Hospitals are beneath stress — from labor prices to ransomware, margin squeezes to misgovernance. This publish explores the rising wave of economic misery amongst US healthcare suppliers in recent times. It unpacks what went improper at a number of suppliers and attracts from my very own expertise within the $7 billion restructuring of NMC Well being. I share sensible steering for finance leaders and reveal how monetary governance failures can rapidly erode investor worth.
Labor inflation, payer stress, digital disruption, and regulatory scrutiny have uncovered structural vulnerabilities within the US healthcare system. On this setting, the position of finance professionals at healthcare firms turns into pivotal — not simply in disaster containment however in institutional renewal. Monetary missteps can ripple into service closures, job losses, and deteriorated affected person outcomes. Accomplished appropriately, nevertheless, strategic monetary management can stabilize operations, protect entry to care, and rebuild long-term worth for stakeholders. These outcomes additionally carry direct implications for traders, as governance failures in healthcare can set off portfolio losses, credit score downgrades, and compelled asset gross sales throughout institutional holdings.
Restructuring healthcare techniques requires a essentially totally different method than conventional company turnarounds. Finance leaders should strike a singular steadiness: sustaining medical service supply, sustaining workforce and neighborhood belief, and complying with strict regulatory and funding necessities. A failure to take action not solely erodes enterprise worth however can immediately compromise affected person well being outcomes. This twin mission, medical and monetary, calls for a degree of urgency, transparency, and coordination hardly ever seen in different industries. The reputational and societal stakes are merely increased.
Classes from the Subject: 4 Case Research
Steward Well being Care (2023–2024)
Steward Well being Care grew quickly to develop into the most important non-public for-profit hospital system in the US, leveraging sale-leaseback transactions to unlock capital. A lot of the freed-up money, nevertheless, was redirected into enlargement and operational shortfalls quite than infrastructure or care supply. With out centralized treasury oversight, lease obligations ballooned, and monetary management weakened. By 2024, burdened by greater than $9 billion in liabilities and mounting vendor disputes, Steward filed for chapter. [4]
A extra disciplined method to capital funding like making use of a minimal 12% ROI threshold might need filtered out underperforming enlargement plans. Centralizing money circulate visibility may have flagged liquidity dangers earlier, whereas stress testing for REIT publicity would have revealed unsustainable lease commitments. These instruments are normal in lots of capital-intensive sectors however had been underutilized right here.
Pipeline Well being (2022–2023)
Pipeline Well being operated safety-net hospitals in underserved city areas, closely reliant on post-COVID funding. As elective volumes dropped and labor prices spiked, its monetary mannequin grew to become unsustainable. A scarcity of rolling forecasts and versatile labor value buildings prevented the group from adapting to the brand new actuality. Ultimately, delays in participating turnaround advisors and the absence of an escalation protocol led to a Chapter 11 submitting. [5]
In Pipeline’s case, a centralized liquidity management tower with 13-week rolling forecasts may have recognized money shortfalls weeks upfront, shopping for time for vendor renegotiations. Had Pipeline applied a dynamic labor mannequin tied to quantity shifts, it may have higher aligned staffing with demand. Even a easy 10-day fee lag might need introduced government consideration earlier than the disaster deepened.
Prospect Medical Holdings
Prospect Medical was uncovered by a US Senate report for prioritizing shareholder dividends whereas underinvesting in hospital infrastructure. Over a number of years, related-party transactions and opaque monetary governance eroded inner belief and attracted regulatory scrutiny. Specifically, behavioral well being models noticed declining care high quality as capital tasks had been repeatedly deferred. [6]
Strategic finance may have performed a watchdog position. Requiring a capex-to-revenue ratio of 5% as a dividend precondition would have ensured reinvestment. A 3-year rolling capital plan vetted by the board may have aligned strategic investments with operational wants. Clear money and reinvestment dashboards shared throughout departments might need empowered inner stakeholders to boost flags earlier.
UnitedHealth Group (2024–2025)
In a hanging twin disaster, UnitedHealth Group first noticed its Change Healthcare unit paralyzed by a ransomware assault, freezing pharmacy transactions and claims processing. Shortly after, the US Division of Justice opened a probe into Medicare Benefit fraud, alleging manipulation of affected person threat scores for monetary acquire. These points spotlighted the delicate operational core of even probably the most subtle payer-provider. [7]
Extra proactive and risk-aware monetary oversight may have helped establish vulnerabilities earlier and diminished the general affect. Escrow reserves or redundant fee platforms may have protected supplier funds throughout outages. Periodic audits of income threat scoring fashions might need flagged compliance gaps. Funding in cyber redundancy, whereas not a monetary management per se, is more and more a CFO mandate to mitigate operational threat.
A Gameplan for Monetary Leaders
Right here is how finance leaders can construct muscle throughout liquidity, capital construction, and governance:
- Liquidity: Prioritize disbursement and day by day dashboards and use 13-week rolling forecasts.
- Capital Construction: Incorporate sale-leaseback sensitivity evaluation to find out the right combination of mounted vs. floating debt.
- Governance: Implement real-time key efficiency indicators (KPIs) tied to resolution rights, board-level disaster reporting, and whistleblower frameworks.
These capabilities, when developed early and exercised typically, develop into lifelines throughout misery.
The Finance Toolkit in Motion
Right here is how particular interventions may have modified the outcomes of healthcare firms within the case research mentioned earlier:
- In Steward’s case, real-time money management may have uncovered vendor bottlenecks earlier than litigation threat materialized.
- At Pipeline, an early-warning sign tied to payroll threat might need launched government motion six weeks earlier.
- At Prospect, a quarterly dashboard may have uncovered behavioral well being underfunding developments, enabling board pushback.
- For UnitedHealth, common audit of threat scoring logic may have ensured regulatory alignment earlier than the DOJ’s intervention.
When built-in into planning and operations, these instruments empower finance groups to perform as companions in care continuity.
A Playbook for Monetary Restructuring
The next playbook summarizes seven monetary levers that constantly surfaced throughout the case research. These will not be theoretical instruments — they’re sensible interventions that distinguish collapse from restoration when deployed with urgency and precision. Finance leaders can use this as a diagnostic guidelines and information for strategic motion.
The Value of Inaction: Investor Influence
These monetary levers will not be solely operational lifelines; they’re additionally important safeguards for many who rely on institutional capital. For institutional traders with healthcare publicity, monetary misgovernance can erode worth swiftly. Downgrades triggered by margin compression or unanticipated liabilities typically result in compelled gross sales, widening spreads, and diminished long-term returns. For personal fairness and long-only fairness funds, strong monetary oversight in healthcare is greater than finest follow, it’s a fiduciary safeguard.
Key Takeaway
Monetary misery in healthcare is not only a steadiness sheet occasion, it’s a systemic risk with wide-reaching penalties for sufferers, workers, and traders alike. On this setting, finance leaders will not be back-office operators, they’re strategic stewards of belief, continuity, and capital. Finance leaders have develop into important to the success of cross-border healthcare offers and with the best instruments, the best timing, and the best mindset, they’ll additionally flip misery into self-discipline, and self-discipline into long-term institutional resilience. In healthcare, monetary management is a public good.
References
- PwC – Healthcare’s Large Squeeze and the way in which out: https://www.pwc.com/us/en/industries/health-industries/health-research-institute/next-in-health-podcast/2024-outlook-healthcares-big-squeeze-and-the-way-out.html
- KPMG – Resilience in Healthcare Finance: https://belongings.kpmg.com/content material/dam/kpmg/ie/pdf/2024/02/ie-healthcare-horizons-cge-health-2.pdf
- Fitch Scores – Not-for-Revenue Hospital Outlook: https://www.fitchratings.com/analysis/us-public-finance/us-not-for-profit-hospitals-health-systems-outlook-2025-09-12-2024#:~:textual content=Fitchpercent20Ratingspercent20Sectorpercent20Outlookpercent20for,marginpercent20compressionpercent20inpercent202022percent2D2023
- Steward Chapter – PE Stakeholder: https://pestakeholder.org/information/steward-health-cares-bankruptcy-one-year-later/
- Pipeline Chapter – Chief Healthcare Government: https://www.chiefhealthcareexecutive.com/view/pipeline-health-files-for-bankruptcy-protection-aims-to-reorganize
- Prospect Medical Investigation – CT Mirror: https://ctmirror.org/2025/01/14/us-senate-investigation-prospect-medical/
- UnitedHealth DOJ Probe – WSJ: https://www.wsj.com/us-news/unitedhealth-medicare-fraud-investigation-df80667f
- Change Healthcare Cyberattack – Fierce Healthcare: https://www.fiercehealthcare.com/payers/unitedhealth-estimates-190m-people-impacted-change-healthcare-cyberattack”
