In July 2025, the U.S. Congress passed the One Big Beautiful Bill Act (“OBBBA”), a significant piece of legislation comprising hundreds of provisions related to federal tax and spending policies. For hospitals and healthcare professionals, the most noteworthy components of OBBBA are those related to the $850 billion cuts in Medicaid spending. The spending cuts will affect program eligibility and participation, hospital solvency, hospital reimbursements, and more.
While the dust may have settled in the short term and we have a good sense of OBBBA’s theoretical ripple effects, only time will give us a sense of the true long-term implications. In the meantime, many hospital administrators and professionals may feel left in the lurch, unaware of what’s to come.
The good news is, even amid the uncertainty, there’s plenty hospitals can do to position themselves well for whatever may be on the horizon.
A glimpse at the path ahead
First, a primer on what hospital administrators may begin experiencing as the effects of OBBBA take hold.
- Revenue losses due to spending cuts and changes to provider tax caps
- More uncompensated care due to patients’ lost coverage
- Insolvency for hospitals whose margins are already dangerously low
- Patient influxes due to other hospitals’ closures
- Changes to care offerings and staffing due to new patient increases
This is by no means an exhaustive list, and it’s worth emphasizing that there’s much we don’t yet know about what the future will bring.
Preparing for the unknown
Much of what occurs over the next several months and quarters will be beyond hospitals’ control, but what administrators can control is their organizations’ positioning and resiliency to handle whatever comes their way.
Flexibility
First, hospitals need to proactively shore up their flexibility and adaptability. With so much up in the air, hospitals need to be ready for anything; the faster they can react and adapt to OBBBA’s effects, the better they’ll fare.
At a high level, this means conducting an audit of the hospital’s operations, identifying weaknesses or blind spots, and making it a priority to address them. Hospitals may be suddenly asked to take on a new patient population; they may need to implement quick staffing changes or adjustments to care; they may need to find alternate suppliers or partners. While they wait for the tangible OBBBA repercussions to materialize, administrators should consider their hospitals’ biggest sources of inertia—what’s standing in your way from being a nimbler organization? Start there.
Technology
Hospitals should also expand their use of advanced technology. Automation and AI can take on tasks related to scheduling, record-keeping, billing, and other administrative or clerical responsibilities, helping reduce operational expenses and make up for any lost efficiency due to staffing challenges.
Expanding digital health and telemedicine can also make hospitals more efficient while supporting superior patient experiences. Digital marketing tools can help hospitals improve their discoverability online, which directly translates to competitiveness in the market; if other hospitals are forced to close, their patients will likely go online to research their next-best options. Even if patients are more sporadic in seeking care—maybe, for instance, they don’t have a PCP—they’ll need to go somewhere when the time goes. Hospitals can position themselves well to funnel these up-for-grabs patients by building a healthy pipeline for new care acquisition.
Data proficiency
Finally, hospitals should rely on their data to guide any forthcoming tough decisions. Administrators must clearly understand the financial impact of all the procedures in their repertoire across specialties. What will the reimbursement changes affect, and how might that evolve? Hospitals should select specific areas of focus based on capabilities, personnel, anticipated volumes, and financials. The more quantitative leaders can be, the better.
Preparation for preparation’s sake
Ultimately, nobody knows exactly what’s coming down the pike; nobody knows the full extent of OBBBA’s financial impact. Only time will tell. The good news is, adopting these strategies—improving flexibility, embracing technology, and relying on data—will benefit hospitals no matter what’s on the horizon.
As we get clarity on the hospital landscape for 2026 and beyond, leaders can use these strategies to guide next steps, whether that may be attracting new patients, building out existing programs, or simply trying to be as efficient as possible.
Taking action today will help hospitals improve their operational and strategic foundations, laying the groundwork for a more resilient, competitive tomorrow.
Mike White
Mike White is Principal for Alexander Group.
