How Sanford Health is preparing for Medicaid cuts and other challenges

There are plenty of challenges in the healthcare industry, and they are magnified in rural areas, Dr. Brian Hoerneman says.

Hoerneman is the president and chief executive officer of Sanford Health Marshfield, a division of Sanford Health that operates 11 hospitals and dozens of clinics in Wisconsin and Michigan’s upper peninsula.

“There are innumerable challenges in healthcare and rural healthcare certainly is no exception to that,” he tells Chief Healthcare Executive®.

“We see instances of higher burden of chronic disease, and more disparate geography where it's harder to provide that care,” he says.

• Read more: Sanford Health Marshfield CEO sees progress after merger

Sanford Health and other hospital systems across the country are preparing to deal with changes in Medicaid programs following the passage of the federal HR 1 tax package last year. Analysts say Medicaid spending will be $1 trillion less than projected over the next decade, and millions of Americans are expected to lose coverage. Hospitals are bracing for more uninsured patients even as they see less Medicaid funding.

“If there's a decrease in reimbursement that makes it even more challenging,” Hoerneman says.

But Sanford Health also operates two health plans, including its Sanford Health Plan and Marshfield’s Security Health Plan. Hoerneman says the health system aims to use the health plans’ strength to help patients manage conditions.

As Hoerneman says, the question is, “How can we work to keep our communities and patients healthier and really shift from that reactive care to caring for patients only when they're sick, to keeping the population healthy?”

Hoerneman pointed to a value-based care committee with leadership from the health system and health plan, along with finance and healthcare transformation leaders working to identify ways to keep patients healthy.

He says they are looking at ways to help people need less care, and to reduce the cost of providing care.

“I think there's a really significant opportunity there, and we've seen some of that actually play out,” Hoerneman says. “So if you look at instances where we provide both the coverage for a health plan member, and they're also a patient of one of our providers, we see that the cost of care decreases by 20 to 30 percent, so per member per month, a 20 to 30% decrease in cost of care. So really remarkable.”

“We also see that the quality increases,” he continues. “So things like cervical cancer screening actually doubled. We saw an improvement in colorectal and breast cancer screenings, both of those up 10 and 15%.”

He says there were also encouraging findings in helping patients manage conditions such as diabetes and high blood pressure.

Hoerneman says the system is looking to be innovative and find “a sustainable approach” in facing headwinds.

Wisconsin has seen some hospitals shuttered due to financial pressures, including two hospitals that closed their doors in 2024: Sacred Heart Hospital in Eau Claire and St. Joseph’s Hospital in Chippewa Falls.

Rural hospitals are going to have to adapt new strategies and form partnerships, Hoerneman suggests.

“I think the rural hospitals are starting to enter a new chapter, and that new chapter is where we're going to have to continue to be more innovative, and we're going to see more partnerships going forward to reach that sustainability,” he says. “I think rural hospitals that stay static and don't recognize those challenges soon enough, can find themselves in trouble.”

“I think rural health care does need to continue to adapt to be successful and sustainable,” he says.

Hoerneman says he is enthusiastic about the new federal Rural Health Transformation Program, which will distribute $50 billion over five years to the states to improve rural health.

Wisconsin identified developing the healthcare workforce as a goal, and Hoerneman says he’s glad to see efforts at developing a stronger pipeline of talent.

“We need more physicians, we need more APPs, we need more nursing and all those different support services to be able to provide the care that we do,” he says.

Wisconsin is also aiming to use funds to support data and technology initiatives.

Hoerneman says better data could inform efforts to identify patients that would benefit from additional care and coordination to keep them healthy. He also expects to see efforts to collaborate with family health centers, educational institutions and other community partners.

Like other health leaders, Hoerneman says the funds in the federal rural health program aren’t expected to offset losses in Medicaid. But he says he is hopeful the rural health program can have some impact.

“We are excited about the program and some of the opportunities that it has,” Hoerneman says.