2026 healthcare industry outlook: Get ready for seismic disruption
The healthcare industry is headed into an era of disruption greater than any in living memory. Fifty-four percent of healthcare revenue comes from the federal government — but nearly $1 trillion of that funding is disappearing, with more cuts looming on the horizon.
To survive, healthcare will have to change in a big way. Organizations will need to radically transform how they operate and rethink what it means to serve patients, providers and communities.
The time to start that transformation process is right now. Keep reading to learn more about key trends for the healthcare industry in 2026 and what your organization can do to meet the moment.
What’s coming for healthcare in 2026? Massive Medicaid funding cuts.
In 2026, healthcare will face massive funding cuts. For decades, healthcare organizations have heavily relied on federal money to keep their doors open, and now, much of that revenue is gone or sunsetting.
- The One Big Beautiful Bill (OBBB) Act, which the Trump administration pushed through Congress in July, will cut an estimated $911 billion from Medicaid over the next 10 years.
- The nonpartisan Congressional Budget Office (CBO) also estimates that the bill will trigger nearly $500 billion in future Medicare cuts beginning in 2027 to offset lower federal tax revenue, although Congress could still act to prevent this from happening.
- Hospitals, which serve all comers, will feel the effects first, with a significant amount of revenue now likely to become bad debt. Rural hospitals will take an especially large hit, and while Congress did create a $50 billion fund to help rural hospitals affected by Medicaid cuts, it’s not nearly enough. Three hundred rural hospitals are already at immediate risk of closure.
- Along with funding cuts, Medicaid is also imposing burdensome work requirements, which will likely dramatically reduce the number of people insured by the program.
- Unless Congress makes a last-minute deal to extend the Affordable Care Act (ACA) subsidies set to expire at the end of 2025, the number of people covered under the ACA will likely fall significantly as premiums are expected to more than double — with the average premium rising by 114%.
- Finally, the OBBB also cut $187 billion in food stamp funding over 10 years, which will worsen patient health outcomes just as organizations are struggling to find the resources to provide care.
If this sounds dramatic, that’s because it is. No one alive has witnessed such a major level of change in the healthcare sector.
This understandably creates tremendous uncertainty. Healthcare leaders are losing sleep trying to figure out how to fill seemingly unfillable budget gaps. It’s a hard time, and as an industry, we need to give each other grace.
But don’t despair. Every crisis also contains the seeds of a new beginning. And for organizations willing to evolve, that beginning can start right now.
To survive 2026, healthcare must transform to meet the moment
The current U.S. healthcare system can work miracles, but it is also deeply flawed. For every remarkable advancement in medicine or life transformed, there are still too many glaring inefficiencies, short-changed patients and exhausted providers.
And the economics of healthcare just don’t add up. Both organizations and patients have long struggled to manage ballooning costs, even with vast sums of federal money to prop up the system.
As an industry, we can’t sugarcoat how brutal this new era of change will be. However, as transformation becomes a survival necessity, healthcare should also take it as an equally rare opportunity to rethink and rebuild from the ground up:
1. Completely reassess funding
Federal money isn’t gone completely, but hospitals and other healthcare organizations can no longer count on it. This means it’s time to reevaluate your funding from the ground up and find new revenue streams.
Private philanthropy will be useful here. Look to cultivate relationships with donors or foundations that could help make up for at least some of your budget shortfall. But private money alone likely won’t be enough, so you’ll also need to get more creative.
Most hospitals provide only acute care. Is it time to rethink that model? What about offering continuing education services for healthcare professionals or renting out unused facilities?
More than ever, you also need to get what you can from insurance. Work with your billing team to maximize insurance reimbursements to keep that revenue going strong.
As a longer-term trend, look for more hospitals to become government-sponsored entities capable of receiving tax dollars. This used to be common: Decades ago, many hospitals were county-operated and largely funded by local tax dollars, and a return to this approach may make increasing sense in the coming years.
2. Reengage with your local community
Hospitals and healthcare organizations make a huge impact on their local communities. Besides providing medical care, a hospital is usually among the largest employers in a town or neighborhood.
Now, more than ever, you need to lean on and deepen those community relationships. As you’re rethinking funding, consider how you can provide additional value to your community.
For example, can your organization evolve beyond acute care into a gathering place or hub for local wellness? Imagine, for a moment, a hospital that hosts cooking and yoga classes, offers performance spaces and creates other opportunities to not just treat disease but actively promote the physical, social and emotional well-being of the people who live nearby.
No, this isn’t what hospitals or healthcare centers usually do, but the time for usual is over.
More community engagement can provide revenue opportunities, volunteers and a general sense of goodwill that healthcare organizations could really use right now. It can also bolster political support for additional state or local funding to help stabilize your organization.
3. Reevaluate how you run your organization
To survive, healthcare organizations are going to need to reevaluate longstanding systems and practices. This means asking uncomfortable questions and leaving no stone unturned in pursuit of greater efficiency.
Look to AI and automation to see what’s possible. Can you automate back-office functions to save on costs? Some doctors are now using AI notetakers to record patient visits so the doctor can focus on the person in front of them, which can make patients happier and improve treatment outcomes.
Outsourcing can also be a useful tool. Organizations that need effective financial management can save money by hiring a CFO or controller fractionally rather than full-time.
4. Work with an advisor
Don’t try to tackle huge organizational change on your own. Work with an outside advisory firm to evaluate your specific needs and figure out an action plan to navigate the challenges before you.
An advisor can help you navigate funding difficulties, find opportunities to make your organization more efficient and evaluate new revenue opportunities. If you need new tools or systems to accomplish your goals, an advisor can also recommend and implement them.
Look for an advisor with deep healthcare experience. This will allow you to benefit from what other hospitals and healthcare organizations are learning and avoid pitfalls along the way.
5. Embrace change for what it is
This is not an easy moment for healthcare. But change is inevitable — and people and organizations who embrace that reality will have a smoother journey than those that don’t.
Communicate honestly with your team about what’s happening. Share your frustrations and your fears. And then start taking action to move forward.
It may be winter now, but spring will come again.
How Wipfli can help
We help hospitals and healthcare organizations strengthen financials and navigate change. Let’s talk about the obstacles you face and come up with a plan to get through 2026 and thrive in the years to come. Start a conversation.
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