Healthcare is heading into a turbulent phase. Many leaders have worked through tight budgets or policy shifts before, but the scale now forming is different. More than half of provider revenue comes through federal programs, and the ground under that support is shifting. Nearly a trillion dollars in Medicaid funding is expected to fall away over the next decade. Early indications suggest the cuts may not stop there.
Organizations will need to adjust. Some of that work involves daily operations; some involves how care teams are supported; some involves rethinking financial assumptions that have held for years. The groups that start sorting through these questions now will have an easier time adapting as the year unfolds.
A steep decline in federal support
In 2026, the financial picture sharpens. The One Big Beautiful Bill Act pulls roughly $911 billion from Medicaid over ten years. Federal analysts are also expecting large Medicare reductions beginning in 2027 unless Congress steps in with new legislation. Hospitals, clinics, and senior living operators that lean on these programs for stability will feel the shift quickly.
Hospitals will feel it first. Care that once generated dependable reimbursement will move into the bad-debt column. Rural facilities sit in the most exposed position. Their payer mix is heavily tied to government programs, and many already run on razor-thin margins. Roughly 300 are considered at immediate risk of closure. Congress set aside $50 billion to help rural providers, but that pool of money barely makes a dent in the size of the cuts.
Coverage changes add more pressure. Work requirements for Medicaid will narrow eligibility. ACA subsidies expire at the end of 2025 unless renewed, and premiums could spike without congressional action. That creates straightforward problems for patients and a second layer of complexity for senior living communities that depend on predictable coverage to manage admissions and reimbursement flow.
Reductions in food assistance will widen gaps in basic health needs and push more people toward clinics and hospitals already stretched thin.
Preparing for a year shaped by structural change
Healthcare can produce remarkable results. It also carries inefficiencies that fade into the background when funding is stable. In 2026, those inefficiencies will be harder to ignore. Most organizations will need a clear-eyed review of what they do, how they do it, and what assumptions no longer hold.
Reassessing funding and long-term revenue
Federal programs will remain a major source of support, though not one that can carry all models at current levels. A useful starting point is to map out how much revenue depends on Medicaid and Medicare, then look at what other options exist.
Philanthropy can soften short-term gaps but cannot replace the scale of federal funds. Some organizations are beginning to look at unused corners of their campuses: continuing-education partnerships, community programming, rented space for outside groups. These ideas will not solve the broader funding problem, though they can help create a steadier base.
Rural hospitals are in a more complicated position. Some may need to revisit older governance structures that once allowed access to local tax support.
Reengaging the community
Hospitals, clinics, and senior living providers hold an important place in the communities around them. As budgets tighten, that relationship becomes more important. Some organizations are experimenting with broader roles in community health: nutrition programs, activity groups, social-connection efforts, small initiatives that strengthen trust and show local value. Senior living operators have long used these kinds of programs, and their experience may offer a practical template for others weighing similar approaches.
Rethinking operations
Operational work will take up a significant share of leadership attention. Staffing challenges, rising costs, and administrative requirements are converging. Leaders may need to examine where technology can remove friction or where staffing approaches can change. Some organizations are experimenting with automated documentation tools, regional shared-service models, or selective outsourcing to relieve overloaded teams. The aim is straightforward: protect care delivery and direct limited dollars toward the places where they matter most.
Using outside perspective
Many organizations will bring in outside advisors this year. The policy shifts are large and technical, and an external view can help quantify what the changes mean, outline options, and pressure-test assumptions. Advisors also have a broader vantage point and can share what similar systems are trying, what’s working, and what isn’t.
Leading through uncertainty
Teams are aware of the strain in the system. Clear, steady communication from leadership helps keep people anchored. Transparent conversations about what the organization is facing, and what steps are underway, make large adjustments easier to carry out.
2026 will reshape parts of the healthcare landscape. There is no question the pressures are heavy. There is also room for organizations to rethink how they deliver care, how they support the people they serve, and how they invest limited resources. Choices made over the coming months will influence which organizations emerge from this period with the stability to continue their mission in a very different environment.
Photo: rudall30, Getty Images
Kelly Arduino has over 20 years of experience in working with healthcare and senior living organizations. She is the industry leader of the healthcare practice at Wipfli, which combines the strengths of consultants and CPAs to provide financial and strategic services to clients. Kelly is a former investment banker and is well-versed in financing options and debt structure to assist in the evaluation of project feasibility and capital plan development.
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