On July 4, 2025, President Trump signed the “One Big Beautiful Bill” with promises to deliver significant tax savings, reduce federal spending and deficits, restructure social programs, curtail regulations, reassert national security, and roll back progressive reforms in healthcare, education, environmental, and civil rights. While these cuts and reforms will be favorable for some Americans, millions of people will be without access to critical healthcare benefits and payments.
Breaking Down the Impact
The bottom line is that federal spending on Medicaid and Medicare will be cut by nearly $1.3 trillion over the next 10 years (Text – H.R.1 – 119th Congress (2025-2026): One Big Beautiful Bill Act | Congress.gov | Library of Congress). This will include stricter eligibility, reduced subsidies, additional work mandates, and the removal of certain benefits completely.
For healthcare leaders, this may mean that more than 300 rural hospitals may be forced to close their doors per data compiled by the Cecil G. Sheps Center at the University of North Carolina (Letter on Rural Hospitals). Hospitals that rely the heaviest on a payor mix of Medicaid and Medicare patients will be impacted the most, but all providers will feel the impact in numerous ways. All employers and employees can expect to face higher healthcare costs to absorb the decrease in federal funding. Healthcare users can expect to see higher rates and less access to services, particularly emergency department access. More patients will be uninsured, causing them to be unable to access proper preventative care. Without access to proactive care, patients may increase reliance on a fewer number of emergency service providers that results in more non-payments, a tighter strain on hospital budgets, and emergency department staffing.
The Challenges and Considerations
These sweeping changes bring about important questions about the future of Medicaid and Medicare, the stability of hospitals, and the overall well-being of communities, especially those in rural or underserved areas. Healthcare leaders will be forced to find ways to operate with even tighter margins and continue to provide essential services. Median operating margins for the US health systems are already down to 1%, even with increased revenues (U.S. Health Systems See Margin Declines to Start the Year While Hospital Margins Grow, According to Two New Strata Reports | Strata Decision Technology).
Finding a New Path
Healthcare leaders will need to focus on strategies to reduce expenses, maximize revenue, increase efficiencies wherever possible and consider consulting partnerships to accelerate the results. Education that embraces Cohesive Value Transformation (CVT) promotes utilization of Lean Six Sigma concepts, creating a culture of empowering employees to recognize inefficiencies and own the optimization process.
Investing the time and resources now in optimizing the supply chain process and associated contracts, improving workflows, and partnering with payers to maximize revenue and timely payments will allow systems to continue to provide quality care and adapt to the rapidly changing environment facing the industry.
The Time is Now
Ultimately, the ramifications of the “One Big Beautiful Bill” will be felt across every level of the healthcare continuum, from top executives to frontline providers and by the patients themselves. The magnitude of these policy changes demands that leaders act proactively, anticipating challenges, embracing innovation, and forging new collaborations within their communities. While the pressures will be immense, this is also an opportunity to reimagine and reshape the delivery of healthcare in America. By prioritizing efficiency, adaptability, and patient-centered care, healthcare organizations can not only weather this storm but emerge stronger and more resilient in the future. The stakes are high, but with strategic leadership, it is possible to safeguard the well-being of patients and communities, even amidst sweeping change.
Let’s have a conversation to chart a new path for your organization.
