The recent passage of the Big Beautiful Bill is adding new challenges for healthcare providers in the U.S. After years of financial struggles and workforce shortages, this legislation is expected to create significant changes in how healthcare is funded and managed.
Gigi Norris, a leader in the healthcare sector at Marsh, pointed out that the bill will increase financial pressure on providers already facing difficulties. It is anticipated that cuts to Medicare and Medicaid, along with stricter immigration rules, will worsen staffing issues. Workforce shortages are now the primary concern for healthcare organizations under this new law.
Labor costs make up a large portion of hospital budgets, often more than half. When finances tighten, layoffs and workforce reductions may follow, creating a ripple effect throughout the healthcare system. This situation can lead to overstressed employees, who are more likely to suffer injuries and experience burnout. Such stress can increase workers’ compensation claims, especially as some states now recognize mental health issues under these claims.
In response to these challenges, healthcare organizations are looking at new workforce strategies. They are trying to help employees work more effectively, reduce administrative tasks, and use technology to improve efficiency. However, Norris emphasized that simply being efficient is not enough. Employees need to feel safe and valued, especially given the rise in workplace violence against healthcare workers since the pandemic.
As staffing shortages continue, ensuring patient safety will become increasingly difficult, particularly in long-term care facilities that rely heavily on Medicare funding. With fewer staff available, the likelihood of errors and lapses in care increases, raising the risk of liability claims against healthcare providers.
For insurance brokers, the focus will be on helping healthcare clients find a balance between retaining risk and transferring it. Norris noted that professional liability coverage is costly, and brokers must ensure their clients are not overpaying for coverage while retaining the right amount of risk.
The current hard market for healthcare professional liability insurance is expected to continue, making efficient coverage design crucial. Many hospitals may consider workforce cuts to manage their budgets, but layoffs can lead to claims of discrimination, which can be expensive.
Additionally, the bill does not impose a federal ban on state-level regulations regarding artificial intelligence (AI), leaving healthcare organizations to deal with a mix of rules. This uncertainty complicates the ethical use of AI, especially as organizations increasingly rely on it for hiring and workforce management. Norris cautioned that poorly managed AI systems could introduce bias, leading to discrimination claims.
Beyond workforce issues, the Big Beautiful Bill also cuts funding for academic research and imposes tariffs on medical equipment. Norris believes this financial strain could lead to more consolidation in the healthcare sector.
In this challenging environment, healthcare organizations will need strong risk management support. Key areas of focus will include optimizing professional liability coverage, addressing employment practices liability (EPL) risks, enhancing workforce safety strategies, and developing ethical AI adoption plans.
As healthcare providers face these pressures, Norris stressed the importance of compassion. It is crucial for employers to care for their workers, and for healthcare providers to support their patients. In these tough times, looking out for one another is more important than ever.