From managing non-labor expenses to strengthening the workforce, expanding access and navigating payer reimbursement, health systems shared the key challenges shaping their focus this year—and their planning for the year ahead.
Non-labor expense increases, alongside uncertainty related to tariffs, have most respondents (83%) taking steps to quantify the impact of tariffs—and, indeed, many of the hospitals we interviewed shared they had set up tariff workgroups to manage these increases. Despite these tariffs, however, almost 60% of respondents report non-labor expense increases between 6% to 10% over the past year—similar to the increases noted in our 2023 report.
Workforce strategies remain crucial for health systems, with at least 70% of organizations pursuing widespread efforts to optimize staffing. More than half of respondents said they were pursuing outsourcing alternatives in food and nutrition, revenue cycle, IT and environmental services. In areas where the competition for talent is more intense (particularly clinical workforce), 83% are raising salaries and 81% are offering signing bonuses—among other financial incentives.
Access and capacity continue to be major challenges for health systems: 91% of respondents said they couldn’t accommodate patients in a timely manner. Of those, 42% say patients wait too long. Additionally, 77% say emergency department (ED) holds continue to be the most significant capacity constraint, followed by delays due to insurance referrals and approvals (57%).
Payer reimbursement—especially its impact on Medicaid—emerged as the most significant challenge raised in our interviews. Although many organizations are starting to see signs of stabilization, payer policies and the legislative implications of the One Big Beautiful Bill remain top concerns heading into the next year. To navigate what lies ahead, health systems will need to strengthen their approach to managing claims denials. At the hospital level, respondents identified front-end breakdowns—such as authorization, eligibility and benefits verification—as the leading contributors to denials (26%), followed by delays in payer response times (19%) and limited denial tracking and root-cause analysis (15%). At the physician level, incomplete or missing documentation leads the list (26%), with prior authorization gaps (15%) and issues involving bundled or separately billed services (15%) also contributing.
Taken collectively, these pressures signal a critical moment for health systems to strengthen their operational footing and position themselves for long-term resilience.
