Most healthcare finance leaders say they’re worried about business conditions

Healthcare finance leaders say they’re most concerned about external business conditions, including federal policies and the overall economy, according to a new report from Deloitte.

The firm surveyed 64 healthcare finance leaders, with 32 coming from hospitals and health systems and 32 coming from health plans. In similar recent surveys, most said they were worried about issues inside their own organizations, such as workforce challenges, cutting costs and cybersecurity. Deloitte released the report early Tuesday morning.

In the latest report, most (84%) cited concerns about external factors, including federal regulatory policies, tariffs, and the overall strength of the economy, says Dr. Jay Bhatt, a primary care internist and managing director at Deloitte.

“Finance leaders are concerned about business conditions that are stemming from the potential regulatory and policy changes,” Bhatt tells Chief Healthcare Executive®.

“There's the uncertainty and the disruptions related to tariffs and supply chain. So, you know, last year was a lot about growth and the internal business and building on that business for growth. And now external factors have taken center stage," he says.

Among other top external factors, 81% of healthcare finance leaders cited changing consumer needs, including affordability and trust. And 73% of finance leaders surveyed pointed to growth and financial performance. (See part of our conversation with Dr. Bhatt in this video.)

Healthcare finance leaders have shifted their views in recent months. A similar Deloitte report last December indicated some cautious optimism for growth, with nearly 60% of finance leaders indicating a favorable outlook for the year ahead.

Finance leaders at hospitals and health plans listed tariff and trade policy changes as their top concern among policy and regulatory issues, with finance leaders at insurers placing it as their second highest area of concern.

Healthcare leaders have worried about the prospect of higher costs for prescription drugs and other medical supplies, which typically represent 20% of an average hospital’s expenses, the Deloitte report notes. New tariffs on imported medical supplies could increase hospital costs by 15% or more, the report notes.

“What's important is that it's an integrated story,” Bhatt says. “It’s tax, it's pricing, tariffs … all of those actually coming together.”

Health plan policy leaders listed drug pricing policy changes as their top concern.

While cybersecurity ranked near the top of finance leaders’ concerns in past surveys, concerns about federal policy and uncertainty in the economy are simply more pressing at the moment.

Bhatt suggests that cybersecurity remains a top issue for health leaders.

“I think cybersecurity continues to be important, and we've seen that trend over the last four out of five years, but I think the external factors have just become top of mind for finance leaders to manage through,” Bhatt says.

Healthcare finance leaders said they are concerned about the impact of possible changes to Medicaid programs. Hospitals and physicians are pressing Congress to change proposals that could leave millions without coverage, and have warned that some hospitals would face reducing services and possible closure. Providers with a significant number of patients relying on Medicaid must plan for possible changes, he says.

“I think rural communities, those organizations that have a significant proportion of their consumers and patients on Medicaid, are certainly going to have to think about how to plan for that,” Bhatt says.

While healthcare organizations have often used mergers and acquisitions as mechanisms through growth, finance leaders suggest those efforts haven’t always paid dividends. Only a little more than a quarter (28%) of health system finance leaders and 25% of those at health plans said mergers have provided a “strong impact” on their organizations.

The report suggests healthcare organizations could consider looking at partnerships rather than full-blown mergers. Some analysts have suggested the pace of hospital mergers could be slower than in the past couple of years due to economic uncertainty.

Health system leaders said they are seeing the benefits of generative AI and cloud technologies, with 53% seeing strong impacts. But most health plan leaders (72%) reported moderate to no impact from those technologies so far.

“What that suggests is that transformative tech, and then the components to support that tech, are really important to deliver on managing costs and outcomes in this environment,” Bhatt says. “And so those are places that healthcare organizations may identify opportunities to have strategic alliances or make investments or have acquisition.”

Health systems can still plan for growth, but "they have to do that in the context of uncertainty in some of this regulatory environment," he says.

Healthcare leaders may have expected fewer financial headwinds this year, and some hospital systems are still struggling to recover from the fallout of the COVID-19 pandemic. Bhatt says finance leaders are accustomed to turbulence, but they can position themselves to face a difficult environment.

“I think we're in another moment of uncertainty in some of this shifting and and change, both in the regulatory environment as well as in the macro economic environment,” Bhatt says.

And he adds, “The data suggests that organizations have a host of important issues to consider, and we've seen that planning and using data to drive that planning and having a process and system to approach it can help you manage through and be successful.”

Hospitals and health systems should also look for ways to partner with others in the ecosystem, including health plans, Bhatt suggests.

“This could be a moment for collaboration and integration among providers and health plans, towards managing through this time of uncertainty, through addressing higher cost and working together to improve outcomes, with other actors in the industry, whether it be digital, biopharma, med-tech and retail and other technology providers,” he says.