"Proactive not reactive" cost containment strategies are vital for finance executives.
Healthcare costs are rising. From labor costs, to technology investments, to shifting reimbursements models, many components are fueling heightened costs. It's enough to give CFOs whiplash.
In this week's episode of The Winning Edge, sponsored by HealthTrust, finance executives dove into the nuances of cost containment for 2025. Lynn Ansley, Vice President of Revenue Cycle Management at Moffitt Cancer Center, James Dregney, Chief Financial Officer and Vice President of Finance and Operations at Sauk Prairie Healthcare, and Rich Philbrick, SVP, Strategic Accounts and Performance Solutions at HealthTrust, discussed what cost containment means for health systems and how they are strategizing in 2025.
Shifting Into Value Based Care
Reimbursement timelines and collaborating with payers are key challenges, according to the panelists.
Payer-provider disputes have risen 70% in just the last two years, and collectively providers now spend nearly $20 billion annually on claims denials, with half of that wasted on disputes that should have never happened.
One opportunity that comes into play here is value-based care, which is designed to shift the focus from volume to value. But a large component of value-based care is a strategic focus on preventative and primary care.
While shifting the focus toward preventative care is certainly crucial for success in VBC models, it can't all be done at once. Data sharing is a large factor, panelists said, and providers and payers will need to examine more effective ways to transparently share data.
For health systems looking to utilize VBC models for effective cost management, panelists had some advice:
Create a balance in shifting services. Ensure there is continuous balance between inpatient and outpatient settings as more focus is placed on preventive care services and programs.
Ensure thorough data sharing with payers. Hold payers accountable to transparent, accessible data for all services.
Be creative with the available options. Stay curious and vigilant about what resources and opportunities are available when shifting services.
Considering AI Investments
New technologies like AI are also prime candidates for cost containment opportunities. While initial AI investments can be expensive, the long-term pay off is usually worth it for a health system. Not only can AI help with streamlining and automating certain processes, it can identify areas of inefficiency and waste.
Dregney, whose organization consists of a 36-bed acute care hospital, pointed out that not every health system is going to have the resources to carry out its own AI operations.
This is where partnerships come into the picture. For finance executives looking to implement AI but unable to tackle the large costs or technological nuances of implementation, third-party partnerships can be a great resource for creating advanced technology opportunities, especially for smaller organizations.
Tariffs and Supply Chain Woes
Tariffs pose yet another big challenge for providers, and budgeting for these changes may certainly play into cost containment efforts for 2025. Panelists spoke about supply chain disruptions during the COVID-19 pandemic, and said today's fast-paced policy changes are leaving many health executives with a blurry idea of how healthcare costs will be impacted over the next few years.
Having an effective supply chain strategy is critical, said Dregney. Partnering with outside organizations is also a good option for smaller health systems and hospitals. He said it's crucial to do the homework to select the right GPO and ensure the organization is purchasing items on contract .
Ansley discussed how her organization prioritizes the cross-examination of data for its pricey oncology drugs. This is a collaboration between the pharmacy side and the revenue cycle side, she said. It's important to have a strategy that is "proactive not reactive," to price increases, she added.
For providers looking to mitigate these extra costs as much as they can, diversifying supply chains and utilizing domestic suppliers may be helpful. Panelists suggested having an efficient inventory process and utilizing innovative technology for data analytics within the supply chain.
This episode of our Winning Edge series is sponsored by HealthTrust.
In a dynamic healthcare landscape, effective cost containment can help health systems Manage their expenses and improve the bottom line.
Health systems have been navigating rising costs for some time now, and CFOs are at the forefront of this challenge. Healthcare costs have steadily been increasing since 2021, making cost containment a crucial strategy going forward.
From high labor costs, to the advent of artificial intelligence (AI) and shifting reimbursement models like value-based care, CFOs are finding they must be agile in their approach. What’s more, external factors such as tariffs and supply chain disruptions add further pressure on health system budgets.
In this week’s episode of The Winning Edge, sponsored by HealthTrust, we’re diving into the nuances of cost containment for CFOs in 2025. Tune in to hear Lynn Ansley, Vice President of Revenue Cycle Management at Moffitt Cancer Center, James Dregney, Chief Financial Officer and Vice President of Finance and Operations at Sauk Prairie Healthcare, and Rich Philbrick, SVP, Strategic Accounts and Performance Solutions, HealthTrust, discuss what cost containment means for health systems and how they are strategizing in 2025.
Value-Based Care Models
The transition from fee-for-service to value-based care (VBC) is reshaping how providers deliver services and get reimbursed. But often, this model can be a double-edged sword for CFOs. While value-based care aims to reduce unnecessary spending by prioritizing preventive care, it also requires significant investment in infrastructure, data analytics, and care coordination.
To get serious about VBC, CFOs must prioritize investments in electronic health records (EHR) and other technologies that allow for better tracking of patient outcomes. A shift to value-based care may involve financial risk, but it can also result in more sustainable and predictable revenue streams when implemented strategically and effectively.
Factoring AI into the strategy
AI offers a promising avenue for providers to streamline operations and reduce unnecessary expenditures, but with so many AI solutions on the market, CFOs must be careful in choosing the right technology.
Despite the industry hype, health systems should not invest in AI simply for the act of hopping aboard the new technology train. CFOs must consider factors like costs of implementation, training, and continued governance. There’s also the question of how new technology could disrupt workflows and affect staff.
While initial investments in AI technology can be substantial, the long-term savings and efficiency gains often outweigh these costs.
Tariffs
Tariffs pose yet another challenge for providers. The fluctuating costs of medical devices, pharmaceuticals, and personal protective equipment (PPE) due to international trade policies can quickly disrupt budgets. CFOs will need to work with supply chain managers to develop contingency plans, such as diversifying suppliers, leveraging group purchasing organizations (GPOs), and investing in local or domestic suppliers where possible.
Additionally, negotiating long-term contracts with vendors and suppliers can also help to give a little price stability in a volatile market. Leveraging data analytics to track supply usage and optimize inventory management is also a crucial strategy. Budgeting for tariffs may certainly play into cost containment efforts for 2025.
High Labor Costs
In the previous finance episode of The Winning Edge, panelists discussed the best strategies for lowering labor costs as this challenge grows for health systems everywhere.
Labor expenses remain one of the largest healthcare budget items, and with increasing demand for healthcare services due to factors like an aging population, these costs are expected to rise. CFOs will have to consider innovative approaches to workforce management, such as enhancing the use of nurse practitioners and physician assistants to handle routine care, which can free up specialists to focus on higher-acuity cases.
Additionally, technology can also play a role here; implementing flexible staffing models, such as telemedicine, can help alleviate the strain on in-person resources and reduce costs without sacrificing quality.
Join us on Tuesday for a deep dive into the most effective cost containment strategies for healthcare finance executives in 2025.
This episode of our WInning Edge series is sponsored by HealthTrust.
Here's how CFOs can navigate the impact of HHS layoffs.
The Trump administration has proposed downsizing the Health and Human Services Department (HHS), and CFOs need to be prepared for the potential effects to their health system.
Downsizing HHS particularly through the technology department and the Agency for Healthcare Research and Quality (AHRQ), could negatively affect healthcare. The impact could stretch from the technology infrastructure supporting electronic health records (EHRs) and cybersecurity, to the pace and quality of medical research. CFOs will need to adopt proactive strategies to minimize these impacts for their health systems.
Check out this infographic for 3 CFOs Strategies to use if HHS layoffs and the healthcare regulatory space shake-up prevails.
Is AI helping or hurting the payer-provider relationship?
In this episode of HL Shorts we hear from Evan Zaslow, Vice President of Payer Strategies at Moffitt Cancer Center. Zaslow dives into how the technology like AI has impacted payers and providers and how it could potentially impact this relationship in the future.
Curiosity, collaboration, and risk evaluation are key to this CFO’s strategy.
Whitney Bendel took over as CFO of Medical City Denton in August 2024. Now, roughly eight months into her role, she’s sharing what she is learning, working on, and looking out for as the financial overseer of a specialty advanced care center.
Medical City Denton is a 228-bed, acute care hospital with more than 900 employees and 1,100 physicians in Denton, Texas. In addition to being a Level II trauma center, the organization is also a primary stroke center and an accredited chest pain center offering advanced open-heart surgery.
Prior to this role, Bendel served as CFO for Medical City Lewisville, where she contributed to facility-wide enhancements. During her tenure there and at Medical City Dallas prior to that, she helped to build processes that tracked the organization's volume, revenue and financials in support of the campuses' growth agenda.
Collaboration
Collaboration with clinical teams is key for organizational success. For Bendel, this collaboration is vital to making informed financial decisions.
“I stay very close to my clinical leaders. It is important for me to hear what is happening on the front line to ensure we are addressing their needs while staying aligned in our goals,” Bendel says.
“We meet regularly at a senior team, a director and manager level to discuss productivity, staffing, and contract labor management. This allows me to understand how I can support them,” Bendel says.
“We also have a multidisciplinary team of leaders that discusses throughput opportunities and length of stay to ensure we are getting our patients safely in and out of the hospital. The clinical leaders are also imperative when we increase capacity or add new service lines. We set up a task force to talk through many things including resources, equipment and supplies.
Challenges and Hurdles
One constant to Denton’s specialty care challenges is comprehensive coverage.
“I believe the organization as a whole is concerned about the premium tax credits set to expire in 2025 that will make health insurance more costly for those that have been able to access the marketplace plans and to be able to provide care for themselves and their family,” Bendel says. “That is the number one focus for HCA Healthcare and Medical City.”
As the country sees more medical debt, this will be a prominent issue for many health systems.
A recent report found that roughly 12% of U.S. adults (about 31 million) say they collectively borrowed an estimated $74 billion last year to pay for healthcare, either for themselves or a family member. Additionally, a majority of Americans, about 58%, say they are concerned they would experience medical debt if faced with any major health event.
Taking the Risk
Bendel shares that curiosity remains a vital component of her strategy as a finance leader.
“A mentor of mine told me to stay curious. When you are curious, you ask questions, and you find creative ways to solve problems. Or your curiosity could cause someone to think of a situation differently,” Bendel says. “So being curious is really important to understand the issues and think creatively at solutions."
Being curious goes hand-in-hand with exploring unconsidered options and creating pathways to take risks that can ultimately pay off for the health system.
“I am naturally conservative and more risk averse. However, experience has taught me that it is imperative to take risk in the right situations to continue to grow,” Bendel says.” If the business case supports the risk then go for it.
Here's how CFOs can leverage their unique position.
As health systems spend billions annually battling payers—CFOs have to recognize the power they have to turn financial losses into policy-driven reform. Healthcare CFOs must step up as strategic leaders to bridge the growing financial and operational divide between payers and providers. To drive real change, CFOs must move beyond financial strategy and into policymaking to advocate for fair reimbursement and operational sustainability.
Check out this infographic for three CFO tips for jumping into policy reform discussions.
The growing tension between payers and providers is no secret. And it's forcing CFOs to take action.
The following is an excerpt from our March cover story.
Providers have been fed up with payer behavior for decades; many have suffered financial turmoil from payer tactics, smearing contention across the picture of healthcare for everyone involved.
About 84% of health system CFOs cite lower reimbursement rates from payers as the top cause of low operating margins, according to a study published by the Healthcare Financial Management Association (HFMA).
Among HFMA survey respondents, 75% have also added more FTEs to handle insurance denials, and 63% have added staff to follow up on accounts receivable, both of which eat into a health system's budget just to keep up with payers.
Over the last few years some components of this dynamic between payers and providers have shifted, but arguably, not enough. There have been some wins, like increased transparency laws and modernized care models, but there have also been some losses, — and lawsuits — like payers using AI to inappropriately deny claims, fanning the flames of these disputes.
Even as recent as this month, health systems are opting out of settlements and choosing to fight back against payers with legal action. Dozens of health systems are currently suing Blue Cross Blue Shield for paying healthcare providers, "far less than they would have been paid in a competitive market."
Mayo Clinic is also currently suing Sanford Health Plan over $700K in unpaid medical bills for a patient that was treated over two years ago. Mayo said is not seeking payment from the patient.
It's instances like these that bring to the surface the strife between payers and providers, and patients that suffer.
Resentful Consumer Outcry
The murder of United HealthCare CEO Brian Thompson shone an uncomfortable, blinding light on the contention within healthcare; not between payers and providers—between consumers and the modern healthcare system.
The online backlash after Thompson's murder was nothing to shrug off, but in many ways, that's exactly what happened. Consumers used the opportunity to fire back over the struggles of obtaining affordable healthcare through today's insurers, painting a stark silhouette of spite against a horrific tragedy.
The harsh, inappropriate backlash from consumers took over the narrative for a brief second, but despite its widespread intensity, despite the decades of patients' rage that led to this horrific outcome, it didn't spark any significant change to healthcare or healthcare policies, it only brought about tension. Under this constant tension, cracks form, and systems break down.
"Though an unjustifiable action, we must recognize that there is a lot of friction that a lot of people, both payers and providers, know is there," said Rick Gundling, Senior Vice President for Content and Professional Practice at HFMA and a former CFO.
This incident was tragic and will always be tough to face. But the industry shouldn't let the discomfort of the situation muddy the waters of the underlying sentiment: many people have died because of denied care.
"It makes no sense to me that there is no true system that captures physical harm to enrollees related to denied or delayed prior authorizations," says Kurt Barwis, CEO of Bristol Hospital, registered lobbyist in Connecticut, and former governor of the American College of Healthcare Executives. "Healthcare is supposed to be evidenced based/do no harm … yet the use of prior authorizations gets a complete and total pass?"
According to a report by the Kaiser Family foundation, 19% of in-network claims and 37% of out-of-network claims were denied in 2023, for a combined average of 20% of all claims. All of this is not to say that payers undoubtedly carry all the blame, but rather that the American healthcare system has failed many, many people when they needed it most.
CFOs stand in a unique position that enables them to use their voice and expertise to advocate for policy reform. Read the full story to understand how, as well as the best strategies for seizing the opportunity.
Funding for healthcare technology and medical research are on the table.
The Trump administration has proposed downsizing the Health and Human Services Department, and CFOs need to be prepared for the potential effects to their health system.
Downsizing HHS particularly through the technology department and the Agency for Healthcare Research and Quality (AHRQ), could negatively affect healthcare. The impact could stretch from the technology infrastructure supporting electronic health records (EHRs) to the pace and quality of medical research. CFOs will need to adopt proactive strategies to minimize these impacts for their health systems.
Cybersecurity, Safety & CMS
Health systems look to HHS for guidance through items such as the HITECH Act. HHS also oversees certification of electronic health records for health systems. Under the Biden administration the HHS technology department saw a revamp and push towards supporting greater artificial intelligence adoption and innovation. With potential workforce cuts here, AI innovation and guidance could be impeded.
Politico reported that the Trump administration has already “wiped the department’s strategic AI document from the web and dismiss[ed] newly hired senior staff in charge of data, technology, and AI policy.”
Without the work that HHS does to enhance cybersecurity measurements, health systems could be more at risk. With cybersecurity risks ballooning in recent years, the potential for a cyber incident could grow even bigger. With the increasing push for interoperability across health networks, delays in technological advancements could also impede the seamless exchange of patient information, undermining hospital workflows, increasing administrative costs, and jeopardizing patient outcomes. This is where data integrity comes into question. As HHS potentially scales back its technology workforce, there may be fewer resources available to support data analysis, quality control, and compliance with federal regulations.
HHS also plays a crucial role in medical device safety through the FDA, as well as the cybersecurity measurements for these devices. Workforce reductions here could affect patient safety when it comes to these devices.
Implications for CMS may also come into play. With looming Medicaid cuts, reimbursement and governance in this sector will likely also be hurt. This could affect reimbursement for health systems, stressing health system finances even more.
For CFOs: these disruptions could lead to increased costs for managing internal IT teams, addressing data quality issues, ensuring medical device safety, and following up on Medicaid reimbursement
Research and Innovation Slowdown
Another area primed for workforce disruption is medical research and innovation due to staffing cuts at the Agency for Healthcare Research and Quality (AHRQ.) AHRQ plays a key role in supporting healthcare research, providing funding for innovative medical studies, and improving evidence-based practices. With fewer resources at this agency, research grants could slow down, and fewer studies might be funded, impacting the development of new treatments and technologies.
This could limit opportunities for hospitals to engage in clinical trials, access cutting-edge technology, or improve patient outcomes based on the latest evidence. The reduction in research funding could also spell trouble for areas like personalized medicine, chronic disease management, and health disparities.
For CFOs: Without access to medical advancements and cutting-edge treatments to drive patient volumes and new service lines, this may translate into lower revenue growth for health systems.
The CFO Guide
Invest in IT Infrastructure and Talent: CFOs should examine investments to strengthen their internal IT teams or partner with third-party IT service providers to ensure continuity in EHR management. By allocating a budget for proactive IT infrastructure upgrades, including cybersecurity measures, and data analytics tools, CFOs can minimize downtime and protect against potential breaches. Also, training internal IT staff to handle emerging technologies could reduce the health system’s dependence on external agencies.
Leverage Alternative Research Partnerships: CFOs can look for alternative funding sources for research and innovation. They can also increase their focus on developing in-house research programs and collaborating with clinical trial sponsors to ensure the continued flow of medical innovation.
Optimize Operational Efficiencies: CFOs can also focus on improving operational efficiencies across their organization including streamlining processes, reducing waste, and finding cost-effective solutions to maintain high-quality patient care.
Bonus strategy: CFOs can also get involved in policy discussions with their local representatives. By adding their voice to the pushback against actions that harm public healthcare, CFOs can help safeguard their organizations.
Industry-wide medical trend pressures contributed to Highmark’s 2024 losses.
Highmark Health Plans reported a negative operating performance, citing “industry wide medical trend pressures that continued into the fourth quarter of 2024” as the main contributor.
Despite this loss, two sectors within Highmark Health saw improved operating performance. Both United Concordia Dental and HM Insurance Group’s operating performances remained steady, fueled by increased dental membership and pricing discipline.
Allegheny Health Network (AHN), Highmark Health's provider network, also saw operating improvements that were driven by increased patient volumes across all care delivery areas.
Highmark Health’s balance sheet remained strong with $11.7 billion in cash and investments and net assets of $9.8 billion as of December 31, 2024.
The breakdown
Living Health model
A big part of Highmark’s health Plan membership increase came from efforts in its Living Health model, which allowed all eligible health plan members to gain access to the My Highmark app. The app connects patients to care in a variety of ways such as simplified bill payment and real time personalized recommendation through artificial intelligence.
“We also continue to expand our living health suite of digital and virtual health solutions. At the start of 2024, we launched mental well-being powered by spring health, increasing member access to mental health care by over 40%,” said Highmark Health president and CEO of Daivd Holmberg on an earnings call.
Highmark Health Plans
Operating revenue brought in from Highmark Health Plans was $22 billion, along with $166 million on operating losses through the year-end of 2024. The losses in this business sector were brought on by “increasing headwinds from rising health care usage, continued effects of Medicaid redeterminations, and high prescription drug costs, particularly GLP-1s,” according to the report.
“We're working through proper research strategies to address these challenges and improve performance. For instance, rapidly approaching a high cost of prescription drugs,” said Highmark Health CFO Carl Daley.
In 2024, Highmark also added a Medicaid segment in West Virginia, as well as entering the Southeastern Pennsylvania market, where it gained more than 70,000 new members. The organization also reported increased core health plan and Blue Card membership for Jan. 2025 compared to the same period last year, reporting 7.1 million members. Highmark Health Plans remain the largest health insurer in Pennsylvania, Delaware, West Virginia, and western New York.
Allegheny Health Network
AHN saw its total revenue increase by 9% year-over-year to $5.1 billion, and its operating loss also improved by 15% to $147 million compared to the same period last year. This was in part driven by increased patient volumes. In total, the provider network saw $115 million in earnings before EBITDA for the year-end of 2024.
Through Dec. 31, 2024, AHN saw patient volume increases in the following compared to the same period in 2023:
3% increase in inpatient discharges and observations
6% increase in outpatient registrations
5% increase in physician visits
5% increase in emergency room visits
Community and workforce
During the call, Holmberg addressed Highmark’s commitment to its communities, in which it has funded partnerships with community programs through its Highmark Bright Blue Futures program and donated roughly $53 million.
Holmberg stressed that as a nonprofit organization, commitment to its communities is top of mind. “No matter what happens in our industry, we will continue to invest in transforming health and creating high value jobs for the communities we serve,” Holmberg said.
Holmberg also addressed the layoffs made in January to its information technology subsidiary enGen, in which 207 employees were fired, including 86 in Western Pennsylvania and 41 in the central part of the state. EnGen jobs were also cut in eastern Pennsylvania, West Virginia, western New York, and other states.
“We will not cut costs anywhere that undermines our commitment to providing high quality care and creating remarkable health experiences,” Holmberg said. “Our approach does mean sometimes we eliminate jobs, but it also allows us to identify opportunities to shift people into new roles and create new high value jobs. We hired 6000 people in 2024. That's also part of our performance story.”
One in three Americans don't seek needed healthcare due to costs.
CFOs are charged with doing everything they can to lower costs of care within their health systems. And yet, healthcare is still generally unaffordable for so many.
A recent study shows that Americans borrowed about $74 billion last year to pay for healthcare.
The report found that roughly 12% of U.S. adults (about 31 million) say they collectively borrowed an estimated $74 billion last year to pay for healthcare, either for themselves or a family member. Additionally, a majority of Americans, about 58%, say they are concerned they would experience medical debt if faced with any major health event.
Here are three strategies that CFOs can examine to help make healthcare more affordable for their communities.
