Trends in Healthcare & Governance
HTNYS’ monthly Trends updates provide trustees with information about emerging developments in governance and healthcare. Published by HTNYS on the second Wednesday of each month, Trends’ timely statistics and insights help trustees fulfill their roles and responsibilities while adapting to the changing environment.
In an era of noise, go back to governance basics
February 2025
Hospitals, health systems and their boards are operating in an era of constant noise. Amid healthcare’s rapid changes and increasing complexity, boards’ oversight responsibilities have been expanding. Newer areas of oversight include climate change, cybersecurity and artificial intelligence, with more to come.
Nasdaq’s 2023 Global Governance Pulse survey found that 84% of surveyed board members, executives and governance professionals across many industries expect increased or sustained scrutiny and time requirements for board service in the coming months.
Back to the basics
Trustees may wonder how to add tangible, unique value in this rapidly evolving environment. At a time like this, it is helpful to reflect on the key role of the board, which is board service. This may sound simplistic, but excellent board service requires that the board be committed to excellence in all facets of governance. A board that excels with board structure, diversity, selection, orientation, education, self-evaluation and culture elevates the hospital’s performance.
Tools to reflect on board culture, composition and succession planning
Only 7% of responses to the Nasdaq Governance Pulse survey indicated that their board evaluation process results in specific action plans to address opportunities, risks and weaknesses. A commitment to continuous improvement is key to a dynamic and responsive board. Board evaluations provide insights into the board’s strengths and opportunities for improvement regarding board composition, oversight, engagement, culture and governance processes.
A board demographic/skills gap analysis ensures that board succession planning is strategically aligned with the organization’s future needs. Additional options to fill knowledge gaps include investing in trustee education and creating advisory seats for subject matter experts to facilitate the board’s understanding of specific topics.
High performance governance practices
An AHA article suggests that there are four practices that hospital and health system boards must engage in today to be successful in the future:
- Define a clear mission and vision for a transformed enterprise.
- Create an environment of trust.
- Establish a foundation of effective communication.
- Build a board-CEO co-leadership partnership.
Boards must be currently performing at an extremely high level to be successful in the future. With the number of demands facing boards, it’s easy to put the basics on the back burner. Keeping the essential elements of effective board governance a priority will put boards in a better position to navigate the noise that challenges healthcare today.
Information for this article was obtained from:
- Back to Basics: Focusing on Board Service in an Era of Noise, Nasdaq
- Current High-Performance Governance Practices, AHA Trustee Services
Major headwinds predicted for 2025
January 2025
As we enter the new year, hospital and health system leaders are considering challenges and opportunities that may arise in 2025. Becker’s Hospital Review recently shared what is on the minds of 74 health system executives. The following are the major headwinds they predict.
1. Continued staff shortages: In 2025, expect a national shortage of:
- 61,700 to 94,700 physicians, as demand spikes in several specialties (Association of American Medical Colleges); and
- 78,610 full-time registered nurses (American Association of Colleagues of Nursing).
Mercer predicts a shortage of about 100,000 critical healthcare workers by 2028. This means the potential for less access to care, slower patient throughput and the need to pay higher wages to stay competitive.
HANYS’ November 2024 Hospitals Fiscal Survey Report highlights the issue in New York, where 97% of hospitals reported a shortage of nurses and 88% reported shortages of non-nursing personnel.
Hospitals and health systems continue to mitigate these shortages by creating pipeline programs, strengthening the workforce, automating administrative tasks where possible, developing hospital-at-home programs and forging partnerships to provide in-person and virtual coverage for patients.
2. Financial pressures: Slow margin growth is expected nationally along with rapidly rising costs, inflation and an increase in payer claims denials. All will contribute to providers’ financial challenges.
In New York, three out of four hospitals reported that they do not have the operating margins needed to maintain and improve access to patient care, attract and retain a skilled workforce, invest in technology and research, secure capital funding and modernize their facilities. On average, New York’s hospitals projected a median 0.0% operating margin for the year — a slight improvement over recent years — but indicative of our healthcare system’s fragility (HANYS’ Hospitals Fiscal Survey Report).
Hospitals and health systems may have to strengthen their expense management and revenue capabilities. To make a difference this year, executives are adding revenue streams, diving deeper into value-based care and entering into new partnerships to implement technology.
3. Trump administration: A new administration brings uncertainty about healthcare policy. Healthcare leaders must plan for various scenarios.
4. Technology integration: Technology is no longer a “nice to have” — it’s a “must have.” Hospitals with the resources to implement new technology and data analytics will fare better than smaller systems and independent hospitals already struggling financially. Providers may need to divert funds from other essential areas and/or rely on partners and donors to achieve technology goals.
5. Medicare Advantage: In 2024, health systems experienced heightened claims denials and low reimbursement rate increases under Medicare Advantage. This will remain a significant challenge this year as the health plans continue to grow. Healthcare provider executives will have to continue to work with their payer partners to ensure their agreements properly consider future inflation and performance targets.
6. 340B Program: Pharmaceutical companies are pushing for changes to the 340B Program, so be prepared. Healthcare leaders must prepare for the impact of the Inflation Reduction Act of 2022 on the 340B Program.
7. Supply chain: The cost of drugs and medical supplies will remain high, with several supplies remaining on the shortage list. Continue to increase coordination and prepare for shortages.
8. Cyber threats: Both the frequency and sophistication of cyberattacks against hospitals and healthcare providers will continue to rise, making it imperative to invest in keeping your organization safe.
9. Access to care: Patient demand will continue to grow. Improving and increasing access to care will be one of the top priorities, so hospitals may have to improve existing care models or consider developing alternative ones.
10. Private equity: Private equity companies continue to make investments in hospitals, physician groups and other healthcare-related businesses — a concern for some in the nonprofit sector.
To learn more about these headwinds and what health system executives are doing about it, read “10 Headwinds for health systems in 2025” by Becker’s Hospital Review.
Information for this article was obtained from: “10 Headwinds for health systems in 2025,” Becker’s Hospital Review and HANYS Hospitals Fiscal Survey Report.