Beyond Cost Cutting: How to Build Stronger Healthcare Organizations

When healthcare CEOs face financial pressure, the traditional playbook often points to the same solutions: reduce costs, slow spending and protect margins. But in an industry where every operational decision can affect a patient’s experience, a clinician’s workload or a community’s access to care, the most obvious financial moves are not always the most strategic ones.

Members of the Senior Executive Healthcare Think Tank bring expertise across patient experience, workforce strategy, healthcare technology, quality, policy and organizational transformation. They believe the first step for CEOs facing financial pressure is not simply deciding what to eliminate, but determining where the organization can operate smarter, create more value and strengthen long-term resilience.

Their perspectives come at a time when healthcare organizations continue to face mounting financial challenges. The American Hospital Association’s 2025 Cost of Caring report highlights how hospitals and health systems are navigating persistent cost growth, workforce shortages, supply chain pressures and reimbursement challenges that are reshaping how leaders approach long-term sustainability.

In this article, Think Tank members outline the strategic decisions they would prioritize if advising a healthcare CEO on finances today—and how to uphold the same standard of care no matter the choices made.

Build Governance Around Mission, Margin and Risk

Healthcare organizations often make financial decisions in functional silos, with finance, clinical leadership and operations pursuing different priorities. According to Suresh Alla, Senior Principal Systems Engineer at Procept Biorobotics, sustainable financial performance begins by bringing those perspectives together through intentional governance.

Alla recommends establishing what he calls a Mission-Margin-Risk Council, bringing together executive leadership while ensuring physicians, frontline staff, patients and community stakeholders all contribute to strategic decision-making.

“The governance model I would recommend is a Mission-Margin-Risk Council, co-led by the CEO, CFO, CMO, CNO and COO.”

Rather than focusing exclusively on budgets, Alla emphasizes aligning organizational strategy around several foundational questions.

“Are we clear on the care we must protect? Are our stakeholders interpreting the strategy the same way? Are we measuring the right signals early enough? Are our cost and operating models scalable?”

This approach recognizes that financial performance is ultimately a reflection of organizational alignment. When executive leadership, clinicians and frontline teams share common objectives and monitor both leading and lagging indicators, organizations can identify emerging risks before they become financial crises.

For CEOs facing immediate financial pressure, Alla’s recommendation serves as a reminder that sustainable transformation begins with clear decision-making frameworks—not isolated cost-cutting initiatives.

Align Payment Models With Clinical Value

Financial pressure does not always originate inside the organization. Sometimes, the care being delivered achieves excellent clinical outcomes, but reimbursement models fail to reflect that value. Joel Kanter, President of Windy City, Inc., argues that before healthcare CEOs begin reducing services or staffing, they should examine whether their payment arrangements reward the outcomes they produce.

“If the care you were providing was great, but the payments were not covering the cost,” Kanter says, “contracting with payors that would see value in the issue being permanently fixed should alleviate the financial pressures, as they understand the savings potential.”

Kanter also encourages leaders to think creatively about organizational structure when reimbursement gaps persist. In some situations, establishing complementary nonprofit initiatives alongside for-profit operations can help expand access for underserved populations while generating evidence that supports broader adoption of innovative care models.

“If you still had patients that could not be treated correctly as part of that model, you might need a nonprofit entity to match with the for-profit one to further demonstrate the efficacy of your solutions such that eventually most would want to see your methods used as the standard of care,” he says.

His perspective points to an important lesson for healthcare CEOs: Improving financial performance sometimes requires changing how organizations capture the value they create rather than changing the care itself. By strengthening relationships with payers and documenting measurable outcomes, providers can better align reimbursement with clinical excellence and position themselves for long-term sustainability.

“Protect your people, improve your processes and allow innovation to drive long-term financial stability and better patient care.”

– James Dismond, Chief Executive Officer of MiraSol Health

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Improve Processes Before Reducing People

When healthcare organizations come under financial pressure, labor costs are often the first target. Rather than beginning with layoffs or staffing reductions, James Dismond, Chief Executive Officer of MiraSol Health, encourages healthcare CEOs to take a closer look at how work is performed throughout the organization.

“Too often, healthcare organizations respond to financial pressure by cutting staff and reducing resources. Those actions may reduce expenses in the short term, but they rarely solve the underlying problem,” he says.

He argues that hidden costs frequently exist within inefficient workflows, fragmented technology platforms and unnecessary administrative work. Addressing those issues can improve both financial performance and the employee experience while preserving the workforce that delivers patient care.

“My first recommendation would be to evaluate process efficiency before reducing people,” he says. “Inefficient workflows, duplicate work, poor technology integration and unnecessary administrative tasks create significant hidden costs.”

For organizations already experiencing workforce shortages, this approach offers another advantage.

“Improving how work is done often produces greater financial impact than reducing the workforce. Sustainable organizations don’t build strength by doing less, they build it by working better,” he says.

For healthcare CEOs balancing immediate financial realities with long-term organizational health, his advice reframes efficiency as an investment rather than a cost-cutting exercise.

“Protect your people, improve your processes and allow innovation to drive long-term financial stability and better patient care.”

Build a More Resilient Supply Chain

Financial stability also depends on operational resilience beyond the walls of the hospital. Rajani Kumar Sindavalam, Systems Engineering Leader at HCL America Inc., argues that supply chain strategy has become a critical financial decision rather than simply a procurement function.

“The first strategic decision I would advise is a radical restructuring of the supply chain toward resilience and standardization,” he says.

Instead of relying on traditional supplier relationships that may expose organizations to disruption, he recommends continuously identifying qualified alternative suppliers for critical medical components and collaborating across clinical and operational teams to simplify the products and materials used throughout the enterprise.

“CEOs must mandate the continuous identification of alternative suppliers for all critical medical components to avoid disruptions,” he says. “Clinical and operational teams should collaborate to standardize raw materials and component use across different product lines and families.”

Sindavalam notes that reducing unnecessary variation delivers benefits beyond procurement.

“Driving this internal reuse eliminates redundant customization, accelerates procurement and unlocks massive economies of scale without ever touching patient-facing care.”

Investments in operational resilience today can reduce future disruptions, improve predictability and create stronger financial performance over time.

Unify the Operating Model Before Chasing Cost Cuts

For Kat Marie Alvarez, Founder and CEO of Katalyst & Co., financial pressure is rarely just a budgeting problem.

“Financial pressure is rarely purely a cost or revenue problem; it’s often an operating model challenge,” she says.

Rather than measuring success by department, she believes organizations should establish enterprise-wide objectives that connect clinical quality, operational excellence and financial performance.

“The first strategic decision should be to align the enterprise around a unified operating model,” she says. “Sustainable performance comes from improving patient outcomes, reducing unnecessary variation, aligning incentives and removing friction across the care continuum.”

Alvarez identifies three immediate priorities that can help healthcare organizations strengthen both financial performance and patient outcomes.

First, she says, “align clinical, operational and financial performance around a common set of enterprise metrics rather than optimizing functions in isolation.”

Second, leaders should reduce unnecessary variation by standardizing high-impact clinical and operational workflows, improving consistency for patients while increasing efficiency.

Finally, CEOs should “optimize payer and care delivery economics by aligning contracts, care models and resource allocation with long-term value creation rather than short-term margin recovery.”

Her recommendations reinforce a broader truth emerging across healthcare leadership: Organizations achieve sustainable financial performance when every part of the enterprise is working toward the same definition of value.

“It’s rare to find an initiative that simultaneously improves patient outcomes, frees up capacity and protects revenue. This one does all three.”

– Harikrishnan Muthukrishnan, Principal IT Developer at BCBS Florida

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Reduce Readmissions to Improve Both Care and Margins

Many financial improvement initiatives force healthcare leaders to choose between operational efficiency and better patient outcomes. Harikrishnan Muthukrishnan, Principal IT Developer at BCBS Florida, argues that reducing avoidable readmissions and complications is one of the rare strategies that accomplishes both.

“The first strategic decision I’d advocate is treating preventable readmissions, hospital-acquired conditions and avoidable complications as the financial opportunity they are,” he says. “Under value-based arrangements, these events carry direct penalties, and even under fee-for-service they consume capacity and staff time the organization doesn’t get paid for.”

Rather than investing primarily in expensive corrective interventions, Muthukrishnan recommends strengthening the transition between hospital and home through more effective discharge planning, follow-up care and coordination across providers.

“Investing modestly in discharge planning, follow-up and care transitions pays back through fewer costly downstream events,” he says.

Because these improvements simultaneously enhance quality, free capacity and strengthen financial performance, he believes they are among the easiest initiatives to rally clinicians around.

“It’s rare to find an initiative that simultaneously improves patient outcomes, frees up capacity and protects revenue,” he says. “This one does all three.”

Modernize Legacy Systems Without Replacing Everything

Healthcare organizations often assume digital transformation requires replacing aging core platforms with entirely new technology. Mahendran Chinnaiah, Digital Healthcare Architect at a major U.S. healthcare and pharmacy services firm, believes that assumption leads many CEOs into expensive projects with uncertain returns.

“The first strategic decision is to halt multimillion-dollar rip-and-replace platform overhauls and pivot to an open-source API wrapper model,” he says.

Rather than replacing stable legacy systems, he recommends creating modern interfaces using open standards that allow existing infrastructure to communicate with new analytics, AI and clinical applications.

“Legacy tech vendors push a narrative that you must entirely replace older core systems to adopt modern AI or advanced analytics,” he says. “These massive overhauls are high-risk capital drains that crush margins without improving front-line care.”

By leveraging interoperability standards such as HL7 FHIR, organizations can securely exchange real-time clinical data while avoiding the disruption and expense associated with enterprise-wide system replacements.

“This allows you to securely stream clean, real-time data to modern clinical models at a fraction of the cost,” Chinnaiah says.

For healthcare CEOs facing constrained capital budgets, Chinnaiah believes this strategy delivers a dual benefit: preserving financial flexibility while accelerating innovation.

“You protect your capital, shield patient care from technical disruption and retain complete independence from predatory vendor pricing.”

“These are areas in which you can realize ROI and strengthen your financial position within a short time frame without a massive upfront investment.”

– Jason Foodman, Managing Director at Archetype Growth

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Automate Administrative Work That Doesn’t Add Value

Clinical care depends on people. Administrative work does not always have to. Jason Foodman, Managing Director at Archetype Growth, believes healthcare organizations can significantly improve their financial position by targeting repetitive, rules-based administrative processes for automation.

“I would advise a healthcare CEO to look for technological efficiencies that will reduce costs without compromising patient care,” he says. “That means identifying and automating high-volume, repetitive, rules-based administrative workflows.”

He identifies several functions where automation can deliver measurable returns, including revenue cycle management, patient access, prior authorizations, claims processing, denials management, credentialing and provider enrollment.

Because these processes often rely on manual data entry and repetitive decision-making, they are well suited for workflow automation and appropriately governed AI tools.

“Any functional area that includes significant manual processes is a candidate for process improvement that might include automation and/or the deployment of AI to reduce labor costs and increase efficiency.”

Foodman acknowledges that implementing these technologies requires upfront investment, however.

“Implementing technological efficiencies in this way will require an investment of time and dollars,” he says. “But these are areas in which you can realize ROI and strengthen your financial position within a short time frame without a massive upfront investment.”

Carefully targeted automation can quickly reduce administrative burden while allowing clinicians and support staff to focus on higher-value work.

Simplify Operations Through Connected Digital Platforms

Healthcare organizations are under increasing pressure to improve efficiency while managing growing complexity across systems, providers and patient touchpoints. Tirumala Ashish Kumar Manne, Principal Cloud Architect at Optum, believes the first step for CEOs should be investing in digital capabilities that reduce friction throughout the healthcare ecosystem.

“The first strategic decision I would recommend is investing in digital capabilities that reduce administrative complexity while improving patient access and care coordination.”

He argues that fragmented processes create hidden costs throughout the healthcare system, forcing employees to spend valuable time managing inefficiencies instead of supporting patients.

“Fragmented, manual processes are one of the largest hidden costs in healthcare, draining margin through rework, delays and compliance risk,” he says. “Replacing them with interoperable, patient-centered platforms streamlines operations and gives clinicians time back for care.”

Manne emphasizes that successful technology investments should not be viewed as isolated IT projects. Instead, they should be tied directly to organizational goals around access, quality, efficiency and financial sustainability.

“Leaders should treat technology as a strategic enabler rather than a cost center.”

The long-term opportunity, he says, comes from simplifying healthcare operations and improving how information moves throughout the system.

“The greatest long-term financial gains come from simplifying workflows and connecting data, because a seamless experience for patients, providers and caregivers is also the most efficient one to operate,” he says.

Key Tips for Healthcare CEOs Facing Financial Pressure

• Create governance structures that balance mission, margin and risk. A cross-functional council can help executives align priorities, monitor early warning signals and ensure financial decisions remain connected to patient care goals.
• Align reimbursement with the value your organization creates. Healthcare leaders should examine whether payer relationships recognize improved outcomes, reduced costs and innovative care delivery models.
• Improve workflows before reducing workforce capacity. Eliminating inefficient processes, duplicate work and administrative burden can create greater financial impact than cutting staff.
• Strengthen supply chain resilience through standardization. Identifying alternative suppliers and reducing unnecessary variation can improve efficiency while protecting patient-facing services.
• Build a unified operating model across clinical and business functions. Enterprise-wide metrics and aligned incentives help organizations reduce friction and improve performance.
• Target avoidable complications as a financial opportunity. Investments in care transitions, follow-up and prevention can simultaneously improve outcomes and reduce unnecessary costs.
• Modernize technology without automatically replacing existing systems. Open standards and strategic integration can unlock innovation while avoiding expensive disruptions.
• Automate repetitive administrative processes. AI and workflow automation can reduce operational costs in areas such as revenue cycle management, claims processing and prior authorization.
• Treat technology as a strategic driver of healthcare efficiency. Connected digital platforms can simplify workflows, improve access and create long-term financial value.

Sustainable Growth Requires a New Operating Mindset

Financial pressure will continue to be a reality for healthcare organizations, but the strongest leaders will resist treating every challenge as a cost-cutting exercise. The more important question is whether the organization is built to deliver care efficiently, adapt quickly and create value for patients, employees and the communities it serves.

The CEOs who succeed in this environment will be willing to look beneath the surface—to rethink outdated processes, challenge assumptions and invest in the changes that make the organization stronger over time. Financial sustainability and better patient care are not competing goals; when strategy is aligned correctly, they can reinforce each other.