The Impact of New Healthcare Policies on Risk Management in Health Systems

Healthcare providers across the U.S. are bracing for significant changes as new policies emerge from Washington, D.C. The evolving landscape is forcing healthcare systems to reassess their financial and operational risk strategies. With proposed Medicaid and Medicare cuts, rising drug costs, and shifts in coverage, the need for proactive risk management has never been greater.

Jeff Ellis and Chris Giuliano, co-founders of 1m, a healthcare risk management platform, have spent years working with major healthcare systems. They see firsthand how healthcare organizations struggle to adapt to these changes.

“There’s a transformative shift underway from reactive to proactive risk management,” says Ellis. “The velocity of change is accelerating, and providers need systems in place to rapidly translate new threats into strategic insights.”

Short-Term Challenges: Financial and Operational Strain

The proposed policy shifts being discussed in Washington have the potential to shake the financial foundation of many healthcare providers. In the next 12 to 24 months, changes such as new Medicaid eligibility requirements could leave as many as 15 million Americans without coverage, leading to a surge in uncompensated care. Simultaneously, alterations to Medicare’s drug price negotiations could result in up to $10 billion in lost savings, increasing pharmaceutical costs for hospitals by as much as $2.5 billion annually.

“The reality is that healthcare organizations are already operating on razor-thin margins,” Giuliano explains. “With revenue and expenses moving in opposite directions, identifying risks early and developing mitigation strategies will be critical.”

Beyond financial concerns, inflationary pressures, labor shortages, and cybersecurity threats add complexity to an already challenging environment.

“Healthcare systems need to respond faster,” says Ellis. “They must integrate internal risk identification systems, align teams, and use benchmarking data to understand how peers react to similar threats.”

Medium-Term Risks: The Consequences of Policy Decisions

In the next three to five years, healthcare systems may face even more significant financial strain. Congress has proposed $880 billion in Medicaid cuts over a decade, with hospitals expected to bear nearly half the costs. Additionally, shifting patients from traditional Medicare to Medicare Advantage plans could reduce patient access, further impacting hospital revenue streams.

“All these changes will force healthcare organizations to rethink their long-term strategies,” says Giuliano. “We may see smaller hospitals, especially those with a high Medicaid patient mix, merging with larger systems to stay afloat. Others will need to adopt AI and automation to optimize operations and cut costs.”

With funding for public health programs also at risk, the ability of hospitals to prepare for and respond to health crises could be significantly hampered.

“We saw during the COVID-19 pandemic how limited risk visibility and a lack of real-time data strained healthcare systems,” Ellis notes. “Now, there’s a growing realization that collective intelligence—sharing risk assessments and mitigation strategies—can help providers respond more effectively.”

The Shift to Proactive Risk Management

Many healthcare systems have traditionally relied on manual methods, such as spreadsheets and email chains, to track and assess risk. This siloed approach has led to inefficiencies and inconsistencies across departments. Giuliano describes the challenge: “There is no common language in risk management. Even within a single health system, different teams use different frameworks, leading to fragmentation.”

Healthcare organizations are adopting new technologies and strategies to modernize risk management to combat these inefficiencies.

“We’re seeing a shift toward risk quantification—putting real dollar values on potential threats,” says Ellis. “By integrating financial risk models, providers can prioritize their response strategies based on data rather than gut instinct.”

One major development in this space is the Risk Intelligence Network, a collaborative initiative spearheaded by Ellis and Giuliano.

“We’re bringing multiple health systems together to assess risks collectively,” Giuliano explains. “By pooling data and insights, we can provide a standardized risk assessment that healthcare organizations can rely on.”

Balancing Risk Mitigation with Patient Care

As healthcare systems navigate these uncertainties, they must balance risk management efforts with their core mission: delivering quality patient care. 

Ellis believes that an effective risk mitigation strategy enables more significant investment in healthcare services. “If a hospital can rapidly detect, assess and quantify the magnitude of something like Medicaid cuts on revenue, they can develop strategies to offset those losses—whether through operational efficiencies, investment in profitable service lines, or other financial adjustments.”

Giuliano adds that making risk management more accessible and cost-effective will be key. “Many healthcare systems can’t afford large enterprise risk teams. Standardizing frameworks and leveraging technology can make risk management cheaper and more efficient for everyone.”

The Future of Healthcare Risk Management

Looking ahead, Ellis and Giuliano believe healthcare organizations must embrace three fundamental changes to improve risk management:

1. Adoption of standardized risk assessment frameworks – According to Giuliano, “we need a common language for risk management.”

2. Integration of data-driven decision-making – “Applying analytics to risk management, just as we do in other areas of healthcare, will transform how we approach challenges,” Ellis says.

3. A collaborative approach to risk intelligence – “By building a national healthcare risk dataset, we can equip providers with better insights and strategies to navigate uncertainty,” Giuliano notes.

The challenges facing healthcare systems are significant, but by rethinking risk management, embracing technology, and fostering collaboration, providers can build resilience in the face of uncertainty.

“The industry is at a turning point,” Ellis concludes. “Those who invest in proactive, data-driven risk strategies will be best positioned to thrive.”

For more information, visit 1mplatform.com.

Image Source: ID 333572265 ©
Titiwoot Weerawong | Dreamstime.com