Why CFOs must prepare for more than just coverage loss.
KEY TAKEAWAYS
Higher deductibles and cost sharing are driving collection challenges even among patients with coverage.
ACA and Medicaid policy changes can quickly alter payer mix, making financial flexibility a competitive advantage.
Strengthening payer partnerships, optimizing revenue cycle performance, and investing in sustainable growth are becoming unarguably critical.
The expiration of enhanced ACA premium subsidies is not just a policy issue, but a steep revenue cycle and margin challenge. The loss of the subsidies represents far more than a temporary decline in insurance coverage, it’s a structural shift in payer mix, revenue predictability, and financial strategy that is reshaping how health systems plan for an uncertain future.
Recent earnings reports from major for-profit systems underscore the reality of the challenge. HCA Healthcare, Community Health Systems, and Tenet Healthcare have all reported that the impact of ACA marketplace disruptions has been more severe than expected. Rather than transitioning to employer-sponsored coverage or delaying care, many patients who lost subsidized exchange plans are continuing to seek treatment without the ability to cover their growing financial responsibility—meaning rising uncompensated care, higher bad debt expense, and increased pressure on operating margins.
CFO outlook is overall optimistic, and although healthcare demand has remained remarkably resilient, patients’ ability to pay has not. That reality is playing out in real time at hospitals across the country.
Bill Pack, CFO of Methodist Le Bonheur in Tennessee, describes the expiration of ACA subsidies as one of the system’s most significant financial headwinds. According to Pack, enrollment in Gold, Silver, and Platinum marketplace plans has fallen by approximately 70%, while enrollment in Bronze and catastrophic plans has increased by nearly 30%. For Pack’s organization, the disruption is driving a sharp increase in self-pay patients.
“To a certain extent, the mindset of a lot of people in government is ‘COVID’s over, so we don’t need these things anymore,'” Pack says. “But I don’t think there’s a good appreciation for the impact that has had.”
Technically patients are still insured, but many now carry substantially higher deductibles, copayments, and coinsurance obligations than they cannot realistically afford.
“This just adds to the self-pay as well because a lot of people are not going to be able to pay that patient portion,” Pack says.
Pack and his organization’s experience reflects a broader national trend. According to an HFMA analysis, the expiration of enhanced ACA premium tax credits is expected to leave approximately five million Americans without marketplace coverage, increasing uncompensated care while reducing hospital revenue. As a result, traditional payer mix metrics will likely no longer tell the full financial story, making revenue cycle performance and patient collections even more vital to margin preservation.
Further, this is also a subtle but meaningful evolution of the revenue cycle challenge: collections become more difficult, bad debt increases, and cash flow becomes less predictable despite stable patient volumes. At the same time, policy uncertainty is making long-term planning increasingly difficult.
Beyond labor shortages, inflation, reimbursement pressure, and supply chain costs, CFOs are now preparing for additional changes to Medicaid eligibility and future federal policy. Pack says the experience of the past several years has fundamentally changed how organizations approach financial planning.
“One thing we learned from COVID is no matter how hard we try, we cannot predict the future,” he says. “We’ve got to be very flexible. We’ve got to be nimble.“
That philosophy is growing amongst CFOs, ultimately because it has to.
Rather than relying on typical assumptions about reimbursement and payer mix, systems are building flexibility into their financial planning. For this Pack’s system, this means strengthening managed care contracting, deepening relationships with commercial payers, pursuing strategic service-line growth, maintaining disciplined cost management, and making thoughtful capital investments while preparing for potential Medicaid policy changes.
As the challenges persist, optimization is becoming the star of the CFO’s playbook. Today health systems depend on how they can optimize payer strategy, improve revenue cycle performance, make disciplined capital allocation decisions, and invest in services for long-term demand.
HENRY KOTULA 