What You Should Know:
– A new survey from the Deloitte Center for Health Solutions reveals a significant shift in priorities among healthcare finance leaders. While previous outlooks predicted a year of growth, 84% of respondents are now concerned about business conditions driven by regulatory changes, macroeconomic uncertainty, and supply chain disruptions. Notably, 73% are expressing concerns about revenue growth and operating profitability, signaling a more cautious yet strategic approach for 2025.
– The Deloitte Center for Health Solutions’ sixth annual US Health Care CFO Survey, conducted in spring 2025, gathered insights from 64 US health care finance leaders, split evenly between health systems and health plans. The survey aimed to identify their top issues and priorities in an increasingly dynamic environment.
External Pressures Reshaping Healthcare Landscape
Healthcare finance leaders are grappling with a complex array of external factors that directly impact their financial performance. Consumer affordability and escalating healthcare costs are major concerns. For instance, some health insurers observed that the Medicare Advantage medical loss ratio in early 2025 reached its highest point in several years, attributed to a significant surge in members’ utilization of healthcare services. This trend is anticipated to continue throughout the year.
Interestingly, internal concerns such as workforce challenges, cost reduction, and cybersecurity, which were once top priorities in previous surveys, appear to have become less urgent. While workforce attrition and shortages have stabilized, issues like clinician burnout and low employee trust in leadership persist. Cost concerns have also waned, with finance leaders now prioritizing growth over aggressive expense cutting, though continuous cost monitoring remains crucial amidst evolving policy and technology. Similarly, cybersecurity has dropped in priority despite the increasing threat landscape. Overlooking these internal issues, however, could create blind spots, particularly as organizations pursue innovation and growth.
Regulatory and Policy Shifts
A key focus of the survey was understanding which upcoming or potential policy changes finance leaders believe will have the most significant impact on their organizations. Tariffs and trade policy shifts emerged as the top concern. Given that prescription drugs, medical equipment, and other medical supplies constitute approximately 20% of the average US hospital’s expenses—and a substantial portion of these are imported—potential new tariffs could escalate hospital costs by 15% or more, disrupting procurement and complicating supplier negotiations.
Conversely, health plan finance leaders identified changes to drug-pricing policies, such as modifications to the Inflation Reduction Act (IRA), as the most impactful regulatory changes. Key IRA provisions for Medicare include capping annual out-of-pocket drug costs at US$2,000, eliminating the coverage gap (“donut hole”), and shifting a greater share of catastrophic drug costs from the government to health plans.
Both health system and health plan finance leaders ranked potential Medicaid reform as the second most impactful regulatory change. For health systems, concerns extend beyond lower reimbursement rates to potential uncompensated care if eligibility reductions or budget caps lead to an increase in uninsured patients.
Driving Impact Through Strategic Levers
Findings from Deloitte’s 2024 US Health Care CFO Survey emphasized the benefits of a holistic approach to margin improvement, focusing collectively on strategic growth, revenue improvement, cost reduction, and efficient capital deployment. This year, while many finance leaders have increased their focus on these “high-impact levers,” most have not yet realized significant impact. In today’s dynamic environment, effectively leveraging these can significantly enhance financial performance.
Driving Growth: M&As, Alliances, and Risk-Based Contracts
Mergers and acquisitions (M&As) have historically been a primary driver of growth. However, only 28% of health system respondents and 25% of health plan respondents reported a strong impact from their M&A efforts. Strategic alliances and partnerships are gaining traction as opportunities for rapid, asset-light growth, with over 90% of respondents focusing on them, though only one-third have seen a strong impact. These collaborations offer access to new markets without full-scale integration challenges.
Nearly all respondents indicated their organizations are engaging in value-based contracts (VBCs) for strategic growth, but most haven’t seen a strong impact, citing payment challenges, data capability gaps, and insufficient change management as hurdles. Recent regulatory changes encouraging greater downside risk in government VBC programs may catalyze health care organizations to enhance their data and advanced tech capabilities, including artificial intelligence, particularly for early diagnosis and prevention.
Strategic Cost Reduction: Service Optimization and Operating Model Rethinking
Many service offerings for health systems and lines of business for health plans can be loss-making. Half of health plans, for instance, reported consistent underwriting losses in at least one major line of business over the past three years due to factors like pricing strategies, high costs, limited scalability, or unexpectedly high utilization. While 31% of health systems and 41% of health plans report strong impact from optimization efforts, organizations should consider divesting or reducing non-beneficial services, while also considering areas important for customer experience, retention, and loyalty.
Optimizing operating models, potentially through outsourcing noncore services, can yield significant cost savings (up to 28%). Despite this, 25% of health plan and 16% of health system finance leaders are not prioritizing outsourcing this year. Among those that are outsourcing, 22% of health systems and 31% of health plans have seen a strong impact, highlighting the need for strategic assessment of risks like quality concerns, workforce engagement, and data security.
Smart Capital Deployment: Data Modernization and Transformative Technologies
To navigate the dynamic environment, health plan and health system respondents are prioritizing investments in technologies that improve data quality, reporting capabilities, and scenario planning. However, only one-third of respondents reported a strong impact from efforts to modernize core technologies like EHRs, ERP systems, and data infrastructure. Data modernization, which enhances data accessibility and security, is fundamental for leveraging both core and transformative technologies and presents a significant opportunity for finance leaders to improve care delivery and streamline operations.
Furthermore, 53% of health systems reported strong impacts from transformative technologies such as generative AI and cloud computing, while 72% of health plans saw only moderate to no impact. As organizations adopt these technologies, especially generative AI, a holistic, institutional approach addressing data, consumer, and workforce considerations is crucial to realize meaningful impact.
