May 19, 2026

We Cannot Cut Our Way to Success’: Hospitals Prep for Medicaid Crunch
The deadline is not here yet, but the bill is already coming due.
HR 1’s most consequential Medicaid changes, work requirements for able-bodied recipients and tighter rules on state financing mechanisms, do not fully take effect until 2027. But hospitals are not waiting to feel the impact.
Bad debt and charity care jumped 8% year over year in January, according to Kaufman Hall data. Sixty-six percent of healthcare finance leaders named Medicaid cuts their top concern in Strata’s latest survey, ahead of labor costs, payer negotiations and everything else.
“Hospitals are already underpaid for the care they provide, and payment cuts through the federal reconciliation process haven’t even been implemented yet. Our hospitals are still only reimbursed 71 cents on the dollar, and less than half have the operating margins necessary for long-term stability,” Nicole Stallings, president and CEO of the Hospital and Healthsystem Association of Pennsylvania, told Becker’s. “Hospitals have plans for every scenario, ranging from service reductions to reductions in force, to potential consolidation and even closure.”
For hospital and health system leaders, 2026 has become the preparation year. The question is what preparation actually looks like when the math is already broken.
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