Ninety percent of hospital leaders expect financial performance to remain similar to or better than 2024, driven by increased utilization (77%) and success with commercial contracting (56%), according to a VMG Health report published Jan. 9.
Eight things to know:
1. Concerns over labor costs have eased compared to 2024. Only 49% of hospital executives cited clinical staffing shortages as a challenge, down from 77% last year. However, physician enterprise losses and supply chain challenges remain critical issues.
2. Health systems plan to allocate resources to physician alignment, facility service line expansion and easing labor pressures. Areas such as outpatient surgery and behavioral health are top candidates for joint venture partnerships.
3. Most survey participants (76%) are prioritizing provider network expansion, with a focus on physician recruitment and alignment strategies.
4. Mounting physician subsidies (64%) and compensation model redesigns (41%) are significant hurdles in physician alignment. Physician recruitment, retention and clinical staffing shortages remain key areas of concern.
5. Eighty-four percent of respondents expect less M&A activity in 2025 due to challenges such as mismatched buyer-seller perceptions and regulatory hurdles. Health systems are open to joint ventures in outpatient services, particularly outpatient surgery (63%) and behavioral health (56%). However, only 28% would consider private equity partnerships.
6. One third (33%) of hospital executives plan to increase their participation in value-based care models, while 23% expect more Medicare Advantage contracts.While 52% already have hospital-at-home programs, others are planning for future implementations.
7. Workforce retention programs (51%) and leveraging technology and automation (46%) are top strategies to address staffing challenges.
8. In terms of emerging trends, leaders see opportunities in digital care and new service line expansions, alongside easing pressures from contract labor.
Note: The survey includes responses from 73 health system executives, including CEOs, CFOs and COOs, among other executive titles.
Click here for more details on the report.