How OBBBA is reshaping health care: Financial pressures, AI growth and strategic shifts
Last week RSM US LLP held its annual Virtual Health Care Day, gathering health care leaders and professionals to discuss the latest trends affecting the industry.
The event kicked off with a panel discussion featuring representatives from a large national health system, a state hospital association, a former state Medicaid leader, as well as RSM’s health care industry practice leaders and analysts. Panelists delved into the implications of the One Big Beautiful Bill Act (OBBBA) on health care organizations. The conversation spanned operational hurdles, financial repercussions, innovation opportunities and the transformative role of artificial intelligence in health care delivery. Here’s a summary of key takeaways from the discussion.
Operational and financial challenges
According to the panelists, OBBBA introduces uncertainty and financial headwinds for many health care providers. Key concerns include cuts to Medicare and Medicaid, anticipated increases in uninsured populations due to Medicaid work requirements and reductions in provider taxes. These changes are projected to cause declines in hospital operating margins in expansion states leading to difficult operational decisions such as service line reductions and delayed capital investments.
For example, rural hospitals face challenges as Medicaid reimbursement rates approach Medicare rates, threatening the sustainability of rural hospitals and increasing uncompensated care burdens. States are also grappling with the administrative complexity of implementing new eligibility and work requirements, with concerns about the readiness of Medicaid systems to manage these changes.
Strategic responses and planning
Panelists indicated that health care organizations have engaged in extensive contingency planning, addressing regulatory and operational and financial aspects to mitigate impacts. These organizations emphasize collaboration with hospital associations and payer partners to anticipate market disruptions and explore deregulatory opportunities. At the same time, states and associations are focusing on leveraging new funding streams such as the Rural Health Transformation Fund to stabilize critical services, invest in technology and address workforce shortages, especially in rural areas.
Innovation and collaboration
Despite the challenges, however, panelists said the disruption from OBBBA could accelerate innovation and foster collaboration. The need to adapt to financial pressures may drive health care systems toward value-based care models, improved care coordination and enhanced use of technology. Collaborative arrangements between systems are emerging as a means to optimize specialist availability and operational efficiency without resorting to mergers or acquisitions.
Technology and AI adoption
Panelists also agreed that there is a growing role of AI and automation in health care. Health systems are investing in AI for both clinical and administrative functions, including revenue cycle management and digital finance, aiming to reduce staff burden and improve efficiency. Education on AI is being provided across staff levels to encourage adoption and alleviate fears related to job displacement. AI applications such as ambient listening have demonstrated improvements in physician productivity and patient throughput, while also enhancing employee satisfaction.
However, AI should augment rather than replace human roles, particularly in sensitive areas like patient-provider interactions. Transparency and governance are critical to ensure ethical AI use, prevent misrepresentation, and maintain clinical skills. There are concerns about potential skill degradation among clinicians overly reliant on AI and the need for training programs to adapt to evolving roles.
Addressing workforce and training challenges
The health care labor shortage, exacerbated by demographic trends and policy shifts, underscores the importance of AI as a labor enhancer, panelists said. AI can help alleviate workload pressures, reduce burnout and support retention by automating routine tasks. Nonetheless, organizations must carefully manage workforce transitions and training to maintain foundational skills and adapt to new workflows enabled by AI.
Looking forward
Partnerships, both traditional and innovative, are important to navigate the complex landscape shaped by OBBBA. Collaboration among providers, payers and state agencies will be essential to manage administrative burdens, optimize resources and sustain patient care quality.
Panelists at the event indicated there is a need for dialogue and knowledge sharing to support health care organizations in transforming challenges into opportunities for sustainable, value-driven care.
Learn more about what’s happening in health care in our industry outlook.
