At recent Vizient CEO Networks meetings, discussions focused on how structural pressure, chronic disease and AI are converging—and why executive alignment will determine what comes next.
Quick take
- The current healthcare environment is not cyclical—it is structural. Financial fragility, demographic acceleration and policy volatility are converging.
- Revenue ecosystems are under sustained pressure. Leaders must proactively strengthen margins, manage payer mix and align boards before crisis forces reaction.
- Access challenges are being driven by chronic disease. Redesigning care models—not just scheduling—is essential.
- Physician enterprise sustainability can no longer be deferred. Clear effort alignment and service line accountability are critical.
- AI offers leverage—but only with disciplined ROI and governance.
- Structural integration creates the possibility of systemness; cultural integration ultimately governs whether that potential is realized.
- Leadership alignment—skill, will and staying power—will determine outcomes.
Just about every year in healthcare, it feels like the sky is falling.
Reimbursement cuts. Labor shortages. Regulatory shifts. Inflation. Technology disruption. Public dissatisfaction. The headlines change, but the pressure rarely does. For decades, leaders in this industry have developed a kind of muscle memory for crisis—absorbing shock, recalibrating, adapting and moving forward.
But this year feels different.
At recent Vizient CEO Networks meetings, a distinct shift in tone was unmistakable. The conversations were not about navigating a temporary squeeze or riding out a cycle. They were about structural change—the kind that alters the ground beneath your feet.
What emerged from those discussions were five leadership arenas that now define the moment: intensifying pressure on the healthcare revenue ecosystem; the need to redesign access around a chronically ill, aging population; the sustainability of the physician enterprise; disciplined, ROI-driven AI adoption; and the imperative of true systemness across expanding, integrated organizations. These are not isolated challenges—they are interconnected leadership tests. Decisions made in one arena reverberate across the others, compounding either resilience or risk.
So, the question naturally emerges:
Is the sky really falling this time?
The answer, perhaps surprisingly, is not economic, political or technological.
A revenue ecosystem like no other
Ken Kaufman, managing director and founder of Kaufman Hall, a Vizient company, framed the issue in stark terms: hospitals operate within a revenue ecosystem unlike any other industry in America.
Unlike a consumer goods company that can set price, manage volume and forecast demand with relative clarity, hospitals assemble revenue from a precarious mosaic of Medicare, Medicaid, commercial insurance, ACA dynamics, research funding and local market variation—each piece moving independently and influenced by political and regulatory decisions often far removed from clinical reality.
For decades, leaders have made this ecosystem work. It was never elegant, but it was durable.
That durability is now under strain.
Medicaid enrollment reductions are looming. ACA subsidies are under threat. Site-neutral payment pressure persists. Medicare rates continue to lag expense growth. Meanwhile, commercial payers—the last meaningful cross-subsidizer—are tightening contracts in response to their own margin compression.
Nearly half of U.S. hospitals have recently operated at a loss, margins that once supported reinvestment now barely sustain operations, and supply and pharmaceutical costs are accelerating faster than revenue.
This is not simple turbulence, it’s systemic stress.
And yet Kaufman’s central warning was not about collapse: it was about leadership capability. Because when the revenue ecosystem shifts, the differentiator is not the ecosystem itself. It’s how decisively and intelligently organizations respond to it.
Ken Kaufman discusses the toughest lessons today’s healthcare leaders can learn from an unlikely source.
What leaders should consider now
Kaufman urged CEOs to act before crisis forces reaction, outlining several immediate leadership disciplines:
- Establish dedicated operational excellence task forces that focus not on one-time fixes, but on continuous margin improvement—moving from break-even to 2%, then from 2% to 4%, deliberately and relentlessly.
- Create a focused payer mix strategy group to monitor and actively manage deterioration in payer mix, recognizing federal and commercial shifts are structural, not temporary.
- Align boards and executives now on cost-control philosophy—especially around potential workforce reductions—before crisis forces reactionary decisions.
- Engage in disciplined partnership and capital strategy, recognizing that scale alone is no longer a sufficient growth strategy, and that targeted divestiture or partnership may be required.
- Quantify risk tolerance explicitly before innovation investments, calibrating appetite for risk based on cash reserves and operating margin strength.
As margins compress and payer mix deteriorates, financial pressure does not remain confined to the balance sheet. It migrates directly into operations—most visibly in access, where strained resources and rising demand collide.
The access problem that’s been incorrectly framed
If the financial picture is sobering, the operational reality is no less daunting.
A recent Vizient Research Institute study—presented by Erika Johnson, vice president, strategic research—reframed the access conversation in a way that many leaders found both clarifying and unsettling. Access is not primarily about appointment slots, extended hours or telehealth optimization. Those are tactics.
The underlying driver is chronic disease.
More than 80% of inpatient admissions involve patients with at least one chronic condition. Patients with multiple chronic conditions consume exponentially more inpatient days, ER visits and specialist appointments than their healthier counterparts.
And they are frustrated.
Half report difficulty accessing appointments. Many delay care. Some leave systems entirely. A significant minority now prefers the emergency department simply because it is the only place they know they can be seen.
That is not just an access issue, Johnson said. It’s a trust issue.
Health systems are optimized for episodic, specialty-driven care, but the demand curve has shifted toward longitudinal, coordinated chronic disease management. The architecture no longer matches the burden.
The systems making progress are not tweaking scheduling templates. They are redesigning care models and coordinating specialists around the patient rather than bouncing the patient between silos. They are embedding care-at-home capabilities and acknowledging caregiver burden as part of the clinical equation.
They are thinking systemically.
That shift requires leadership courage. It requires board alignment. It requires a willingness to reallocate resources in ways that may not produce immediate margin lift but protect long-term viability.
And it cannot be delegated.
Explore our latest System of CARE Scorecard, which provides important benchmarks for metrics across the care continuum and highlights key trends in throughput, access, quality performance and cost efficiency.
- Redesign care models around comprehensive, multispecialty chronic care coordination, recognizing that patients with multiple chronic conditions are driving disproportionate utilization and require integrated specialty access rather than siloed appointments. It’s also important to invest in community-based and remote monitoring programs that reduce avoidable admissions and protect scarce inpatient capacity.
- Drive enterprise-wide adoption of age-friendly care. Align clinical, operational and care delivery models across all sites to create a cohesive, system-level approach that addresses the needs of older adults beyond senior clinic models.
- Implement digital chronic disease management programs (e.g., remote hypertension, diabetes and chronic kidney disease monitoring integrated into the EMR) to improve outcomes while preserving in-person appointment capacity.
- Expand structured e-consult models to allow primary care physicians to obtain specialist input through chart review. This increases access without adding full appointment burden.
- Establish formal access escalation pathways so cases that exceed acceptable wait thresholds are elevated to departmental leadership for intervention.
Since chronic care redesign hinges on how physician time is structured, measured, and supported, access strategy and physician enterprise sustainability cannot be separated. Capacity is not only a scheduling problem—it’s an alignment problem.
The quiet financial leak: physician time and alignment
Kaufman underscored that physician enterprise sustainability can no longer be deferred. Complementing that discussion, the Academic Time Equation session presented by Kaufman Hall Managing Director Matthew Bates highlighted how even minor shifts in faculty effort assumptions now materially affect system margin, access capacity and capital deployment.
Faculty effort allocation across clinical care, research and teaching has long been governed with rigor inside academic medical centers. What has shifted—particularly as AMCs become part of large, integrated health systems—is the financial scale and enterprise impact of those allocations.
The result is not a lack of management, but an escalation in complexity and consequence.
Small adjustments in clinical FTE assumptions cascade into large changes in productivity benchmarks, compensation models and downstream revenue. Misalignment between time allocation, compensation, and financial reality erodes both fairness and sustainability.
This is not merely a spreadsheet exercise. It’s a governance, transparency and increasingly, a workforce retention issue. When financial stress intensifies, unclear expectations become flashpoints.
Clarity now prevents conflicts later.
Check out the latest Kaufman Hall Physician Flash Report, which features industry trends from the same data physician groups use to track their finances and operations.
What leaders should consider now
- Conduct service-line-by-service-line assessments of medical staff skill and talent, upgrading strategically during natural turnover cycles.
- Reevaluate physician enterprise sustainability, particularly where year-over-year cost growth outpaces reimbursement, and consider alternatives to traditional compensation structures when necessary.
- Define clear clinical effort expectations to align FTE allocation, compensation and productivity transparently.
- Reassess referral-dependent subsidy models in light of shifting payer mix and narrowing margins.
- Deploy short-term, structured oversight (“manual brute force” interventions) in underperforming areas before building longer-term system solutions.
In the coming years, physician alignment and AI strategy will converge. As automation reshapes documentation, scheduling and elements of clinical review, assumptions about physician time, productivity and compensation must evolve alongside it. Technology does not eliminate alignment challenges—it magnifies them.
AI: a tool, not a savior
The meetings made clear that AI is no longer theoretical, but it’s currently far from transformative at scale.
Administrative automation, ambient documentation and revenue cycle optimization are producing measurable returns. But governance structures remain immature, ROI tracking is inconsistent and scaling beyond pilots remains elusive.
The lesson is straightforward: technology does not create discipline—discipline makes technology useful. The organizations that treat AI as a cultural capability instead of a shiny new tool are the ones most likely to extract durable value.
AI will not solve structural pressure on its own, but it will amplify disciplined leadership.
Learn practical steps to build maturity across every stage of the AI journey in our blog series From Pilot to Scale.
What leaders should consider now
- Set explicit ROI targets before AI deployment, and tie measurable financial or operational outcomes to each initiative.
- Prioritize administrative automation first—especially in revenue cycle management and documentation workflows—where returns are most demonstrable.
- Adopt a structured framework (signal detection → root cause analysis → intervention → accountability → impact measurement) to ensure sustained performance improvement.
- Establish formal AI governance structures that align strategy, culture, data readiness and scaling decisions.
- Connect AI initiatives to workforce strategy by targeting repetitive, low-value tasks for automation while redeploying clinical talent to higher-value roles.
When revenue fragility, access redesign, physician alignment and AI governance converge, the test ultimately becomes whether the organization can operate as a coherent system rather than a collection of assets.
Systemness under pressure
Growth, affiliation and integration continue across markets, but one theme surfaced repeatedly: structure is easy. Culture is not.
“Systemness” is not achieved through logos or org charts. It is revealed in how decisions are made when trade-offs become painful. Experiences relayed by CEO attendees illustrated that quality systems can be standardized, but trust must be built locally. Other examples emphasized that preserving local identity while demanding financial accountability during times of expansion requires relentless clarity.
When financial pressure rises, misalignment surfaces quickly.
For instance, Kaufman emphasized that boards must understand value proposition clearly—not just the mission statement, but the real economic and experiential differentiator that drives patient choice. CEOs must ensure that operations, strategy and values remain aligned before crisis forces the conversation.
Misalignment is survivable in good times. It is destabilizing in hard times.
From silos to solutions: Vizient President and CEO Byron Jobe outlines a new mindset for healthcare leadership.
What leaders should consider now
- Implement formal quality playbooks and benchmarking practices to standardize expectations across integrated systems.
- Balance preservation of local identity with system-wide standardization to maintain trust during integration or expansion.
- Kaufman recommended ensuring explicit board-CEO alignment on operational philosophy and cost-containment strategy before financial pressure forces reactive decisions. He also advised:
- Strengthening the nominating and governance process, ensuring board composition supports long-term execution and alignment with executive leadership.
- Conducting structured exercises to clarify and align around the organization’s true value proposition, beyond mission language.
The leadership question
Ultimately, the most powerful moments in the meetings were not tied to data but rather tied to reflection.
During his presentation, Kaufman invoked Bank of America CEO Brian Moynihan’s mantra—Skill. Will. Thrill. Until.—which resonates precisely because it feels personal.
Are we skilled enough?
Are we willing enough?
Do we still love this work?
Will we stay long enough to see it through?
In recent years, early retirements among CEOs and board members have increased. Fatigue is real. Political volatility is exhausting. Public scrutiny is constant.
But institutional resilience depends on continuity of capable leadership. This is not a moment for disengagement: it’s a moment for steadiness, including honest conversations about tradeoffs and who bears the cost when decisions are made.
In these challenging times, remember that leadership is more about projecting purpose than certainty.
See key takeaways from healthcare leaders and cross-industry trailblazers in our 2025 Kaufman Hall Healthcare Leadership Conference report.
What leaders should consider now
- Evaluate board and executive leaders through an “asset vs. liability” lens, Kaufman advised, to address gaps proactively as financial pressure intensifies. He also recommended:
- Assessing whether the current leadership team has the skill, will and staying power required for the next five years of structural challenge.
- Explicitly aligning boards and executive teams on the tradeoffs inherent in major financial and strategic decisions.
- Reinforcing organizational purpose during crisis to ensure difficult decisions remain anchored to mission.
- Proactively addressing leadership continuity and succession risk to prevent destabilizing turnover during critical periods.
So, is the sky falling?
Healthcare spending is projected to approach 20% of GDP.
Margins remain fragile.
Chronic disease demand is accelerating.
Public trust is strained.
The pressures are real.
But collapse is not inevitable.
The industry has faced defining moments before. DRGs. Managed care. Value-based care experiments. Each promised transformation, some delivered partial progress, but none fully resolved the structural tension between cost, quality and access.
This convergence of forces may be different—not because the sky is falling, but because the choices are more consequential.
If leaders treat this as another cyclical squeeze, they will miss the structural opportunity.
If they align boards and management now, redesign care intentionally, manage margins aggressively but thoughtfully, communicate purpose clearly and invest in operational excellence relentlessly, then the sky will not fall.
It will shift.
And those who lead well will not merely survive it—they will define what comes next.
The environment is harder. That much is clear. But the answer still lies where it has always lain.
In your leadership.
Big challenges are ahead. Get ready for a reset.
Explore our companion State of the healthcare industry 2026 reports, which examine how cost pressure, workforce strain, demographic shifts and policy uncertainty are colliding with rapid innovation to reset healthcare’s foundation, along with practical solutions for balancing near-term stability with long-term transformation.
Learn more about Vizient Member Networks— your go-to partner for top performance—uniting 12 C-level networks, structured performance improvement programs and leadership education to help healthcare leaders accelerate their high-performance journeys. And explore the Vizient Governance Academy, which offers expertise, education and tools to enhance board effectiveness and improve organizational performance.
