The healthcare industry is at a pivotal moment. At our recent annual Healthcare Summit, we highlighted three critical areas that stand out for hospitals and health systems in 2026: financial resilience, site-of-care transformation, and navigating tax policy challenges. Here’s how to prepare.
1. Financial shock and capital strategy
Medicaid changes could create tens of millions in revenue shortfalls for some systems. While the impact isn’t immediate, time is limited, and early planning is critical. Begin by modeling the potential impact of these changes across high Medicaid-utilization departments such as emergency, behavioral health, and obstetrics. Understand the best-, base-, and worst-case scenarios to help prepare for what lies ahead.
Cash flow acceleration is another priority for 2026. Hospitals must optimize revenue cycle performance and benchmark against industry standards to ensure liquidity. Investing in revenue cycle optimization services can help your organization untangle complexity and transform processes to reduce denials and improve margins. For a deeper analysis, watch our webinar, “Revenue cycle in focus: Exploring what works in today’s healthcare environment.”
Cost control is equally important, but across-the-board cuts can be detrimental. Instead, focus on efficiency and throughput without compromising care quality. Revisit your capital allocation strategies as well. Tight margins demand disciplined investment decisions that align with long-term goals and patient access.
Finally, affiliations and mergers are also becoming more common as some entities seek partnerships to remain viable. The trend is shifting toward a more collaborative mindset. Joint ventures can unlock new revenue streams, but they require careful planning, mission alignment, and clear exit strategies to avoid future complications.
2. Site-of-care shifts: From inpatient to ambulatory
The move from inpatient to outpatient care is accelerating, driven by patient preferences, cost pressures, and regulatory changes. For example, the phaseout of the inpatient-only list under outpatient prospective payment system rules opens new flexibility for hospitals. This shift has significant financial implications, affecting fixed-cost absorption and reimbursement models. Done strategically, it can reduce expenses and improve margins.
Operational integration is no longer optional — it’s a strategic imperative. The traditional separation between inpatient and ambulatory services creates inefficiencies and gaps in patient experience. Forward-thinking organizations are reimagining care delivery by ensuring seamless transitions across settings, reducing avoidable admissions, and improving outcomes. This means investing in ambulatory sites closer to where patients live and exploring innovative models such as mobile health and home-based care. To move from concept to execution, start by assessing your organization’s position on the value based care continuum and evaluating readiness for expanded ambulatory access. These insights provide a clear roadmap for prioritizing investments and aligning care models with future demands.
3. Tax policy and community benefit: Under the microscope
Tax-exempt hospitals are facing heightened scrutiny with congressional questioning of whether nonprofit status is delivering sufficient community value. Programs like the 340B Drug Pricing Program are under pressure, and compliance with IRS Section 501(r) is a growing audit focus. Make sure your hospital is proactive in addressing these challenges.
Start by quantifying your impact. Calculate the value of tax exemption versus community benefits provided, using Form 990 Schedule H data to tell a compelling story. Perform mock 501(r) audits to help ensure your charity care policies, billing practices, and community health needs assessments meet regulatory standards — before an actual review occurs. Consider hiring external advisors to assist with compliance readiness by helping to identify gaps and strengthen processes, reducing risk of IRS scrutiny. Education is critical: Boards, management, and community leaders should understand the hospital’s contributions beyond tax dollars.
Plan for change. Anticipate potential shifts in 340B eligibility and develop strategies to address mitigate financial risk. Focus on telling your hospital’s story and show the value of your organization’s efforts and impacts in your community. Remember, transparency and proactive compliance aren’t just regulatory requirements — they’re essential for maintaining public trust.
Healthcare at a strategic crossroads
The future of healthcare favors organizations that can adapt with foresight and agility. As you look ahead in 2026, prioritize data-driven planning, align capital investments with long-term goals, and explore partnerships to expand capabilities. Be ready to demonstrate your value to the community through clear reporting and engagement while staying ahead of tax and reimbursement regulations. Your strategic leadership today will set the foundation for resilience tomorrow.
