CFOs are ready to invest and dive into new partnerships this year.
As we settle into 2025, healthcare organizations are prepped to take full advantage of a seemingly on-the-mend economy. With more cash on hand, better borrowing opportunities, and an abundance of cheaper AI options, 2025 is poised to bring more transformation opportunities for health systems.
Check out these three takeaways from the 2025 CFO Outlook Report.
A new study reveals where healthcare profits go and how it may be affecting the industry.
What may be a large contributor to high healthcare cost: excessive profits given to shareholders.
A study of publicly traded healthcare companies is uncovering just how much shareholder payouts, such as stock buybacks and dividends, have skyrocketed over the last two decades. These stock buybacks that the companies receive, in turn, increase the value of their remaining shares. Since 2001 these payouts have tripled, highlighting where the healthcare sector places its financial priorities.
The Study
The analysis, published in February by JAMA Internal Medicine, shared that over the last two decades shareholder payouts have increased a whopping 315% from $54 billion in 2001 to $170.2 billion in 2022. In total, the sum of shareholder payouts over that timeframe has reached $2.6 trillion. Victor Roy, lead researcher on the study, and assistant professor at the University of Pennsylvania, analyzed data from publicly listed healthcare companies on the S&P 500 between this timeframe. Roy found that just 19 of 92 companies accounted for over 80% of these total payouts.
On top of that, a research letter, co-authored by researchers from Yale University, then published by JAMA, found that S&P 500 healthcare companies allocated an average of 95% of net income to shareholders rather than reinvesting in affordability, research, or patient care.
"When shareholders expect greater payouts year in and year out, that has an impact on affordability," says Roy. "One of the ways that [health care companies] make money is to keep prices high—or raise them."
Profits Over Patients
Much of healthcare's dollars are misplaced and misused, as this study reveals. While researchers suggest that policymakers encourage healthcare dollars to be reinvested into patient care and limit share buybacks, this rarely seems to be the case.
When roughly 70% of U.S. healthcare spending is publicly funded through taxes and government programs, this study raises questions about how the financial choices of these healthcare giants affect those with less control over the system, i.e. patients and providers.
"Some might say, these are for-profit companies, so their goal is to make a profit," says Cary Gross, MD, senior author of the study and professor of medicine at Yale School of Medicine.
"Health care is a right, not a privilege," Gross continues. "You can choose when to buy a car. You can't choose to have a heart attack. As costs of care keep rising, it's crucial to ask where our health dollars are going."
What Can CFOs Do?
These findings highlight a massive, continuous issue with the modern healthcare system, and stands as another reason why CFOs and CEOs need to insert themselves in policy discussions. CFOs specifically are at crossroads of healthcare and financial acumen, and their voice is needed to not only paint the full picture of healthcare and its struggles for patients and providers, but also to fight for them.
If the industry continues with the mismanagement of healthcare dollars, it could dampen research progress, delay care, and generally make the healthcare system more expensive than it already is. Healthcare finance executives must recognize and embrace their potential as drivers of change.
For CFOs, the experts on healthcare and finances, the time to act on healthcare policy is now.
As the new year builds momentum, healthcare organizations are prepped to take full advantage of a seemingly on-the-mend economy. With more cash on hand, better borrowing opportunities, and an abundance of cheaper AI options, 2025 is poised to bring more transformation opportunities for health systems.
Defense to Offense
As many industry experts are expecting the economy to improve, healthcare companies are pressing the gas pedal on investments and partnerships. With stable economic conditions seemingly underway, many health systems are breaking out the cheque book to invest in new technology, namely AI, to improve care access and efficiency. With more AI options than ever coming in at lower prices than ever, these investments are now becoming even more accessible. Partnerships are also on the docket this year as more health systems look to collaborate and invest in partnerships and expansions to improve patient access and service offerings.
Here’s how the healthcare landscape is looking:
-72% of healthcare companies expect a revenue increase in 2025.
-57% of CFOs plan to pursue a transaction or partnership in the next year.
-86% say they’re investing as much or more in AI this year compared to 2024.
Many CFOs saw their health systems put in the work in 2024 to make improvements on key performance metrics such as cost management efforts. The report found that 59% of healthcare organizations have between 61-100 days of cash on hand, up 25% from last year. This coupled with returning patient volumes has set many health systems up well for 2025, and now many leaders are expecting better borrowing conditions in 2025. If this plays out, the industry could see many new expansions, partnerships and innovative projects take shape this year.
All In On AI
Remember when we said more health systems are geared up for savvy investments in 2025? Well, AI is still the top investment consideration, as more health systems look to balance innovative technology with robust cybersecurity measures.
According to the report, 100% of CFOs say they are investing in AI this year. When making these investments, health systems need to possess a strong balance of risk and opportunity. It's never a good idea to throw money at new technology without thoroughly examining how it will improve the organization.
"Our goal is not to replace our workforce with technology, but to help our workforce be more effective and efficient in doing their jobs, while also improving their experience when taking care of patients," says HealthLeaders Exchange member and Finance Director of AdventHealth Kaitlyn Anderson.
CFOs will need to ensure their organizations are implementing a balanced AI adoption by taking a long, hard look at developmental costs, determining market needs, and balancing utilization. This year, more CFOs are expecting to get involved in strategic technology discussions, meaning close collaborations with CTOs and CIOs.
AI dominated the discussions at both the VivE and HIMMS conferences this year, and healthcare executives are starting to realize that AI needs to be customized to each organization to gain the most value and truly make a difference. Specifically, generative AI is taking center stage and drawing the most attention from health systems.
Some findings from the report:
-31% of health systems are restricting access to generative AI chatbots due to data privacy concerns and legal complications.
-30% of health systems say they are partnering with external vendors/third parties to build or access generative AI solutions.
-20% say they are building a proprietary generative AI platform.
Who Doesn't Love a Partnership?
Many leaders have expressed optimism about the 2025 economic outlook and plan to take full advantage by engaging in more partnerships and transactions. From joint-ventures to expansions, according to the report 57% of CFOs say they plan to pursue a partnership or transaction in 2025.
However, CFOs should still exercise caution around borrowing options, as there is still the possibility of fewer federal interest rate cuts than expected, which could dampen some plans. One study even cited some surprising obstacles for hospital borrowing costs, specifically for the West Coast.
The report details that CFOs are leaning toward direct investments in home care, lifestyle centers, and virtual care in 2025. Convenience and patient-centered options will be in the spotlight as more health systems focus on value and wellness for their patients.
Overall, growth is the keyword here. Many health systems are looking to use 2025 to accelerate growth in any way that's feasible, especially through geographical expansions and facility/workforce growth.
The data:
-37% of health systems plan to increase hiring/headcount in 2025 (up 25% since 2024).
-21% are planning a geographical expansion (up 16% from 2024).
-47% have increased investment in U.S. expansion plans following the election.
CFOs have a lot to deal with, and sometimes minor items might fall through the cracks. From clinical waste inefficiencies to hefty non-clinical spend, see where CFOs can turn their attention to reduce costs.
Clinical Waste
From overtreatment like repetitive lab tests and duplicate imaging studies, to unnecessary medicine usage and care coordination failures, clinical waste can quickly devour a health system's budget.
Closely collaborate not only CMOs, but lead physicians and physician groups to develop a thorough understanding of where medical inefficiencies and clinical waste lie, and uncover clinical and financial stewardship opportunities.
Check out these resources for guidance on how CFOs can reduce clinical waste:
Financial leaders should ask themselves what adjustments can be made to their system’s most valuable, mission-critical areas.
The Revenue Cycle Management Technology Adoption Model is a free assessment tool that may be able to help health systems prioritize and adopt RCM tech to improve outcomes. Miguel Vigo, chief revenue officer at UC San Diego Health, shared the significant improvement he saw in his organization after using an RCM assessment tool, notably, the system’s point of service collections increased by over $2 million dollars in a single year.
Focus on realigning resources to the most valuable and critical parts of the organization, doing so can create a straightforward map towards solutions for CFOs’ biggest challenges.
Studies show that a hospital's nonclinical spending can climb as high as 30% of overall spending. Control the controllable. As inflation lingers, labor costs jump, and tariff threats loom, CFOs can examine their health system’s non-clinical spend to help reduce costs. From landscaping to signage, examine what items can find a lower price tag through different vendors and different business strategies. Minor items can quickly add up to bigger cost savings.
Check out this resource for guidance on how CFOs to reduce non-clinical spend:
It's a smoky situation for CFOs looking at the future of health system expansion.
Wildfires have been devastating the West recently, and according to climate data, it's not going to let up.
What does this have to do with healthcare CFOs? A lot, actually.
A new study is uncovering some surprising data on hospital costs. A new analysis conducted by a team that includes Sean Wilkoff, an assistant professor in the Finance Department of the College of Business at the University of Nevada, Reno, found that wildfire smoke is linked to higher borrowing costs for hospitals.
It plays out like this: If a hospital in this region issues, say, $90 million in bonds to finance a new building expansion or project, it probably would have an additional $1.6 million tacked on in interest costs due to smoke from wildfires.
"Municipal bond investors realize that wildfire smoke is a growing problem and one that will continue," Wilkoff said. "They have priced it into bonds."
Higher borrowing costs may also translate to higher daily costs over the next decade for health systems, hospitals and nursing homes in Western regions that grapple with intense wildfire smoke.
Other correlations between wildfire smoke and hospital finances are more apparent: Wildfires lead to several types of respiratory complications, like asthma and COPD. The industry will likely see a rise in these conditions in the West, but also possibly all across the country, as wildfire smoke can often travel hundreds of miles.
In 2024 alone there were over 60,000 fires that burned over 8 million acres.
Moreover, in low-income counties in this region, underinsured or underinsured patients may not be able to pay for the care needed for conditions caused by wildfires. This can disrupt hospital revenue and make it more difficult for these hospitals to repay borrowers.
A Double Whammy for Expansion
For health systems, (especially in the West) looking to build or expand, the timing may not be great. Between potential higher borrowing costs from wildfire smoke and hefty tariffs disrupting supply chains, CFOs may see the price to build jump higher and higher. According to a Black Book Research survey, the majority of healthcare leaders predict that costs will jump by at least 15% in the next six months from increased import expenses, including steel and other construction materials.
CFOs may have to prepare their budgets for both of these factors. Budgeting for tariffs will include diversifying supply chains as much as possible, and wildfires may simply mean preparing for the extra cost. For health systems looking to expand or build in the near future, CFOs will have to ensure efficient design and construction plans. Additionally, they can also explore different options for sustainable building practices and designs that can help lower costs. There's also the option to lease instead of constructing new buildings when appropriate.
Caring Communities
CFOs also need to consider the communities they serve and the unique struggles of those communities, whether environmental or socio-economic, because the two are often linked.
Many individuals facing climate change are lower income, more likely to be uninsured, and more likely to not have the financial option to relocate to safer areas. With this in mind, health systems need to be aware and ensure that factors like these are considered when building, implementing new care programs, and generally structuring care and payment models.
Will this lawsuit yield any significant changes to the insurance behemoth?
UnitedHealthcare is in the hot seat once again, this time for fraudulent Medicare Advantage billing practices, placing the health insurance giant under a civil fraud investigation by the Department of Justice. Specifically, the Department of Justice (DOJ) is evaluating the company’s protocols for recording diagnoses that can result in extra payments for the company’s Medicare Advantage plans, according to a report by The Wall Street Journal (WSJ). Additionally, UnitedHealth is also under fire for pursuing employee buyouts and potential layoffs.
As the saga continues, here's what to know.
This Time Around
A report by the WSJ revealed that UnitedHealth employed aggressive tactics to push lucrative patient diagnoses. Sources at the WSJ said doctors working for UnitedHealth said they were trained to document higher revenue-generating diagnoses, even if they were not treating them. Further, the insurer is accused of using software to suggest additional conditions and allegedly were even offered financial incentives to clinicians who agreed to code these additional diagnoses.
Pushing back, UnitedHealth said it wasn’t aware of the start of any new coding or diagnostic activity as the paper reported. Moreover, it criticized the WSJ’s report and posted a statement on its website saying: "Any suggestion that our practices are fraudulent is outrageous and false."
UnitedHealthcare business, part of UnitedHealth Group, covers more than 7.8 million people, making it the nation's largest provider of Medicare Advantage plans.
A Muddled Industry
Medicare Advantage was introduced to the American public as an avenue to save money by allowing private insurers to manage Medicare benefits more efficiently. But now, it's turned into a bloated program that has eaten up federal dollars far more than traditional Medicare ever did, resulting in a $140 billion overpayment to private insurers.
United has faced at least 12 lawsuits in the past seven years, accompanied by dozens of reports. This is also not UnitedHealth's first investigation for Medicare Advantage practices. In fact, the insurer is one of many exposed for fraudulent billing practices.
"Even as lawsuits and government reports pile up, the industry continues to report massive profits. And UnitedHealth isn't alone—other major insurers, including Humana and Cigna, have also faced accusations of inflating Medicare bills," wrote Wendell Porter, former vice president of Cigna and advocate for health insurance payment reform.
Other Voices
Also caught up in UnitedHealth's legal challenges is billionaire Bill Ackman, CEO of Pershing Square Capital Management. Earlier this month, Ackman, a globally prominent investor, publicly offered to cover the legal fees for a Texas physician in a dispute with UnitedHealth Group over her claims that the insurer pulled her out of a surgery to justify the patient's care.
Later at the request of UnitedHealth, Ackman took down a post on X that was critical of the insurer after lawyers for UnitedHealth told him that the doctor's claims that he had magnified on social media were false. Ackman stated that he has no position in UnitedHealth.
An earlier post of Ackman's called on the U.S. Securities and Exchange Commission to investigate UnitedHealth and suggested that the insurer's "profitability is massively overstated due to its denial of medically necessary procedures."
Sen. Chuck Grassley, R-Iowa, is another figure calling for the insurer to be closely looked at for its billing practices.
The WSJ reported that Sen. Grassley sent a letter to UnitedHealth CEO Andrew Witty asking for a closer look at how the company handles Medicare Advantage billing. Grassley's letter argued that "the apparent fraud, waste, and abuse at issue is simply unacceptable and harms not only Medicare beneficiaries, but also the American taxpayer," according to WSJ.
Stock dips
UnitedHealth's stock has taken a deeper dive since the news of the investigation broke, although it has begun to slightly rebound since; company shares dropped 9% last Friday.
Some Wall Street analysts have expressed skepticism that the DOJ probe would yield any significant changes, given that the alleged practices in question are not likely unique to UnitedHealth.
UnitedHealth Group is the biggest healthcare conglomerate in the United States based on revenue. It touts more than $420 billion market cap, and it is the nation's largest private insurer. Cigna and Humana have both been under scrutiny for their MA billing as well, and those company stocks also took a dip.
The Bigger Picture
UnitedHealth's stocks might have decreased slightly, but the insurer has been in a downturn since December last year, when UnitedHealthcare CEO Brian Thompson was murdered in New York City. The horrific tragedy left the industry, and the country at large, shocked. But the shock was also countered by a widespread outpouring of consumer resentment for the insurance giant, highlighting the contention placed on healthcare insurers, and UnitedHealth specifically, for denying care.
UnitedHealth is also still grappling with the fallout from a massive cyberattack on its subsidiary Change Healthcare. The event compromised the protected health information of about 190 million individuals, and UnitedHealth has paid out more than $3 billion to providers affected as well as a $22 million ransom to the attackers. Witty was probed at a Senate hearing last spring for the cyberattack, with senators from all sides questioning the size of the insurer and how much power it holds.
The current civil fraud lawsuit is just a drop in the bucket of what UnitedHealthCare has faced for its practices and how it interacts with patients and the industry. Throughout all of this, one thing is certain: change must be implemented. What the change will be and whether it will be able to reign in UnitedHealth is unclear.
Hurricanes Helene and Milton blew in significant damage to some of HCA’s facilities.
HCA Healthcare released its fourth -quarter earnings report last month, placing the healthcare giant on positive revenue estimates but missing the mark by millions in lost revenues from two destructive hurricanes.
The report details a net income attributable to the health system of $5.760 billion, or $22.00 per diluted share, for 2024, compared to $5.242 billion, or $18.97 per diluted share, for 2023.
Hurricane damage
The report detailed that these loss estimates do not include any insurance recoveries the organization may receive. All facilities impacted by Hurricanes Helene and Milton have resumed normal operations.
The storms had a negative impact on HCA’s volumes, knocking off 20 to 40 basis points, CFO Mike Marks said on an investors call. HCA’s Largo Hospital in Tampa also contributed to additional operating expenses in supplies and repair costs.
Share repurchase program
HCA’s Board of Directors has authorized an additional share repurchase program for up to $10 billion of the organization’s outstanding common stock, as well as a $0.72 per share quarterly dividend. Balance sheets reflected a $1.93 billion cash and cash equivalents and total assets of $59.51 billion as of Dec. 31, 2024. The report added that the repurchase program has no time limit and may be suspended for periods or discontinued at any time.
Executive Take
"We finished 2024 with strong business fundamentals that were consistent with previous quarters," HCA Healthcare CEO Sam Hazen said. "The first half of the current decade, which ended in 2024, proved to be another period of long-term growth for the company and resulted in operational improvements across key performance indicators and greater value for our patients, employees and shareholders. These accomplishments are a testament to the incredible work of our teams, and position us well for the future."
Looking Ahead
The company issued 2025 guidance placing these projections:
-Revenues between $72.8 billion and $75.8 billion.
-Net income attributable to HCA of $5.85 billion to $6.29 billion.
-Adjusted EBITDA of $14.3 billion to $15.1 billion.
Additionally, the earnings call discussed the uncertainty that every health system is facing in the wake of the Trump administration’s new policies. Questions ranged from concerns about Trump’s sweeping tariffs, as well as decisions on the proposal of site-neutral payments and the uncertainty around federal subsidies.
For potential tariffs, Hazen said that HCA’s group purchasing organization is working on mitigation strategies for several years, including fixed-price contracting, supply chain mapping, and risk assessments. For 2025, HCA has roughly 70% of its supplies contracted with firm pricing, according to Hazen.
While the fate of federal healthcare subsidies is widely unknown right now, Marks said the implementation of any site-neutral policies wouldn’t force HCA to adjust its current strategy to reorganize its outpatient networks.
As Paula Tinch prepares for her retirement, she offers advice for other CFOs.
Paula Tinch joined Penn State Health as its executive vice president of finance and CFO in 2019. Now, she is preparing to pass the baton to her successor later this year.
Throughout her time at Penn State Health Tinch was a stabilizing force for the organization, especially during the pandemic where she led the finance team through COVID challenges and helped the system avoid layoffs that health systems across the country were experiencing.
Check out these three pieces of advice from Tinch as she closes out her long career in healthcare finance.
Check out the full interview with Paula Tinch here.
MultiCare's CMO breaks down how the system achieved cost savings through clinical and financial alignment.
From overtreatment like repetitive lab tests and duplicate imaging studies, to unnecessary medicine usage and care coordination failures, clinical waste can quickly devour a health system's budget. Research shows that clinical waste is a big driver of excess health spending, accounting for anywhere between 5.4–15.7% of national health spending.
Through a collaboration with Epic and IllumiCare, MultiCare Health System has achieved big savings by reducing clinical waste. In this episode of HL Shorts we hear from MultiCare's CMO Arun Mathews on how the new system helped reduce clinical waste and how much work went into physician alignment with the new program.
For CFOs, it’s important to not overlook the importance of collaboration with medical teams to uncover clinical and financial stewardship opportunities.
For more info, be sure to check out the accompanying aritcle with Mathews' full interview.
As Tinch prepares for her retirement, she looks back at the strategies, successes and challenges that have shaped her career.
Paula Tinch joined Penn State Health as its executive vice president of finance and CFO in 2019. Now, she is preparing to pass the baton to her successor.
Originally Tinch was set to retire at the end of January 2025, but when asked to stay with her team until June, she said the decision was an easy one.
“Pretty easy to say yes when you know when you have a great team and we've had a lot of really great momentum,” Tinch said.
Throughout her time at Penn State Health Tinch was a stabilizing force for the organization, especially during the pandemic where she led the finance team through COVID challenges and helped the system avoid layoffs that health systems across the country were experiencing.
The Steady Grind
In 2024, Tinch played a significant role in the system’s financial turnaround, setting it up for a much brighter year in 2025. In 2023, Penn State Health’s losses were mainly attributed to debt and expenses related to two recently opened hospitals, plus general increased costs from inflation, worker shortages, and supplies.
Tinch said a large component to finding this stabilization was the system’s specific internal call to action coming together in the form of a project launch titled Project F.I.T: financial improvement taskforce.
“It was really [about] engaging leaders and team members across the organization to kind of spark their change efforts and create some local ownership,” Tinch said. The process was also about expediting further integration, since Penn State Health has morphed as an organization over the last several years.
“Every year the system has changed in a way that it didn't exist the year before,” Tinch said.
For example, the system now has a centralized office that manages all of its contracted labor.
“It was creating some of those structures that are leveraging our size and scale, but making sure that it was broken down in a way that it was easier to leverage that size and scale,” Tinch said. “And we certainly have more to do, but that was laying the foundation and really getting everybody engaged.”
One thing Tinch is particularly excited for in her last few months at the system is the launch of its integrated Epic electronic health record (EHR), which will formally launch at the end of March. Epic is overwhelmingly the EHR of choice for academic medical centers.
“I'm sure it's going to be successful for the organization,” Tinch said.
The health system has also accomplished much in terms of partnerships and acquisitions. Tinch led the finance strategy here to acquire and integrate several private practice physician groups and build several new Penn State Health Medical Group locations.
“When I think about the past handful of years, we've really accelerated a lot of the acquisitions and practices, whether it's smaller practices, medium or large,” Tinch said. “It's really about facilitating that stabilizing clinical expertise in the community, as well as collaborating and strengthening that clinical backbone through different partnerships, bringing it in to grow the services that complement the services that we have.”
Behind The Numbers
As Tinch looked back on her career, she recalled some of the advice she had been given over the years.
“I had somebody always tell me, it's obviously more than numbers,” Tinch said.
CFOs know this but taking the moments to meditate on what the root concept of the job pursues can help to reframe the work when it gets challenging, which in healthcare, can be often.
“I can report on numbers. Everybody can be good at numbers,” Tinch said. “[But] I'm always looking at the history, right? You're always looking behind you to get those numbers, but I think it's trying to really understand the story behind the numbers and the patients that make up the story behind the numbers.”
CFOs don’t need to be experts at everything, Tinch explains.
“But building a great team of those experts around you that you can rely on is key,” Tinch said. “You want to be able to hand it off and make sure that we can transition that information in a valuable way so that people can interpret it.”
According to Tinch, shifting data and information across different working groups in healthcare is a part of what makes the industry so complex, which is something that isn’t too often discussed amongst healthcare professionals.
“The complexity that we have all layered on to healthcare, I think we don't talk about enough,” Tinch said.
“I think there has to be some simplicity layered in behind it, which means peeling back some of the things that I think have been layered on over time that have all good intents and purposes, but have layered on costs.”
