For Hospitals, the Future’s not a Repeat of the Past

Last week was quite a week:

• The U.S. announced a peace deal with Iran to which Iranian officials denied knowledge.
• The strait of Hormuz opened, then closed.
• The stock market soared then fell.
• The President signed an Executive Order to loosen restrictions on psychedelic drugs.
• Vax skeptic HHS Secretary Kennedy nominated vax supporter Erica Swartz, MD, to head the CDC.
• The Centers for Medicare and Medicaid Services (CMS) announced its proposed Medicare inpatient hospital services reimbursement would increase 2.4% in fiscal 2027.
• Two members of the House of Representatives announced their resignations—both due to sexual impropriety (stupidity).
• And pundits were busy justifying or challenging polling showing a Trump Slump.

That’s the context for meetings this week in DC between hospital leaders and Members of Congress as part of the American Hospital Association’s Annual Meeting. Though much of the legislative agenda for hospitals has shifted to states, federal issues still matter, especially funding in the FY 2027 federal budget and appropriations to key departments and programs.

Hospitals are on the defensive in DC. On behalf of its members and in concert with its peers (FAH, CHA, AEH, et al) they’re seeking…….

• Protection against 340B cuts.
• Protection against site neutral payments.
• Protection against competition from physician owned hospitals.
• Protection against “corporate insurer” business practices.
• Protection against unwanted regulation that disrupt their “normal” business practices
• Protection against price gauging by drug companies.
• Protection against reduced tax exemptions for not-for-profit hospitals.
• Protection against funding cuts in the FY2027 federal budget.

And others.

Per AHA President and CEO: “The timing of our presence and voice in Washington is especially important this year. Health care affordability remains in the spotlight. Congress is discussing the prospects of one or two more reconciliation packages this year, even as we are asking them to examine the overreach and mitigate certain health care provisions from last year’s package. And we are 199 days from the midterm elections…” (AHA Today April 17, 2026)

The reality is this: hospitals have lost much of the good will they earned during the pandemic. Pushback by AHA against hospital price transparency, site neutral payments, 340B changes et al. have been successful. But heightened visibility about executive compensation, profitability, tax exemptions, private equity ownership concerns and for-profit venture-development has eroded Congressional favor, exacerbated nurse and physician burnout and lessened community support. AHA is aware.

In 2024, AHA and its coalition changed the name of its public-relations campaign from the Coalition to Protect America’s Health Care to Coalition to Strengthen America’s Healthcare to “… support the Coalition’s expanded capacity as a proactive, always-on organization dedicated to positively shaping public perception of hospitals and health systems, neutralizing opposition attacks, and holding corporate payers accountable for their role in delaying and denying care while driving up overall health care costs.” For AHA and most hospitals, it’s been an uphill battle against think tanks (West Health, Lown et al), investigative journalists (WSJ, NYT, STAT, Modern Healthcare) and competing interests, especially insurers and private investors, who see hospitals as protectors of the past rather than designers of healthcare’s future.

To restore trust and garner good will among employees, employed physicians, local and national employers, elected officials and community leaders, hospital leaders in DC should engage Congress in several areas usually not discussed:

Proactive education targeted to key constituents explaining how hospitals operate including actual costs, AI applications, et al and notable inefficiencies. Asking for money or regulatory relief is not enough. The public’s ignorant about how hospitals operate!

Long-range planning: Hospital boards tend to plan for NOW and NEAR to but spend inadequate time on FAR. Understanding long-term changes in clinical care, technology, regulatory and economic realities are keys to preparedness. And, like capital and facility plans, executive compensation should be linked directly to organizational readiness for long-term changes along with short-term financials). Long-term planning is not a luxury or distraction; it’s necessary.

Systemness: Hospitals should lead in the design of local/regional “systems of health” that provide a full range of needed health services affordably, rationalizes resources appropriately, is connected includes health, social services and funding programmatically. They’re the logical partner with government to integrate health and social services and, as a result, reduce fragmentation and waste. No excuses.

Workforce: Hospitals should modernize workforce plans to maximize technology-enabled consumer self-care, expand mid-level opportunities, facilitate AI-enabled administrative and clinical process improvements and compensate based on merit and performance.

Consumers including patients: Hospitals and AHA should embrace “healthcare consumerism” actualize its centricity in interactions with individuals who use its services. Competition in a value-based system of health depends on customized engagement with consumers.

Positioning: And hospitals must temper the “blame and shame” game against insurers, drug companies and demonstrate leadership in affordability, administrative waste reduction and optimal resource rationalization. Being their target is understandable: hospitals are 31% of direct spending and, with employed physicians, ancillaries and diversified interests, responsible for at least 55% of the U.S. health economy.

I acknowledge hospitals are uniquely complex organizations—labor intense, capital intense and highly regulated by states and the federal government. Events like last week’s add to uncertainty about their future but efforts to “protect” their status quo are ill-conceived. It’s time for AHA and its followers to plan beyond clinical innovations, technologies and the current regulatory and political environment. Otherwise, most hospitals will be public utilities.

I do not think the future of the U.S. health system will be a repeat of its past. That’s good news and bad news for hospitals.

Paul

PS: Each week, I try to distill lag and lead indicators from the Clinical Care, Technology, Capital, Funding, Consumer and Regulatory environments of consequence to healthcare insiders. What’s abundantly clear is that outside forces—economic, political, global—will impact U.S. healthcare future more than its internal dynamics. The future for hospitals is not a repeat of their past: that’s clear. What’s unclear is who will shape that future and what role hospitals will play.