Hospital economics in transition: building financially strong systems

Managing hospital finances in 2025 has been a bit like walking a tightrope. Each step demands balance, foresight, and the agility to adjust to new and unpredictable forces.

Escalating reimbursement pressures, rising labor and supply costs, and an evolving regulatory landscape are converging to create a climate of heightened uncertainty for healthcare organizations. Compounding these financial and regulatory pressures are cybersecurity threats, the rapid adoption of artificial intelligence (AI) and digital solutions, and the unpredictable impact of shifting state and federal policies.

Against this backdrop of interconnected challenges, the need for financial resilience has never been greater. This article explores how some hospital leaders are leveraging innovative financing strategies and operational improvements to not only maintain their balance amid today’s uncertainties but also position their organizations for future growth.

Addressing the impact of OBBBA on healthcare finance

Although its most significant provisions won’t fully take effect until 2026 and 2027, the “One Big Beautiful Bill Act” (OBBBA) is already reshaping strategic conversations in CFO offices at hospitals across the country.

“The truth is, no one has a crystal ball on how this will unfold,” says Joe Kight, head of healthcare for the Institutional Client Group at U.S. Bank, who works with leaders across the healthcare ecosystem. “The variability is enormous, and that’s why rigorous scenario planning is essential. You need to stress-test your assumptions: What happens if charity care spikes? How do you absorb that without jeopardizing your system’s stability? These are the kinds of questions that demand answers now.”

Those scenarios highlight a critical truth: Resilience in hospital finance requires flexibility — and financial flexibility starts with liquidity. With optimized liquidity, the hospital system has more room to maneuver, whether that means absorbing a surge in uncompensated care, funding essential initiatives or adapting to 50 different state-level interpretations of new legislation.

“In times of great uncertainty, you need as much optionality as possible,” Kight explains. “That means revisiting your capital deployment strategy: Are your lines of credit optimized? Do your covenants give you enough headroom to maneuver? Right now, you’re stepping into uncharted territory. States haven’t weighed in yet, and we could be looking at 50 different interpretations with 50 different outcomes. Flexibility is your lifeline.”

Resilience also comes from operational efficiency — tightening processes and accelerating cash flow wherever possible. Systems that can shorten billing cycles, reduce administrative friction and improve payment speed will be better positioned to maintain stability and invest in growth.

As Kight notes, speed and flexibility in collections are critical: “You want to make sure your collections are handled as fast as they possibly can be. You want to make sure you create enough optionality for your patients that you get paid in the way they want to pay you, and you do it in as expeditious a fashion as you possibly can.” For hospital finance leaders, the message is clear: Even before the OBBBA takes full effect, now is the time to model a range of scenarios, strengthen liquidity and ensure your organization’s capital structure prioritizes flexibility.

Capital structure for maximum flexibility

Capital structure is where resilience can become real. In an environment where provider margins are razor-thin, flexibility isn’t a luxury; it’s a necessity. Many leaders acknowledge the system feels broken and may eventually force change, but waiting for that moment is not a strategy. Building resilience is.

Large health systems understand this well. They spend significant time analyzing debt maturities, monitoring interest rate trends and managing their credit ratings to secure best-in-class pricing while preserving maximum flexibility. The goal is optionality — positioning themselves to act when opportunities arise rather than being locked into a single course.

“Think of it like personal financial planning. You don’t wait for a crisis to build a safety net,” says Kight, who works with many large systems. “The goal is to maintain flexibility so you can respond to whatever comes your way. In healthcare finance, that means structuring your capital so you have choices, not constraints.”

For smaller organizations grappling with economic trends in healthcare, the principle is the same: Discipline matters. Too often, capital structure only gets attention when a major project or refinancing looms. “Instead, make it part of your regular cadence,” he says. “Schedule quarterly check-ins with your banking partners to review the lending environment, appetite for deals and current tenors.”

These conversations help ensure your capital structure isn’t just reactive but strategic — ready to support resilience in an unpredictable landscape.

Capital structure review checklist

• Assess debt maturities: Identify upcoming obligations and evaluate refinancing opportunities.
• Monitor interest rate trends: Understand how rate movements could impact borrowing costs.
• Review covenant compliance: Ensure headroom exists for operational flexibility.
• Evaluate credit ratings: Confirm positioning for favorable pricing and access to capital.
• Discuss lending environment: Ask your banking partner about appetite for deals and current market conditions.
• Explore tenors and structures: Understand what terms are being offered and how they align with your strategy.
• Update liquidity strategy: Confirm lines of credit and contingency buffers are adequate for stress scenarios.

Building resilience with working capital

If liquidity creates flexibility, working capital creates opportunity. Improving revenue cycle management is one of the most powerful ways healthcare systems can strengthen resilience — because every day shaved off receivables translates into more cash on hand and more room to maneuver.

Days-cash-on-hand is a critical metric for most providers, yet it varies widely. Some systems operate with 30 days, others with 400. The right number depends on your organization’s risk profile, but if you’re light on cash, the question becomes, what steps are you taking to drive that number higher?

Kight frames it this way: “From a bank perspective, we can help accelerate receivables, delay payables and make sure you’re maximizing yield on excess liquidity. Increasing efficiency through revenue cycle management is key.”

Historically, these processes have been treated as back-office plumbing. Today, they’re a strategic lever for protecting margins and creating optionality.

Digital transformation amplifies this opportunity. As systems migrate to platforms like Epic, they can streamline payment workflows, reduce paper checks and adopt consumer-friendly solutions such as the U.S. Bank MedEpay™ patient payment portal to improve the patient experience and accelerate collections.

While most healthcare organizations are actively exploring generative AI to boost operational efficiency, it’s important to recognize that digital payment technologies are already harnessing AI-driven automation to deliver tangible results. These solutions not only streamline financial workflows but also enable smarter, faster decision-making — bringing the promise of AI directly into the heart of revenue cycle management.

For organizations with a large cash buffer, discipline matters too — deploying excess liquidity thoughtfully and reviewing strategies regularly ensures that cash works as hard as possible.

Modernizing accounts payable for even greater resilience

With working capital strategies in place, the next lever for building financial resilience is modernizing accounts payable (AP). As hospitals continue to navigate volatility, the AP function is evolving from a back-office necessity to a strategic asset.

“A strong payment strategy isn't just about cutting checks faster. It's about automating AP, moving away from paper and using payments to create value,” Kight says.

Automation in AP consolidates data, generates rebates, strengthens supplier relationships and frees teams for higher-value work. Most importantly, it provides financial leaders with real-time visibility, enabling smarter, faster decisions about cash flow, expenses and emerging trends. “It's about giving the CFOs, the treasurers and all the revenue cycle management folks real-time visibility so they can make smarter calls,” Kight explains.

For example, one regional health system recently automated its AP workflows, replacing manual invoice processing with a digital platform. The result: Payment cycle times dropped by 40%, supplier discounts increased and finance staff were able to shift focus from routine tasks to strategic analysis, directly supporting the organization’s resilience goals.

Building resilience for the future

In an era defined by uncertainty, hospitals that proactively strengthen their financial foundations will be best positioned to serve their communities — no matter what challenges arise. The strategies outlined here — enhancing liquidity, optimizing capital structure, improving working capital and modernizing accounts payable — are not just defensive measures. They are the building blocks of a more agile, resilient organization, capable of adapting to regulatory shifts, economic pressures and technological change.

Ultimately, financial resilience is not a destination but an ongoing process. By embedding flexibility, discipline and innovation into every aspect of financial management, hospital finance leaders can ensure their organizations remain steady on the tightrope — balancing today’s demands while preparing for tomorrow’s opportunities.

No matter where you are on your journey to strengthen financial resilience, we can help. Our industry experts partner with healthcare organizations to navigate complexity, optimize processes and implement strategies that drive efficiency and growth. Request a call to learn how we can help you achieve your business goals and deliver a better patient experience.