You don’t have to be looking at the news much to feel looming uncertainty in many industries around the world. For healthcare in the US, many healthcare delivery organizations (HDOs) are experiencing this alongside ongoing staffing shortages, narrow margins, and rising costs. But with the passing of Trump’s “Big, Beautiful Bill” and its $1 trillion in cuts to Medicaid, HDOs only face more difficult choices.
With HDOs already stretched thin, understanding how peers are adapting can offer a lifeline for navigating the months ahead. In our latest report, Navigating Healthcare Policy Changes in 2025, we surveyed 169 decision-makers across hospitals, health systems, and physician practices to understand how they’re responding to today’s challenges.
The findings reveal a sector in motion: contingency planning is widespread, IT budgets are being reimagined, and AI is gaining traction despite uncertainty as to whether federal policy will help or hurt adoption. Below, explore several key data points from the report to unpack what these shifts mean for the future of healthcare delivery.
Points to Know
- 86% of HDOs already have contingency plans in place, showing that many are acting decisively in response to new policies and uncertainty rather than waiting for stability.
- Despite financial pressure, many organizations are maintaining or increasing IT spending, especially in areas like AI and cybersecurity that promise long-term resilience and operational efficiency.
- Of the HDOs planning to increase spend, nearly 40% are turning to AI to ease staffing burdens and administrative overload, though many remain stuck in pilot mode due to funding and standards gaps.
- Value-based care, once a compliance checkbox, is now being embraced as a strategic revenue model, with providers rethinking payer partnerships and exploring more stable reimbursement structures.
- Smaller providers are investing where they can, but limited budgets and staffing are making it harder to act on strategy, potentially widening the gap between them and larger systems.
- You don’t have to do everything, but you do need to do something. Strategic clarity, intentional cuts, and collaborative partnerships are emerging as the most effective ways to move forward in a volatile healthcare landscape.
Read on for a deeper dive into each of these points.
Policy Shifts Drive Hard Choices
Many HDOs are making proactive changes to combat government and regulatory shifts. 86% already have contingency plans in place, while those with no contingencies are mostly smaller hospitals or physician practices. Often, HDOs are planning for multiple approaches. Top strategies include workforce restructuring as the top spot (encompassing plays like proactive layoffs and hiring and salary freezes), and discretionary spending cuts.
Policy changes are also causing one in five HDOs to look more closely at their service lines and operational alignment. For example, one CEO told KLAS, “We have had to scale back services that are not reimbursable, like palliative care. It is very poorly reimbursed.”
Why this matters: These proactive moves show that many HDOs aren’t waiting for policy to stabilize—they’re acting now where they can so they can stay afloat.
IT Budgets Are Being Redrawn, Not Frozen
It is striking that, despite tightening margins, most HDOs are not pushing pause on spending. Rather, they are shifting their budgets to tools that offer steady growth and resilience, with a clear, significant ROI. 75% of HDOs don’t anticipate cuts to IT spend.
When increasing their spend, health systems are investing more heavily in AI and cybersecurity—both are top-of-mind areas that help organizations increase their efficiency and reduce their risk.
Why this matters: This signals a shift in mindset—IT is no longer a cost center but a strategic lever. Organizations that invest wisely now may be better positioned to weather future disruptions.
AI Investment Rises in Response to Staffing Challenges
Speaking of AI, tools like ambient speech and others are emerging as a lifeline for overburdened staff. Nearly 40% of HDOs, when they plan to increase spend, are betting big on AI and other digital tools to reduce the challenges from staffing shortages and increasing administrative burdens.
Unsurprisingly, large acute care organizations and larger payers are most widely adopting AI. AI tools will also need more spend in other areas to support them. As one C-level executive at a large health system outlined, “We anticipate significantly more spending on AI, as well as increasing our spend on data infrastructure, cloud migration, and device strategy.”
The caveat to this growth is that many organizations remain stuck in pilot mode, held captive by a lack of funding and standards. Many are hoping that policies will start to fill the gap.
Why this matters: AI has been a buzzword for some time. The reality is that AI solutions present practical solutions to real-world problems like burnout and administrative overload. But without standards and funding, many HDOs risk falling into a cycle of stalled innovation.
Value-Based Care Is Becoming a Revenue Strategy
For the past few decades, value-based care has been the proverbial turtle in the healthcare race as fee-for-service took precedence. What was once mostly a compliance-driven initiative is now becoming a core revenue strategy.
HDOs are now rethinking payer partnerships and contract performance as part of their strategic contingency planning. As they do so, HDOs are aligning reimbursement models with broader organizational goals more than ever before.
Some key shifts that provider organizations are talking about include:
- Exploring upside risk models or capitated arrangements that offer more revenue stability.
- Looking for payers that allow for more predictable payment structures and better incentives.
- Shifting their payer mix.
Why this matters: This shift shows that value-based care is becoming a real financial strategy. Organizations that align incentives with outcomes may find more stability in an otherwise volatile environment.
Smaller Providers, Bigger Pressures
Smaller HDOs are facing the same cost-cutting and revenue-expansion pressures as their larger counterparts, but they understandably have fewer resources to respond. While many are investing in foundational IT infrastructure, their ability to scale or innovate is directly impacted by tight budgets and limited staff.
A leader at a midsize health system told KLAS, “Our budget is pretty conservative, so we haven’t bought into some things that have annual recurring costs, regardless of what we are using.”
Cuts to grant funding are also hitting academic health systems hard, forcing them to reevaluate staffing and future investments. While larger health systems are more likely to take proactive steps, many physician practices are adopting a wait-and-see approach. This leaves them vulnerable in our rapidly shifting policy landscape.
Why this matters: Smaller HDOs risk falling further behind in this current market. A few of the consequences could include increased consolidation, reduced access to care in more rural areas, and a growing divide between large systems and community-based providers.
What You Can Do
In a time of relentless pressure and policy upheaval, it’s good to remember that doing nothing is still a decision—and often a risky one. Whether you’re a provider, payer, or vendor, the path forward doesn’t mean you have to get everything right in this exact moment. It does mean, however, that you need to do something.
- For providers, this means making smart, intentional cuts and exploring even modest shifts in payer strategy that can unlock meaningful relief. Look for and to collaborative partnerships as your lifelines.
- For payers, transparency and flexibility can make your network stronger. Providers are under strain, and those who offer reimbursement stability and listen beyond compliance will build stronger, more sustainable networks.
- For vendors, your customers need you to be a partner, and not just a product, more than ever. Tech budgets may be tighter, but they’re not disappearing. The organizations that win will be those who position themselves as growth partners.
The healthcare ecosystem is in motion. The question is: will you move with it or be moved by it?
Learn more about other considerations you can make by downloading and reading the free report.
You can also learn more by watching our recent webinar covering the report here.
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