Healthcare Finance Leaders Anticipate Challenges Amid Policy and Economic Uncertainty

Healthcare finance executives are bracing for potential storms on the horizon, as policy changes and economic uncertainties loom large over the industry. A recent Deloitte survey of 64 finance leaders from health systems and insurers reveals growing concerns about future business conditions and profitability.

External Factors Take Center Stage

While previous years saw internal issues like workforce challenges and cybersecurity dominating the agenda, the latest survey indicates a significant shift towards external concerns. A staggering 84% of respondents expressed worry about business conditions, citing an unclear policy landscape, economic pressures, and potential disruptions from tariffs and supply chain issues.

The impact of these external factors is not to be underestimated, with nearly three-quarters (73%) of finance leaders voicing apprehension about future revenue growth and profitability. This marks a notable departure from past surveys, where internal operational concerns took precedence.

Policy Changes: A Mixed Bag of Impacts

The survey delved into specific policy changes expected to have the most significant impact on healthcare organizations. Interestingly, health systems and insurers diverged in their primary concerns:

• Health Systems: Ranked tariffs and trade policy as their top concern, followed by Medicaid overhauls and regulatory changes around data and technology.
• Insurers: Identified drug pricing policy as the most impactful issue, with trade policy and Medicaid reform following closely behind.

This divergence can be attributed to the different operational focuses of these organizations. Hospitals and health systems, heavily reliant on imported equipment and supplies, are more susceptible to the effects of trade policies and tariffs. In contrast, health plans are particularly attuned to the potential ramifications of drug pricing reforms, including those introduced in the Inflation Reduction Act.

Strategies for Adaptation Fall Short of Expectations

Finance leaders are actively exploring various strategies to bolster their organizations' financial health, but the results have been mixed so far. Mergers and acquisitions (M&A), once seen as a panacea for industry challenges, have yielded limited benefits:

• 59% of health plans reported only "moderate or no impact" from M&A activities.
• 50% of health systems echoed similar sentiments about their M&A endeavors.

Value-based care initiatives, another much-touted solution, have also failed to deliver significant change. Approximately 63% of health system financial leaders and 62% of those at health plans reported "moderate or no impact" from strategic, value-based, or risk-based contracting efforts.

As the healthcare industry navigates these turbulent waters, finance leaders are being called upon to adopt more agile planning cycles, conduct real-time scenario analyses, and identify new growth opportunities. The ability to adapt swiftly to this complex and rapidly evolving landscape may well determine which organizations thrive and which struggle in the coming years.