The healthcare landscape today is more complex than ever, with shifting reimbursement models, evolving regulations and an increasing emphasis on patient-centered care. As organizations work to balance financial sustainability with quality improvement, they must also consider changing consumer expectations and the role of technological advancements in care delivery.
Nearly four years after the pandemic, the healthcare industry continues to adapt to a “new normal” that closely resembles pre-pandemic trends—particularly the push toward value-based care. While financial strains, workforce shortages and supply chain disruptions persist, providers are also facing mounting compliance requirements. Despite the increased focus on health equity and value-based models, many healthcare organizations struggle to adopt new initiatives while managing these ongoing pressures.
The Acceleration of Value-Based Care
Momentum toward value-driven healthcare is once again picking up speed, with the Centers for Medicare & Medicaid Services aiming for a major milestone: by 2030, all Medicare fee-for-service beneficiaries and most Medicaid recipients should be engaged with a provider accountable for both care quality and total costs. Federal policies and insurance frameworks—such as Medicare’s evolving payment models, Medicaid 1115 waivers, and Direct Payment Templates—are reinforcing this transition. While shifting to value-based care presents financial and operational challenges upfront, many leaders view it as a long-term solution to alleviate economic strain and improve efficiency.
The Growing Impact of Medicare Advantage & Medicaid Managed Care
As health systems prepare for large-scale value-based initiatives, Medicare Advantage and Medicaid Managed Care Plans are reshaping financial landscapes with new layers of complexity. These managed care models introduce additional financial pressures, subtly transforming revenue flows much like a “frog in boiling water” scenario. As enrollment in Medicare Advantage and managed care plans expands, so does the demand for stronger revenue cycle and IT infrastructure.
According to a 2024 study by the Kaiser Family Foundation, 54% of Medicare beneficiaries are now enrolled in Medicare Advantage plans—up significantly from 31% a decade ago. This rapid growth is forcing healthcare organizations to rethink how they manage claims, pre-authorization requirements, and payer relations.
Financial and Operational Challenges for Providers
With the rise of managed care, providers must navigate increasing pre-authorization requirements, rising denial rates and complex billing processes—all of which put pressure on revenue cycle management. The influx of new payers adds yet another challenge, increasing administrative burdens and raising the risk of revenue leakage.
For organizations emerging from pandemic-related financial constraints, investing in advanced revenue cycle management and IT systems may be difficult. However, without these upgrades, providers risk operational inefficiencies and lost revenue. Those with the ability to enhance denial management strategies, optimize payer relations and strengthen compliance infrastructure will be in a stronger position to succeed in the evolving healthcare landscape.
Strategic Solutions for Managing the Shift
For providers lacking the immediate resources to overhaul revenue cycle operations, alternative strategies can help bridge the gap. Partnerships with third-party experts, resource-sharing agreements with other providers and phased investments in technology can provide cost-effective ways to enhance financial and operational resilience. These efforts are not just quick fixes—they create a competitive advantage by improving revenue capture and streamlining administrative processes.
A Proactive Approach for Healthcare Finance Leaders
To stay ahead of the financial complexities introduced by Medicare Advantage and Medicaid Managed Care, healthcare finance leaders must take a proactive stance. Key performance metrics such as days in receivables, denial rates, authorization timelines and cash flow stability should be closely monitored to gauge the effectiveness of revenue cycle operations.
Developing a long-term strategy for IT modernization, specialized workforce development or third-party partnerships will be essential in minimizing revenue loss and ensuring financial sustainability. By treating these investments as fundamental to their organization’s future, healthcare leaders can navigate the immediate challenges of managed care while laying the groundwork for long-term success in a value-driven healthcare system.
Jonathan Miller
As a Partner with Bonadio’s Strategic Advisory and Consulting division, Jonathan Miller works with clients within the healthcare and human services industries on a variety of advisory engagements. He focuses on providing services such as financial statement analysis, operational improvement strategies, and strategic guidance to executives and boards of directors in these sectors. Jon also lends his expertise to advisory and consulting projects that involve mergers, acquisitions, financial forecasting, strategic planning, and governance guidance.
Aimee Jozic
Aimee is a Partner in the Bonadio Group’s Assurance practice and has been with the firm since 2005. She focuses on the healthcare and higher education industries and specializes in providing auditing services for clients, with a primary focus on tax-exempt organizations. She has experience in various engagements, from financial statements and single audits to cost report certifications and informational tax return preparation.
