Healthcare executives are preparing for 2025, a year likely filled with profound challenges and big opportunities.
From workforce shortages to financial pressures, technological advances, and policy uncertainties, 74 health system executives and leaders shared their biggest headwinds heading into next year. The big themes include:
1. Continued staff shortages. Hospitals across the U.S. have seen an uptick in demand for patient care despite continued nurse, physician and staffing shortages. The Association of American Medical Colleges predicts there will be a 61,700 to 94,700 physician shortage next year as demand spikes in several specialties; the American Association of Colleagues of Nursing predicts a shortage of 78,610 full-time RNs next year; and a recent Mercer study predicts a shortage of around 100,000 critical healthcare workers by 2028. The shortfalls mean less access to care, slower patient throughput and increased wages to stay competitive next year.
"One of the difficult issues we are anticipating for 2025 is a continuing shortage of staff for the level of patient demand we are experiencing," said Michael Dolan, MD, chief clinical officer of Gundersen Region at Bellin and Gunderson Health System in La Crosse, Wis. "While we made some improvements in 2024, this is especially critical in certain physician areas. As a result, we continue to need assistance for physician staffing services to help us meet the demand."
Hospitals are preparing to overcome clinician and staff shortages by creating pipeline programs for current team members to achieve advanced degrees, bring in new team members and strengthen the overall workforce. They are also automating tasks where possible to alleviate administrative burden and support clinical staff. Finally, many hospitals are developing hospital-at-home programs and forging partnerships with regional systems and specialty groups to provide in-person and virtual coverage for patients.
2. Financial pressures. Nonprofit hospitals reported slow margin growth in 2024 and the same is expected for 2025, according to ratings firm Fitch. Slow reimbursement growth coupled with rapidly raising costs and inflation will make the next year particularly challenging for community and independent hospitals, as well as regional chains. An increase in payer denials could contribute to financial challenges.
"As we prepare for the top headwinds in 2025, we anticipate significant challenges related to cost containment and revenue cycle management," said Shelly Schorer, CFO of California Division of Chicago-based CommonSpirit. "We will address rising inflationary costs through a rigorous approach to our expense management. Simultaneously, we will strengthen our revenue capture capabilities by optimizing billing processes, improving collections, and fostering strong relationships with payers."
Health system executive teams are adding revenue streams, diving deeper into value-based care and entering into new partnerships to implement technology as a difference-maker next year.
3. Trump administration. President-elect Donald Trump will take office for the second time in January, and plans to appoint a swath of new leaders to oversee aspects of the healthcare system. While he hasn't shared specifics about his healthcare policy, his administration is already rooting out inefficiencies and looking for areas to cut costs. There are also key waivers up for renewal next year that will affect hospitals and executives are planning for a variety of scenarios.
"In 2025, we're focusing on finding ways to fill the gaps so we can get to financial stability while continuing to provide the charity care needed in our communities," said Ngozi Ezike, MD, president and CEO of Sinai Chicago. "It's not going to be easy, especially with city and state budget challenges looming and a good deal of uncertainty about healthcare policy pivots with a new administration. So, we need to look creatively at new philanthropy channels, partnerships with better resourced systems along with ongoing efforts to be as efficient and cost-effective as possible. These are difficult needles to thread, but our leaders and caregivers are committed to our mission that healthcare is a right for all."
4. Technology integration. The technology in healthcare is rapidly advancing, and so is the chasm between the "have's" and "have-nots." Hospitals with the resources to implement new technology and data analytics will grow at a much faster rate than smaller systems and independent hospitals already struggling financially. But technology isn't a "nice to have" anymore; it's an imperative for operating in the digital world.
IT purchases are significant for any organization and require diverting funds from other essential areas. Hospitals without enough funding rely on partners and donors to modernize.
"To plan the future, hospitals and systems need to invest capital into technology and programs. However, low financial margins, continue to stress the ability for future investments," said Mayank Shah, MD, president and chief medical officer of Advocate Condell Medical Center. "Many systems continue to have dual short term and long-term strategies for financial sustainability."
5. Medicare Advantage. Health systems have gone toe-to-toe with Medicare Advantage plans in the last 18 months after experiencing heightened denials and low rate increases. Some have left the program entirely while others spent months in contentious negotiations. Executive teams are planning for more challenges ahead as the plans grow.
"Medicare Advantage remains a significant headwind as plan sponsors consistently reimburse at rates lower than traditional fee for service Medicare," said Stephen Rinaldi, senior vice president and chief revenue officer of University of North Carolina Health care System in Chapel Hill. "In the coming year, we will continue to work with our payer partners to ensure we have agreements that properly consider future inflation and performance targets."
6. 340B program. Health system executives are planning around potential changes to the 340B program and preparing for the impact of the Inflation Reduction Act. It's unclear how the Trump administration will approach the 340B program, but pharmaceutical companies are pushing for adjustments.
"Increasing and everchanging contract pharmacy restrictions and the emergence of 340B rebate models threaten to alter the 340B program, requiring strategic adjustments to maintain program compliance while minimizing the regulatory burden on covered entities," said Matthew Webber, director of pharmacy business at Novant Health in Winston-Salem, N.C. "The Inflation Reduction Act will reshape reimbursement dynamics, requiring pharmacies to navigate increased administrative complexities while ensuring patient access to critical medications, making preparation for 2026 a key focus for 2025. Preparing for these challenges involves advocating for policy stability, optimizing 340B program management, and implementing data-driven strategies to mitigate patient disruption and maintain access to care."
7. Supply chain. Hospital and health system leaders navigated a variety of supply chain issues in the last year, including an IV shortage after a manufacturing plant operations were disrupted during a hurricane. The cost of drugs and medical supplies remain high, and several supplies have remained on the shortage list over the last few years.
"Cost pressures will dominate, with scrutiny on care models, high-cost drugs, and potential supply chain disruptions," said Marschall Runge, MD, PhD, CEO of Michigan Medicine. Increased coordination and preparation for supply shortages could help in the near term, but more long-term solutions are needed industrywide.
8. Cyberthreats. Cyberattacks against hospitals and healthcare providers in the last year continued to rise, with both small hospitals and large health systems falling victim. Hackers are using AI for more targeted attacks and are branching out to hit third party vendors as well. In the last year, St. Louis-based Ascension and Optum's Change Healthcare had operations disrupted by ransomware attacks that affected hospitals across the U.S. C-suite executives are spending big to keep their organizations safe despite talent shortages in the space.
"In our increasingly digital world, safeguarding patient data is not only a technical necessity but also a moral imperative," said Richard Isaacs, MD, dean and senior vice president of medical affairs and chief academic officer of California Northstate University College of Medicine in Elk Grove. "The frequency and sophistication of cyberattacks are on the rise, compelling us to remain vigilant and proactive in protecting sensitive information."
9. Access to care. Increased patient demand, even in markets where the population isn't increasing, will be a challenge for hospitals already at capacity. Sprawling health systems are approaching access issues by adding clinics, virtual care and partnerships with local physician groups to keep care in the right settings and close to home for patients.
"One of the top priorities will be improving and increasing access to care. That encompasses improvement in the existing care models but also leaning into the development of alternate care models that allow for greater access to care; this includes enhanced virtual health opportunities, robust hospital at home models and other innovative solutions," said Diane Lynn, assistant vice president of global health at Charlotte, N.C.-based Advocate Health.
10. Private equity. One of the biggest stories of 2024 was Steward Health Care's bankruptcy and subsequent sale or closure of the for-profit system's hospitals. Steward previously had private equity backing and its failure raised questions about private equity in the industry. However, several private equity companies continue to make investments in hospitals, physician groups and other healthcare-related businesses, and some in the nonprofit sector are concerned.
"The healthcare market is pivoting towards more private equity and venture capital investments looking for returns. This shift of ownership often compromises indigent and underserved care," said Dr. Shah. "The non-for-profits in the market end up taking the brunt of this payer mix which continuously constrains the financial health of the organization. The anticipated complexity is that an increase in volumes of patient care requires upended staffing with reducing reimbursements to cover the costs."