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Becker’s Healthcare Podcast
Healthcare Outlook for 2026: Policy, Consolidation, and Cautious Optimism
00:09:28
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- [00:01]
A
This is Scott Becker with the Becker's Healthcare Podcast. We're thrilled today to be joined by long term leader and editor in chief Laura Dearda. Laura joins us regularly to talk to us about issues that she's watching in health care. Laura, let me tee it up and ask you to take it away. What are the couple of the key issues that you're watching and stories that you're watching currently in health care as we head into the last couple weeks of 2025?
- [00:27]
B
Absolutely. Well, thank you so much, Scott. And what a year it's been in 2025. There's been so much that happened in the healthcare space and really seeing a lot of different trends, whether it's looking at technology and the acceleration of artificial intelligence, looking at how the workforce has developed as a result of that, as well as other key factors and pressures within the environment. And then two thinking about all the policy changes. There's a lot coming up in 2026 and 2027 that executives are really keeping an eye out for, whether it' about cms, Medicaid, other healthcare funding issues. And then two, thinking about consolidation and just any other policies, tariffs and more that could make an impact. So, you know, in that we've been trying to look at how different organizations are thinking about next year and ask leaders how they're planning for the next year given all the uncertainties in the field and really, you know, being up against a lot. So we actually had a report recently from Fitch Ratings that might have been a little bit rosier than usual given some of the challenges. But Fitch issued a neutral outlook for the US healthcare provider sector in 2026, really pointing to stable credit trends, modest revenue growth and potential margin pressure from some of those rising labor costs and policy shifts. As we talked about, the rating really cited issuer resilience and sector stability. Most credit ratings are expected to remain balanced for the next 12 months. Hospital and systems now of course, that could vary based on region, where the hospital is located, its size, et cetera. But overall, you know, many organizations, while not necessarily in the growth mode they would like to be, still are likely going to be in a decent position for the next year or so. Fitch expects revenue to grow modestly, projecting about mid single digit revenue growth in 2026, driven by low single digit increases in volumes as well as low to mid single digit mix adjusted reimbursement. G According to their report, the merger and acquisition activity is also expected to be on the rise as consolidation continues in the healthcare space. I think there's been a lot of folks who have taken the last six months or so to see what would happen with some of the policy and legislation updates. There's a lot in the beginning of the year that leaders were facing. And so to think about how, you know, what that means for them, see ground, settle a little bit and figure out what their plan is going to be for the next 12 months, many of them are starting to of think through, hey, maybe it's time to either start adding health systems again, doing a little bit more buying, or on the flip side, you know, taking on a partner that could help smaller or regional organizations really grow in the way they want to in the future. So we expect to see a bit more of that, the consolidation continuing. We also see that Medicaid changes may increase the uninsured population. The 2025 tax cut and Jobs act will tighten Medicai eligibility, intensify annual redeterminations in the next year. So that will likely reduce Medicaid enrollment. So Fitch expects this to push people into more of the uninsured population and affect hospital payer mix, ultimately placing more pressure on overall margins as we've seen. You know, executives have this top of mind that they're planning for next year as well as additional cuts that would happen in 2027. And already thinking through how they can add additional revenue streams, looking ways they can boost philanthropy efforts, figuring out how they can become more efficient, although there's only so much you can squeeze out of hospital and health system enterprises. So you know, really thinking through how they can put themselves in the best position with this next 12 months to absorb any additional hits that might be coming or an upswing in that uninsured population. And then finally the policy shifts that we've seen recently from CMS thinking about the 2026 outpatient Perspect payment system rule, cut reimbursement for drug administration for some of the off campus hospital outpatient departments as well as you know, really had more of a balance for some of those reimbursement to hospital outpatient departments versus ASCs versus what's inpatient. And so we really see this pushing more patients into the ASC setting and more hospitals and systems trying to strengthen their ASC strategies sooner rather than later, whether that's through partnerships, developing their own own surgery centers or a mix of those things to make sure they're getting their patients into the right place and still capturing some of those procedures as they come through. So those are some of the big things that we're seeing for the next 12 months or so. And Really a lot happening within the healthcare space, but definitely cautious optimism that there is going to be a little bit more stability in the next year than some folks perhaps felt in 2025.
- [05:34]
A
Laura, when you hear the rating agencies be a little bit more positive about next year, what is the tone you're actually hearing from health systems and health system executives? Are they feeling that as well or what's the sense that you get from talking to, you know, systems and leaders?
- [05:52]
B
Absolutely. So the sense I get from talking to systems and leaders is that really the next 12 months are going to be filled with some tough decisions that they're going to have to make in looking ahead towards the future. And so I think there is a little bit more strain or a little bit more hesitancy to really think about the positive because there are so many challenges. I think many systems are facing some big decisions, whether it looks at playoffs or workforce reductions or trying to figure out how they're going to manage all of these shifting priorities in bringing folks into the technological and digital age. I think it's no easy task. And really many systems have seen additional pressures coming in on the financial side this year. And so I do think there is, it's been more challenging to be optimistic about next year. I think there is still a lot of stress around how they're going to make the balance sheets fit. But ultimately, you know, from many of the, especially CEOs and CFOs, when I talk to them, they're very clear eyed about what they're going to need to do. And so I think they are have been hard at work in getting the strategy and messaging down and then really, you know, pushing past some of those tough decisions to actually come out the other end and seeing healthcare becoming more accessible, becoming more, you know, delivering better quality care, being able to tackle some of the big community based issues that they've wanted to do. I think they see a pathway to it. But there are certainly challenges ahead before they get to that spot. And so it's definitely mixed, but there is hopeful optimism because we do have more possibilities and potential. More people thinking about mental health health and behavioral health, more organizations stepping up to support hospitals and systems and especially academic and research institutions in some ways. But it's going to be very different and very challenging to get to that new and transformative space in healthcare. So I think on the ground a lot of still stress and heartache over that. But in the end, I think the leaders that I've been speaking to still do have positive outlook on what healthcare could and should be for their communities and are very much committed to serving their patient population and figuring out how they can make this work. I think many of them look at the challenge as an opportunity to do things better, but very, very clear eyed on some of the tough decisions they're going to have to make in the next 12 months.
- [08:31]
A
Does seem like we hear more of a tone of cautious to cautiously optimistic versus pessimistic, which I think at some points during the year or early in the year it almost felt more pessimistic. And so hopefully it continues to move just a little bit. That meter of confidence continues to move a little bit in the right direction.
- [08:51]
B
Absolutely. Agreed.
- [08:53]
A
Laura, I want to thank you as always for joining us on the Beckers Healthcare podcast for people that don't know or dared. She's been with Becker's Healthcare for more than a decade and just an absolutely remarkable leader. Just the very best of the best. Laura, thank you so much for joining us today at Becker south on the Becker Self Care podcast and more importantly, for your overall contribution to everything that Beckers Healthcare does.
- [09:16]
B
Oh, thank you so much Scott. I appreciate it. It's been an amazing decade plus and just, you know, really excited to see where things are headed.
- [09:23]
A
Thank you very, very much.