Ted Chien, President and CEO, SullivanCotter, Inc.
By now, we know the “One Big Beautiful Bill Act” (OBBBA) will significantly alter the U.S. health care environment. Changes to Medicaid work requirements, more rigid eligibility checks and reforms to the Affordable Care Act (ACA) marketplace subsidies will reduce the ability for millions of Americans to access and receive adequate health insurance and care. In fact, a Congressional Budget Office analysis suggests that nearly 11 million fewer people would be enrolled in Medicaid by 2034.
I expect to see this legislation affect care access nationwide, regardless of whether a hospital or clinic is not-for-profit, for-profit, government-run or in an urban or rural setting. For leaders in the healthcare space, it’s important that you pay attention to these shifts and understand how you can prepare.
Community benefits make health access and care better for all.
Nearly 60% of American health systems are not-for-profit businesses. These organizations have a “community benefit” mandate, meaning they must provide programs and services that advance community and population health. This allows an organization to qualify for tax-exempt status, which then enables it to reinvest revenue back into community benefit services like lower-cost procedures, maternal care, vaccine clinics and medical research.
With many health systems already struggling to overcome considerable labor and financial challenges, I believe reductions in Medicaid funding may push health care access to a breaking point, especially in rural communities where there are already limited resources. The American Hospital Association estimated a $50.4 billion reduction in federal Medicaid reimbursements for rural hospitals over the next 10 years. Without these reimbursements, health systems may need to cut staff, increase wait times, restrict operating hours, reduce emergency services or eliminate community benefit services.
Many are already struggling to stay afloat. In most states across the U.S., more than 25% of rural hospitals are already at risk of closing, according to the Center for Healthcare Quality and Payment Reform (CHQPR). In 10 states, 50% or more of health systems are at risk, the CHQPR said.
The impact will be widespread.
Limited access to care, hospital closures and an inability to recruit, retain and pay for high-quality health care labor will have a direct impact on all citizens—not just those who are on Medicaid, uninsured, low-income or residing in rural areas.
These changes could trigger a domino effect that pushes rural patients to urban health systems, directly affecting wait times and availability of care. With more patients in the queue, health care organizations may need to streamline services and cut back on community benefit care by prioritizing more critical patients and pushing those with less pressing health concerns to the bottom of the wait list. It could also mean denying elective surgeries or referring elective patients to more costly facilities or private clinics.
Not surprisingly, mortality rates can also increase after a hospital closure, primarily for rural and underserved patients. Data from a study of California hospitals found that rural closures increased mortality rates by 11.3% and 12.6% for Medicaid patients and racial minorities.
Beyond the provision of care, it’s important to note that rural hospitals are often the backbone of small communities. They employ hundreds of individuals who invest wages back into their local economy, which in turn supports local taxes, public services, education, childcare and other essentials. Communities without a health care organization often struggle to thrive. A lack of health services can deter businesses and families from moving to the community, which slows economic growth. The ripple effect of losing health resources can also reduce the labor pool for other critical rural jobs, such as agriculture, forestry, mining and alternative energy.
Closures and restrictions on accessible care in rural areas may also exacerbate labor challenges in urban hospitals. Many employees no longer want to trade their mental and physical well-being for overtime, understaffed conditions or a massive influx of patients—all issues that can drive them to other hospitals or out of the industry entirely. Moreover, many health care organizations have begun to pay more for qualified staff to combat this increasing labor shortage and address burnout, which in turn increases health care costs for patients in urban and rural settings alike.
What happens next is critical.
The OBBBA does include a provision for the Rural Health Transformation Program, which allocates $10 billion annually to states over five years (fiscal years 2026 to 2030) for a total of $50 billion. However, there’s no provision for what happens after those five years pass, and there is skepticism regarding whether this amount of funding will effectively offset losses due to Medicaid reduction. Politicians on both sides of the aisle have already introduced bills to bolster rural financial support in an attempt to save their state health care organizations.
Health system and hospital leaders might feel like what happens next is out of their control. But there are concrete steps they can take to protect high-quality care delivery, serve their communities and continue to fulfill their organization’s mission.
These include:
1. Reimagine organizational structures by reassessing traditional operating models. Taking a new approach to administrative and support functions can improve efficiency and cost control, helping to preserve resources for direct patient care.
2. Review care delivery protocols to ensure they are tailored to the needs of local populations. Completing rigorous community health assessments can identify which services are most critical and allow for targeted deployment of resources.
3. Assess population health strategies, including current preventive care messaging, wellness programming and patient education initiatives. Focusing on these areas can improve long-term outcomes, lessen reliance on expensive acute care and inform smarter investment and resource decisions.
4. Determine the efficacy of telehealth services to close care gaps, especially in rural areas where hard infrastructure can be limited.
5. Harness AI to drive efficiency. Automating administrative tasks, modernizing staffing models, supporting diagnostic accuracy and using predictive insights can improve patient engagement and outreach.
The impact of the OBBBA has the potential to be seismic, and the unknowns are daunting. Health care organizations that take proactive steps can help sustain their commitment to community health.
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