforce investments to evaluate ROI.

The Collaboration Trifecta: Finance, HR, and Clinical Leadership

A cornerstone of UW Health’s business strategy is cross-functional collaboration.

“Finance and HR are tightly aligned,” Vitello said, “and we partner directly with clinical leaders to understand real-time staffing needs and workforce challenges.”

This approach allows UW Health to respond quickly to labor gaps while ensuring investments are aligned with care delivery priorities.

Predictive Planning & Tech Tools

To more effectively manage the transitions from contract to permanent staffing, UW Health has implemented detailed labor tracking tools, allowing leaders to forecast contract expirations, assess upcoming labor gaps, and adjust recruiting efforts accordingly.

“We track what the next thirteen weeks look like,” Vitello said. “So while not necessarily longer term in this example, we’re still looking at predicting which travelers might be able to roll off, which ones may need to remain. That visibility helps determine whether we extend, replace, or absorb the role internally.”

The organization hasn’t fully deployed AI tools for labor management, and Vitello is cautious.

“We’re in an exploratory phase,” she said. “We’re focused on understanding what tools can do today and whether they align with our operational reality.”

While UW Health’s investment in Oracle Cloud has already improved efficiency across finance, HR, and supply chain, Vitello said the health system’s next frontier might involve expanding its scheduling functionality to optimize strategic workforce deployment.

Balancing Cost and Culture and Contracts

Currently, UW Health is narrowing its agency relationships to improve pricing leverage and data transparency.

“We’ve worked to funnel most of our agency activity through a single partner,” Vitello explained. “It allows us to consolidate scale, manage contracts more effectively, and maintain better audit readiness.”

Ultimately, Vitello noted, the transition away from contract labor dependency is as much about culture as it is about cost, with the goal being to retain employees who want to stay at the organization.

“The barrier isn’t just operational, it’s about finding people who want to work the third shift or weekends,” she admitted. Vitello’s finance team is supporting efforts to make these roles more attractive through compensation, support, and career growth.

The bill could slash Medicaid funding and end enhanced premium subsidies, threatening over $1 trillion in provider revenue.

The House recently passed a massive reconciliation bill that, if enacted, could dramatically alter the landscape of health system financing.

The bill proposes big cuts to Medicaid funding and the expiration of enhanced premium tax credits, potentially leading to a loss of more than $1 trillion in provider revenue over the next decade. This move poses grave challenges for safety-net hospitals, which serve a high proportion of low-income and uninsured patients.

Provider Impact

According to an analysis by the Robert Wood Johnson Foundation, providers could face a cumulative revenue loss exceeding $1 trillion between 2025 and 2034.

Hospitals alone are projected to experience a $306 billion revenue decline. Additionally, uncompensated care costs could increase by $278 billion, with hospitals bearing the brunt of this burden.

Financial pressures are expected to intensify if the enhanced premium tax credits, which currently assist millions of individuals in affording health insurance, are allowed to expire at the end of 2025. This could play out to nearly 16 million people losing Medicaid coverage, raising the uninsured rate by more than 50% (it currently hovers around 7%) and further straining hospital finances.

April Audain, CFO of Denver Health, says the bill would produce more uninsured patients.

"Denver Health sees close to 125,000 Medicaid patients per year – nearly half of all patients across our health care system, and more than 10% of all Colorado Medicaid patients get their care at Denver Health," she said.

 "As a safety net, nearly two-thirds of our funding comes from the federal government, primarily through Medicaid funding," she added "Adding barriers to enrollment to Medicaid undoubtedly will result in more uninsured Coloradans. The net result will be delays in care for patients and additional financial burdens for safety-nets like Denver Health, who are disproportionately affected by reductions to Medicaid and increases in the uninsured."

The CFO To-Do List

CFOs, especially those in safety-net hospitals, should consider safeguarding their organizations and advocating against the funding cuts.

First, CFOs can develop detailed models to assess the impact the cuts would have on their health system. Taking this time to diversify revenue streams can also help prepare health systems for revenue losses. This may include expanding services, pursuing partnerships, or enhancing outpatient care offerings.

Cost efficiency initiatives are also attractive, especially when considering the uncertainty surrounding tariffs. Some CFOs are examining supply chain management, reducing administrative expenses, and leveraging technology to improve operational efficiency.

Lastly, CFOs should examine both their community partnerships and their advocacy efforts. CFOs should strengthen collaborations with community organizations to support patient populations affected by potential coverage losses. Community-based initiatives can also provide additional resources and support to vulnerable groups. They should also engage with policymakers to advocate for the continuation of Medicaid funding and enhanced tax credits. Active participation in policy discussions can help influence decisions that affect hospital revenue streams, and a CFO’s voice can hold a lot of power.

The bill is currently being debated in the Senate, where it will likely face changes, with the updated version then requiring another sign-off from the House.