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From a revenue perspective, hospitals’ investments in outpatient care are reaping dividends, and 2024 as an operating year was largely better than 2023.

On today’s episode of the Gist Healthcare podcast, we hear the second half of host J. Carlisle Larsen’s conversation with Modern Healthcare’s Michael McAuliff about a document making the rounds on Capitol hill that outlines potential federal healthcare spending cuts.

Of the long list of possible federal budget cuts released on January 17, the suggestion to eliminate the tax-exempt status for interest payments on municipal bonds is an item of particular concern. While it is too early to wager on any of the items on the list, the implications of this move for not-for-profit hospitals would be severe.

In the fourth quarter of 2024, the median investment/subsidy per physician was $306,792, an increase of 5% compared to Q4 2023.

In 2024, hospital financial and operational performance stabilized. Outpatient revenue increased, and patient observation days decreased. Though expenses in 2024 rose, they did not outpace inflation on a volume-adjusted basis.

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This week’s graphic illustrates the challenging operating environment many rural hospitals find themselves in.

As hospitals and health systems respond to the challenges and opportunities of a stabilizing but still challenged market environment, their strategic and financial plans will inevitably change.

Despite overall industry improvements for not-for-profit health systems, the divide between stronger and weaker performers continues to increase. Other challenges to the sector include the still-challenged labor market, the continued difficult payer environment and potential policy changes from the new Trump administration.

Michael McAuliff, politics and policy reporter for Modern Healthcare, joins host J. Carlisle Larsen to talk more about what healthcare programs could face spending cuts and reactions from lawmakers on Capitol Hill.

Five key steps health systems should consider implementing to improve their observation management strategies and ensure appropriate reimbursement.