Hospitals on the Brink: Navigating the Fallout of the One Big Beautiful Bill Act

As lawmakers return to their districts for the August recess, hospital and health system leaders face a critical window to engage with their representatives and senators. The stakes are high: Congress must act by September 30 to fund the federal government, including vital healthcare programs, for the next fiscal year. Failure to do so could result in a government shutdown, and discussions of another reconciliation package on deficit reduction efforts loom large. The One Big Beautiful Bill Act (OBBBA), passed in May 2025, has already set the stage for significant cuts to Medicaid and other health programs, leaving hospitals and health systems in a precarious financial position.

The OBBBA, with its $793 billion cut to federal Medicaid spending and $268 billion reduction in ACA Marketplaces spending, is projected to increase the number of uninsured Americans by 10.9 million. This surge in uninsured individuals will inevitably lead to more uncompensated care, placing an additional financial burden on hospitals. Rural hospitals, already struggling with negative operating margins, will be particularly hard hit. According to the Congressional Budget Office (CBO), the bill will restrict states’ ability to raise the state share of Medicaid revenues through provider taxes, which often support higher payments for hospitals. This financial pressure could force hospitals to cut services, lay off staff, or even close their doors.

The financial impact of the OBBBA is not evenly distributed. Hospitals with a high proportion of Medicaid patients are likely to face the most severe consequences. About 4 in 10 hospitals had negative operating margins in 2023, and 12% had margins below -10%. These hospitals will struggle to absorb any additional losses resulting from the OBBBA. In contrast, hospitals with positive margins, particularly those with margins at or above 10%, may be better positioned to weather the storm. However, even these hospitals will face challenges as the financial strain on the healthcare system intensifies.

To mitigate the effects of the OBBBA, hospitals must engage in advocacy and policy efforts. As outlined in the article "Every Nurse Can Become an Advocate: Pathways for Meaningful Policy Change," nurses and nursing organizations can play a crucial role in advocating for policies that support healthcare providers. By building long-term relationships with lawmakers and key staffers, hospitals can ensure their voices are heard in the policy-making process. This involves meeting with lawmakers and key staffers, agency leadership and regulators, and other influential voices even when there is no immediate issue at hand. Consider joining briefings, listening sessions, and meetings without a specific agenda. Get to know the people who are at the heart of an agency or office—no matter who is in a leadership position. This approach lays the groundwork for future influence. If an entity has proven its expertise and dependability, decision-makers will rely on it for meaningful input when relevant debates arise.

Hospitals can also focus on cost management and operational efficiency to reduce expenses without compromising patient care. This could involve implementing cost-saving technologies, streamlining administrative processes, and optimizing resource allocation. Diversifying revenue streams by expanding outpatient services, telemedicine, and partnerships with other healthcare providers can help mitigate the financial impact of reduced Medicaid payments. Additionally, hospitals can form partnerships and coalitions with other healthcare providers, trade groups, and alliances to amplify their advocacy efforts. As mentioned in the article on healthcare technology management (HTM) advocacy, coalitions can help organizations speak with greater authority and carry more weight with policymakers.

As the fall and winter approach, hospital leaders must be proactive in their advocacy efforts. They should invite lawmakers to visit their hospitals, providing a firsthand look at the importance of supporting policies that allow hospitals to provide care for their communities. By sharing their stories and the impact of funding reductions on their ability to provide services, hospital leaders can make a compelling case for continued support.

In conclusion, the implementation of the OBBBA presents significant challenges for hospitals and health systems, particularly those with a high proportion of Medicaid patients. However, by engaging in advocacy efforts, focusing on cost management and operational efficiency, diversifying revenue streams, and forming partnerships and coalitions, hospitals can navigate these challenges and ensure the continued provision of high-quality patient care. As lawmakers return to their districts for the August recess, hospital leaders have a critical opportunity to connect with their representatives and senators and advocate for policies that support the healthcare community.