This report zooms in on the financial distress in healthcare.
A new report is pointing out where distress lies in the healthcare industry, and bankruptcies are still a major concern.
Gibbins Advisors, a leading healthcare restructuring advisory firm, has published its annual 2024 report of healthcare sector Chapter 11 bankruptcy filings, examining only cases with liabilities exceeding $10 million.
Although filings dropped by 28% from the peak in 2023, this year produced the second-highest level of healthcare bankruptcy filings within the past six years (2019-2024).
The numbers breakdown:
-The average number of healthcare bankruptcies from 2019-2022 was 42 per year
-There were 57 healthcare bankruptcy filings studied in 2024.
-This is down from 79 filings in 2023
The markets breakdown:
-Middle-market cases (liabilities between $10 million and $100 million) declined by one-third from 51 in 2023 to 34 in 2024.
-Large bankruptcies (liabilities exceeding $500 million) remained high post-COVID-19: 12 filings in 2023, and nine in 2024. (The average here was three per year from 2019-2022).
-Filings in the $100 million to $500 million range held steady: 14 cases in 2024, 16 cases in 2023.
The study had a few more key findings:
On track with previous trends, two sub-sectors were the source of almost half of healthcare bankruptcies: senior care and pharmaceutical. Both have caused much stress for providers over the past few years. Drug prices are skyrocketing, and Medicare Advantage denials keep pouring in.
Many CFOs have said they turn to the 304B drug pricing program when able, and this may be the best tactic given today’s hectic healthcare climate. As for Medicare Advantage, strategizing here is even tougher. CFOs should keep active in policy-making discussions and contacting their senators, on top of closely strategizing with and keeping tabs on payers and denials.
Clinics/Physician Practices bankruptcy filings reached their highest level in six years, growing to 10 cases in 2024 compared to a four-per-year average from 2019 to 2023, according to the study. This likely came from numerous factors, including labor costs, supply costs, payer tactics, and private equity mishaps. This steady growth of bankruptcies in this sub-sector calls for the need for policy action to counter costs in some areas and make resource opportunities available in others.
Ronald Winters, principal at Gibbins Advisors, highlighted the financial stress of smaller and rural providers, and called for collaboration:
"While the new presidential administration introduces some uncertainty to the healthcare system, the core factors driving healthcare distress remain unchanged," he said. "Standalone and rural providers will continue to face significant financial challenges, and collaborating with communities on effective restructuring solutions is vital to preserving essential healthcare services in those regions."
The results are clear on the game plan for rural providers: collaboration will be key to enduring financial woes. CFOs of these types of systems should ensure they are proactive in creating collaboration opportunities for their health systems.
Here's how CFOs are currently feeling about Medicare Advantage.
Medicare Advantage payers are getting a rate increase, and providers feel the unease.
MA plans are set to receive a 4.33% payment increase from 2025 to 2026. Some plans could see a more than $21 billion pay increase in 2026 under a plan proposed by the Biden administration last week. Since a new administration jumped into office on Monday, plans could still change, and analysts expect the ultimate pay increase to be even higher under the Trump administration. Major MA payers like UnitedHealthcare, Cigna and Humana would all benefit from the increase.
Providers are seeing this increase as unfair, wondering why insurers are getting an increase as physicians get left behind, and while medical costs continue to rise. Prior authorization, the continuation of increased denials, and other administrative burdens have plagued providers in Medicare Advantage for years. MA enrollment has also been steadily increasing, which generally puts providers on the short end of the stick with lower margins. The increase suggests government reimbursement could be catching up with the increase in utilization among the Medicare population, putting minor stress on payers' earnings.
Late last year, the Department of Health and Human Services Office of Inspector General released a report finding MA insurers pocketed $7.5 billion from risk-adjusted payments in 2023.
Politico released a list of spending reform options which includes Medicaid, site-neutral payments, and the Affordable Care Act. MA and pharmacy benefits managers are not on the list. Providers will need to pay close attention as the new administration swiftly lays out new policies and reversals.
Who’s Saying What
The American Medical Association (AMA) emphasized how physicians treating Medicare patients are seeing cuts for the fifth straight year. Outrage is setting in, although it may have never left.
"It's unbelievable they're giving insurance companies that had record profits an increase while at the same time cutting payment to physician practices that are struggling to survive," said AMA President Bruce Scott, M.D., in a statement. "This contrast highlights the urgent need for Congress to prioritize linking payment to physician practices to the cost of providing care."
Mary Beth Donahue, CEO of lobbying group Better Medicare Alliance, said the following in a statement last week:
"President Trump can immediately deliver on his promise to protect Medicare for seniors by examining these policies, including ensuring the rates keep up with increasing medical costs and that the final rate notice provides much needed stability for seniors."
The CFO To Do List
Many CFOs are, unsurprisingly, fed up with MA and the constant hurdles from payers.
Generally, MA has faced criticism from both sides, for denials and overpayments. This goes without saying, but CFOs must ensure they go over contracts carefully. Stay on top of payers' tactics as much as possible, especially as the country and economy shift under the Trump administration.
To go a step further, CFOs should ensure they are communicating with their senators about these policies and the effects they have, especially for major health system CFOs that serve large populations.
As more hurdles and policy changes come about, CFOs will have to conjure their fighting spirit to protect the fiscal health of their organizations and staff.
An investment here could have big implications for drug costs, value-based care, and population health.
Seventeen health systems are investing in a genomic database that could significantly drive down clinical costs.
Truveta, a Washington-based software company, unveiled the Truveta Genome Project on January 13. The large collaboration aimed at creating a diverse database of genotypic and phenotypic information could transform billions of data points with industry-leading normalization and aid in everything from drug discovery to accelerating value-based care.
Health systems like Advocate Health, CommonSpirit Health, Henry Ford Health, Northwell Health, Providence and Trinity Health have all invested in the project.
The project is taking shape through two health companies:
-Illumina, which does DNA sequencing, which is investing $20 million.
-Regeneron, a biotech company focused on medicine creation, which is investing $119.5 million.
Regeneron’s investments are enabling the discovery and development of new therapies, as well as new solutions for healthcare delivery and population health management.
Together, Illumina and Regeneron, and the 17 health systems have invested $320 million in Truveta preferred equity at a valuation exceeding $1 billion, according to Truveta.
Additionally, Microsoft Azure will be the exclusive cloud provider for the Truveta Genome Project.
Why Does It Matter?
The process: Truveta, alongside its health system partners, will gather leftover biospecimens from routine lab tests that are linked to de-identified medical records for genetic research that will remain anonymous. Then, the first 10 million volunteers will have their exomes sequenced by the Regeneron Genetics Center.
The Truveta Language Model, an AI system designed to process and standardize large volumes of genetic and clinical data, built on Microsoft's Azure, is a key ingredient. By applying AI to this dataset, researchers hope to better understand genetic contributions to health and disease.
This database differs from ones that preceded it. There’s been a lack of large and representative datasets in healthcare that are fit to apply current AI tech to uncover connections between genetics and medical outcomes.
With more information comes more options and more informed medical outcomes that accelerate efficiency and operational excellence.
This project could be huge for the healthcare industry. With more precise datasets focused on genetics, healthcare could cut back on the massive drug discovery price tag ($25 billion last year, by the way), and accelerate tailored medical research, inching the industry towards value-based care models.
Why CFOs Should Pay Attention
Not only are projects like this vital for advancing research for more informed and generally better medical decisions, they also work towards driving down costs and accelerating care models that will benefit the entire industry.
Many CFOs have expressed high confidence in the economy this year, and are feeling more comfortable with taking risks and investing. When able, CFOs should look to invest in projects like this that further the advancement of medicine to help better the overall healthcare industry outlook. Healthcare is a group effort, and in the long term projects like these are helping the entire industry, which can collectively help drive down costs.
CFOs are displaying a notably positive outlook for the economy and the future of their health systems. That optimism stems from several key factors, including the anticipated impact of the incoming administration, the accelerated adoption of artificial intelligence (AI), and an economy primed for new investment opportunities.
According to a recent Deloitte survey, 72% of CFOs in all industries have a positive outlook for the 2025 economy. In healthcare, that may translate to growth, enhanced operational efficiencies and improved patient care.
Now, healthcare CFOs know that they run a health system first and a business second, so jumping onto the bandwagon of a bullish market requires thought and caution so that financial decisions do not harm patients. To do this, CFOs must be diligent in how they stay informed and navigate the year ahead.
The Real Benefits of AI
CFOs must reimagine business practices as well as operations through AI. With a constant expanding and shifting AI market, CFOs must invest in AI that will help their organization thrive in its specified goals.
Healthcare staff should only be doing tasks that only they can do. By tasking staff with these types of duties, providers can win back time and operational efficiency, lending a hand to a refined financial outlook.
With the rise of agentic AI, CFOs can explore the deeper benefits that AI can bring, like improving access to information, performing complex tasks, and delivering actionable insights, all with minimal human intervention.
A Good Risky Time
Sixty-seven percent of CFOs surveyed by Deloitte say now is a good time to be taking greater risks. This percentage, stemming from CFOs across different industries, shows an even more complete picture for healthcare CFOs to examine.
After so much unpredictability around the election, many CFOs and CEOs are relieved it’s settled. They now have a much better idea of what to expect and prepare for with the incoming administration.
With this mindset in play, will 2025 be the year of M&A deals?
Dealmaking can allow provider organizations to reach their full potential through an influx of capital and resources, and CFOs and CEOs are focused on a few key initiatives here, such as expanding access and improving technology.
This mindset may be partially due to lower interest rates and the perception that the new administration might be more lenient on antitrust enforcement.
Keeping A Cash Balance
Despite all the talk around investment, risk, and M&A, many CFOs are looking to improve their cash balance. Although the positive economic outlook under the new administration is taking shape, the fact is, we’re not there yet.
Keeping a well-funded cash balance and reserve fund will still be crucial for CFOs
And they will still need to walk the tightrope of making savvy investment decisions to drive their organization forward, while maintaining a strong safety-net, coupled with a recipe for a smooth patient experience.
There is a rise of imposter syndrome across upcoming finance leaders as they approach new roles, and they need the tools to reinforce the skills to combat it. Imposter syndrome and feelings of self-doubt can hinder executive leadership and lead to an unconfident staff. Upcoming finance leaders can explore a few strategies to deal with imposter syndrome including mentorship and focusing on a growth mindset.
Check out this infographic for the top tips on combating imposter syndrome as a finance leader.
Hospital CFOs must stay vigilant about price transparency rules to avoid financial penalties.
Since Congress enacted the Hospital Price Transparency rule in 2021, the Centers for Medicare & Medicaid Services (CMS) has issued fines to 17 hospitals, some nearing $1 million.
Most recently, Jackson Memorial Hospital was fined $871,122 in July 2024, Baytown (Texas) Medical Center was fined $50,711 in December 2022, and West Chase Houston Hospital was fined $44,251 in December 2024.
These hefty fines to providers for failing to comply with federal price transparency rules underscore the increasing scrutiny on provider pricing practices. The penalties are part of a broader push by the federal government to ensure that healthcare prices are accessible and understandable for patients.
But these fines are not just a matter of regulatory compliance; they represent a growing concern for hospital CFOs and finance teams across the country. If they continue, these penalties can have significant financial and reputational consequences for health systems.
The Price Transparency Mandates
The price transparency laws require hospitals to publicly display their standard charges for all services. This includes prices for both insured and self-pay patients, and for the first time, hospitals must publish machine-readable files containing a comprehensive list of prices for items and services. Additionally, hospitals are expected to provide clear, consumer-friendly information that allows patients to estimate the cost of care before receiving services. The goal is to empower consumers to make more informed decisions and stimulate competition within the healthcare market.
But compliance has been sluggish, forcing CMS to ramp up enforcement over the past few years, issuing fines for hospitals that fail to comply or provide incomplete, inaccessible, or unintelligible pricing information. The most recent penalties reflect CMS’ commitment to holding healthcare systems accountable for transparency and pushing the industry toward greater accountability.
Some experts argued that, given the complex nature of healthcare billing, it’s too difficult for hospitals to list accurate pricing online. There was some push-back in the industry at the onset, but health systems are becoming more adept at meeting the rules.
While the task of updating price information does not fall to the CFO specifically, a massive fine could wreak havoc on a hospital’s finances. CFOs should ensure their organization can avoid this whenever possible.
The Financial Impact
For CFOs, the fines represent more than just a regulatory headache. The financial repercussions are real, with penalties escalating based on the size of the health system and the nature of the violations. Hospitals are required to pay fines for every day they remain out of compliance, making it crucial for finance teams to stay on top of these regulations. Even more, non-compliance with price transparency laws can damage one’s reputation. As more patients and insurers demand pricing clarity, failing to meet transparency rules could lead to a loss of business, lower patient satisfaction, and potential legal challenges.
The financial penalties could also indirectly impact other areas of hospital operations. Resources that might otherwise be allocated to improving patient care or operational efficiency could now be diverted toward compliance measures or paying fines. Additionally, the reputational damage could affect negotiations with insurers and suppliers, potentially reducing reimbursement rates or increasing operational costs.
The CFO To-Do List: Navigating Compliance
To avoid the fines and reputational damage associated with price transparency violations, CFOs should take several proactive steps to ensure compliance with CMS rules:
Review and Update Pricing Information Regularly: CFOs must ensure that their health system’s pricing data is current, accurate, and easily accessible. Regular audits of pricing files and consumer-facing tools should be conducted to ensure they meet CMS requirements.
Invest in Technology Solutions: Many health systems are investing in software and platforms that help manage and display price data efficiently. These tools can help ensure that pricing information is updated in real-time and is presented in a user-friendly format. CMS also has provided hospitals with resources to help them comply, such as an online validator tool and a template for creating machine-readable files.
Develop a Dedicated Compliance Team: Maintaining transparency is not a one-time effort but an ongoing process. CFOs should consider establishing a team dedicated to compliance, ensuring that all relevant departments (finance, IT, marketing, and legal) are aligned with the transparency goals.
Train Staff on Legal and Operational Requirements: It’s essential that the finance team, as well as other departments, understand the nuances of the price transparency regulations. A little training here will help prevent inadvertent violations that could lead to costly fines.
Communicate with Stakeholders: Open communication with patients, insurers, and other stakeholders about price transparency efforts can foster goodwill and mitigate any negative publicity.
Looking to upgrade your IT system? See how this CFO braved the pricey transition.
Switching IT systems is a hefty task, and not one that CFOs are usually ready to take on. But for health systems struggling with operations, especially in revenue cycle, a new system might be exactly the transformation needed to thrive.
UMass Memorial Health CFO Sergio Melgar spoke with HealthLeaders about how his organization made the switch. UMass has achieved Epic's Gold Star Level 10 recognition for its use of the platform. (See how transitioning to Epic helped take UMass Memorial Health from working in disconnected silos with struggling operations, to fluent organizational synergy, and improved margins.)
Implementing an IT system switch is a huge financial (and stressful) undertaking, and CFOs looking to make this change must understand the steps for sufficient preparation. Here’s a breakdown of Melgar’s advice when he was in the trenches of the transformation, including crafting the right mindset, and the key tactics that cannot be overlooked.
Waking Up To the Change
The first step to implementing change is realizing when one needs to happen. If your health system is struggling with poor operational metrics and working in silos, (even effectively), it’s likely time for a change.
To help lead that change with other C-suite execs, CFOs will need to have a clear, long-term, strategic mindset. Melgar says to think about the big picture items. If training will cost a certain amount, that’s that, he says. CFOs can’t think the process will lead to a complete transformation in a year or two. Instead, Melgar urges CFOs to think about everything in the long term. CFOs also must have the resources, and can’t think ‘we’ll just be financially strained this year.’
“That means where's the liquidity coming from?” Melgar says. “So your balance sheet has to be prepared for it.”
Be Prepared for Staff Challenges
Taking an entire organization from one IT system to another is also challenging on a staff level. Melgar says to be prepared for staff challenges with training, but also general change.
“They're leaving their old job and they're going to a new one,” he says. “That is a little bit emotional for some folks because it's not what they know.”
Melgar says UMass changed a lot of its IT organizational structure, making a few employee changes, but also brought in more experienced staff that had done this transition before.
Be prepared for the cost here,
“You do need to put a lot of money into the training,” Melgar says
The “Continuous Improvement Philosophy”
Another key element to pulling off a successful long-term transition, Melgar says, is logging into the “continuous improvement philosophy.” This pairs strategic, long-term thinking with searching for improvement every step of the way. CFOs may find improvements in places they didn’t expect.
One example Melgar gave was how UMass’ corporate costs were a percentage of the total cost of the transition. While not all corporate structures are the same, Melgar says its corporate structure over the 11 years that he’s been at the organization, has transitioned from most of the services that were previously local.
“So we haven't decentralized,” he says. “We've actually centralized more so conceptually. We are effectively doing more centrally. While that has been happening, our cost of the overhead compared to the cost of the total has dropped.”
Be Patient
The long-term game is filled with speed bumps and barriers, and CFOs must be patient in waiting for financial results. Melgar says CFOs may find themselves breaking through unexpected barriers in this time:
“You'll need to sort of break through more, call it personal barriers, than necessarily the system barriers,” he says.
Melgar said the system itself no longer was the barrier, but barriers arose from the “the human element that is in there and will always be there,” more so than the system.
Melgar says to also be prepared to brave the “valley of despair” in the first year with Epic as it goes live — it will likely be a rough year. With less-than-exciting margins and uneasiness as the organization jumps into the new system with real patients and claims, CFOs will need to practice patience as they wait for the investment to pay off.
The CFO Guide
Melgar emphasized the role his management system played in the transition, saying, “I think our management system is certainly probably the driving force, but without Epic, I think we would not have made the progress that we've made.”
“So perhaps it's been a catalyst,” he says. “I would say that our management system certainly is the key because we were creating ideas and transforming long before Epic. But once Epic went in, it was really the catalyst that I think propelled us to do more and more.”
Three final tips from Melgar and his experience with the transition:
Transform
“You need to invest in transformation because you don't want to put Epic on the practices that you currently have. You want to transform what you do.”
Keep it simple
Getting too complicated, Melgar says “is a common mistake, because if you do, if you think you can do it better and you customize it, you customize it again. The upgrades become more challenging, just plain and simple”
Modernize
“You have to modernize.” Don't think you're going to put Epic on an old computer, Melgar says. “If you stay current, you're going to ride this to success.”
Here's what CFOs should prep their budgets for in 2025.
The healthcare finance outlook is stabilizing, for now, but some of the same 2024 challenges will roll over into 2025. Here are three items CFOs can focus on to ensure their organization's finances are set straight for 2025.
As new CFOs step into their roles, how can they forge a leadership mindset?
Shifting into a new role can be intimidating, especially if it’s an executive role .. Healthcare CFOs must be adaptable, analytical, and equipped to make decisions that affect millions.
One thing we learned at the HealthLeaders UpNext CFO Exchange is that many future healthcare finance leaders grapple with imposter syndrome. Healthcare finance is a high-stakes field, so it’s not uncommon for leaders to feel overwhelmed by the complexity of their roles.
Feeling confident in one’s skillset and leadership is easier said than done. For those stepping into leadership roles, overcoming this psychological barrier is essential not only for personal growth but also for the health of the organization.
How Imposter Syndrome Impairs
The responsibility to make high-stakes decisions for both the financial health of the organization and the care of patients can feel overwhelming, especially when new execs are surrounded by seasoned professionals with years of experience.
If an executive leader isn’t confident in their ability to solve a challenge, their team is going to be unsure as well. In order to lead and have the vote of confidence from staff, executives must focus their mindset on believing in themselves and their skillset.
The Rise Of Imposter Syndrome in Healthcare Finance
Several factors contribute to imposter syndrome among emerging healthcare finance leaders. One key factor is the steep learning curve in the industry. Healthcare finance is multifaceted, blending traditional financial management with an intricate understanding of healthcare policies, reimbursement systems, regulatory frameworks, and patient care economics. For leaders new to these dynamics, it's easy to feel like they are constantly catching up.
More than that, the healthcare sector is marked by rapid change, driven by technology, policy shifts, and evolving patient expectations, which can leave finance leaders feeling uncertain and vulnerable.
Overcoming Feelings of Imposter Syndrome
Many leaders, even those with decades of experience, grapple with self-doubt. Acknowledging these feelings can be liberating, allowing new leaders to see that they are not alone in their struggles. Building a supportive network of peers, mentors, and colleagues can help normalize these feelings and provide reassurance.
Seeking out mentors—whether senior leaders within the organization or professionals from outside networks—can provide invaluable perspectives and insights. Regularly engaging in professional development opportunities, such as attending healthcare finance conferences and webinars or earning certifications, can also build confidence by deepening expertise and staying current on industry trends.
Emerging leaders need to focus on developing a leadership mindset rather than merely having the technical expertise. They will need to think of ways to build trust across their teams while being transparent, and keep in mind that there is always more to learn.
Building resilience is the second piece to creating a solid leadership mindset. Fostering a culture of collaboration and being open to feedback from both financial peers and clinical teams can also help new leaders gain confidence and demonstrate their ability to lead effectively.
With twice the responsibility, see how this finance VP makes it work.
Elena Barberis, CPA, has accepted the role of Vice President of Finance for both Trinity Health Holy Cross Health in Fort Lauderdale, Florida and St. Mary’s Health Care System in Athens, Georgia.
Over the past 18 years, Barberis has served in leadership positions in healthcare systems in the Miami and Atlanta metro areas. She spent 11 years at the Jackson Health System in South Florida, rising to the position of vice president of finance.
It Takes A Village
Being the VP of finance for two different health systems is no small task.
First, organization is vital, she says. From differing payer mixes to population metrics, to operations, being extremely organized is something Barberis knew well long before her dual role. Now it’s helping her keep both health systems in check.
“My whole career, I think, and my whole life, has been developing the strategies to get organized and to be equipped to handle this role,” she said.
Secondly, it takes the support of a good team. With several levels of finance support teams at her side, Barberis said: “It's one of those things that really gives you that village and the support you need to be able to handle everything.”
On top of this, consistently monitoring the economy and regulatory policies is also a significant part of the job, she says.
Barberis said one of the strategies that has helped her throughout her career is determined and resourceful collaboration. She recalled a time early in her career where she had been brought into a health system as part of the financial turnaround team. When she found herself unable to get the information she needed, she used her communication skills and collaborated with the colleagues she needed to get the work done.
“Basically I just went around and used all my communication skills and tapped into meeting people,” she said.
Too often in healthcare, and especially in healthcare finance, executives find themselves making decisions in isolation. With so many financial pressures coming from all around, it’s no shock when CFOs want to phase out the noise and simply get the job done. But isolated decision making isn’t practical and can often lead to uninformed outcomes that can affect just about every aspect of a health system.
But Barberis has found a collaborative system that works at her organization, where finance isn’t a scary, off-limits topic to non-finance staff.
“One of the things that I think has been a benefit for me, is that I've been able to reach across the aisle to colleagues and to folks that are usually not comfortable speaking about numbers,” she said. “It's very helpful to be able to do that when you can.”
For a VP of finance, the most crucial collaboration, especially when dealing with multiple health systems, is the collaboration with the CFO. Barberis manages her two health systems along with CFO Michael Gusho, who regionally manages four locations for the health system.
Barberis emphasized how her CFO helped her as she settled into the new roles and she knew her success was on his radar from the beginning.
“It's been a wealth of knowledge for me to learn from him,” she said.
Looking Ahead
Looking down the path of the rest of 2025, Barberis says she's keeping a close eye on regulatory changes and reimbursement models.
“Trinity, as well as many other health systems, has been very vocal about negotiating with payers and getting a fair negotiation, and a fair rate with increasing dynamics in the market,” she said.
While insurers are raking in hefty profits, health systems are still struggling.
“Margins are getting thinner and thinner for hospitals as costs continue to rise. Prices continue to rise on drug costs,” she said. “Things are not getting any cheaper, especially with inflation.”
