Due to the One Big Beautiful Bill Act (OBBBA) and other federal and state policy changes, healthcare is facing a volatile landscape that could disrupt every sector of the industry. Vendors and partners — such as companies in life sciences, facility planning, professional services, and digital health — must adapt to serve client needs and maintain positive connections with health system partners.
Read on to learn about the impacts of OBBBA and how different vendor sectors can help health systems navigate these policy changes.
The impacts of OBBBA and how health system leaders are responding
Funding cuts and other restrictions related to OBBBA and other policy changes are projected to cause unprecedented impacts on the healthcare industry. Health systems may see uncompensated care increase, patient health conditions worsen, and elective procedures drop. At the same time, tariff volatility may affect health system operating environments, immigration restrictions may deepen staffing shortages, and direct funding cuts threaten research initiatives.
How these and other changes will impact individual health systems isn’t easy to predict. Some leaders are using scenario planning tools to understand how policy changes will affect their finances. Some are delaying planning until the impacts of legislation and policy seem more settled, narrowing their focus to three- to six-month planning cycles or extending the planning window over years.
Despite this planning uncertainty, health system leaders will make difficult short-term decisions to reduce costs and preserve margins by:
- Improving core operational efficiency by streamlining workflows, adopting technologies that increase efficiency, and reducing administrative costs wherever possible.
- Reallocating resources, often having to choose between immediate cost savings and the potential for long-term growth via investment.
- Reassessing growth plans and deciding which services to prioritize and which to deprioritize based on volume growth and margin performance.
How different partners can respond
Across all sectors of the healthcare industry, vendors and partners should think about how to help health systems maximize their margins as quickly and efficiently as possible to create a quick return on investment (ROI). Because each health system is different, that will mean reaching out to health system leaders to discuss how they envision improving operational efficiency, reallocating resources, and prioritizing the right services. Participating in these conversations positions vendors as strategic partners willing to help health systems take on difficult challenges.
- Tailor your approach to each health system’s purchasing strategy. No two organizations will respond to policy shifts in the same way. Most are still scenario planning — identifying their next moves based on which outcomes will impact their unique populations. In anticipation of tighter budgets in the coming years, health systems may pursue intense cost-cutting, spend heavily on stockpiling critical supplies, or bring forward capital investments. Investigate which actions health systems are considering and be prepared to offer support based on their chosen path.
- Communicate how your products can help customers improve operational efficiency. Health systems will consider the role drugs, devices, and technologies play in streamlining workflows to reduce costs. This presents an opportunity for life sciences organizations to highlight value narratives about shortening length of stay, reducing procedure times, streamlining staff workflows, or making patient care pathways more efficient.
- Help patients retain access to care. Patients who lose their health insurance will have a harder time accessing the treatments they need. Be prepared to offer these individuals direct financial assistance, but also explore partnerships with alternative, direct-to-consumer product delivery systems that bypass traditional payer-benefit manager networks.
- Communicate your reliability as a partner. Health systems that are weathering a volatile policy and financial landscape value partners they can trust. Show how your organization has been a stable partner amid uncertainty to increase confidence that you can deliver products reliably and are willing to find win-win solutions.
- Advocate for the specialties and services that use your products. As health systems examine their budgets, they may deprioritize investments in services that are low-margin or where they feel they can’t compete. Emphasize why services that leverage your products are critical and deserve continued funding by sharing data that shows how they improve patient outcomes, boost revenue, connect to other margin-generating services, or serve critical needs of the patient population.
Questions to ask your health system partners
- To what extent do you anticipate that funding cuts from OBBBA will impact your organization and the patients you serve?
- What actions are you planning to take to reduce costs or increase revenue to maintain your margins?
- How are your strategic priorities for the year shifting as the policy/regulatory landscape evolves?
- Help hospitals prepare for a new influx of ED patients. Emergency departments (EDs) may begin to see more patients than they have space for. This influx may include newly uninsured patients and patients who previously sought care from facilities that have closed. (Some hospitals are already experiencing the latter.) Many EDs are also seeing an increase in emergent behavioral health patients, which the average ED may not be optimally equipped to handle. You may be able to help find ways to better accommodate this influx of patients by designing or retrofitting EDs or urgent care centers to account for projected changes in volume.
- Help health systems find flexible financing options. As budgets shrink and facilities costs go up, hospitals and health systems are deciding whether growth strategies like new medical buildings will bring enough ROI to support long-term growth — in addition to which repairs and upgrades they must do now and which they can do later. Flexible financing options, such as extended repayment timelines for construction loans, can help them offset the increasing (and in some cases, unpredictable) cost of building materials and labor.
- Find creative ways to reduce facility costs, such as by converting to green energy. Some health systems have significantly reduced costs by implementing systems that use less energy. Working with energy efficiency planners can reduce facility energy use, in some cases, by 25% to 50% over a short time.
Questions to ask your health system partners
- What role do facilities play in your 5- to 10-year strategic goals, and how do you expect anticipated budget pressures to affect your facilities-related plans?
- How efficient is your current ED patient flow, and what kinds of volume changes do you expect? How equipped are your EDs to handle incoming patient volumes, including behavioral health patients?
- How have your energy costs changed in the past five years, and what efforts do you have underway, if any, to reduce them?
- Demonstrate how digital tools can improve operational efficiency and a quick ROI. As health systems reallocate resources, they will review project investments more carefully, often with more restrictive processes or requirements before sign-off. Being able to show that a digital health product can help health systems either reduce administrative costs or increase revenue — and that those impacts will result in short-term ROI — may help you expedite approval. For example, a data analysis tool that predicts bed turnover and length of stay may help health systems find bottlenecks and improve patient flow through the hospital, which may improve outcomes and reduce costs.
- Make sure health systems with existing contracts know how to use digital tools to their full potential. Proactively reaching out to health systems to make sure they are maximizing the value of digital health solutions can help them improve operational efficiency. This outreach could further cement your organization as a valuable partner, particularly if you identify additional potential benefits or features that they can take advantage of.
Questions to ask your health system partners
- What operational challenges are currently impacting your efficiency the most?
- What role does digital health play in your organization now, and how do you expect that to change due to budget and other pressures?
- What kind of support would be most valuable to your team after implementation?
- Stay the course — but intensify your efforts to be an excellent partner to health systems. As health systems face increasing financial pressure, labor spending will come under increased scrutiny. Staffing partners must deliver value to health systems through tailored, high-quality services. Health systems often view contracted labor as a last resort, so additional attention may be required to shift the perception toward long-term partnerships. For example, some staffing firms position themselves as strategic partners by using predictive analysis to help health systems align staffing to patient care demands.
- Showcase the unexpected ways workforce support can boost efficiency. Health systems may not always realize the benefits of contract labor beyond filling a vacant position. For example, while the ROI of staffing providers is often easier to demonstrate than for nurses, nurses generate revenue in indirect ways. A well-staffed nursing department keeps beds open, facilitates efficient patient flow, and in the longer term, may reduce burnout and turnover.
- Flip the narrative to find opportunities to meet health system needs. Current trends indicate that urban health systems are trending toward growth and rural health systems are struggling — but that isn’t always the case. While the impacts of OBBBA will affect health systems regardless of location, some systems are still growing faster than they can find staffing. Identify those systems and tailor your value proposition to what they need.
Questions to ask your health system partners
- What are your top workforce challenges, and how would an ideal partner help you address those challenges?
- What role do staffing services play in your strategic goals, and how do you expect anticipated budget pressures to affect those plans?
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