New budget law has healthcare leaders eyeing workforce ‘pruning’ strategies

Hospitals and health systems are reevaluating workforce strategies — including compensation and benefits — in response to various provisions of the One Big Beautiful Bill Act, signed by President Donald Trump on July 4. 

The law includes changes to Medicaid, such as tighter federal oversight of Medicaid provider taxes and new work requirements. The Congressional Budget Office estimates Medicaid spending will decrease by nearly $1 trillion over the next decade.

The OBBBA also phases out enhanced federal medical assistance percentage incentives connected to provider taxes and restricts ACA premium tax credits eligibility.

Human resources leaders at health systems told Becker’s the provisions have them reevaluating their workforce strategies, but they also emphasized their continued commitment to their workforces.

The broad evaluation of workforce strategies

The OBBBA will affect health systems differently, depending on the size of their workforce, their geography and whether the states they serve have expanded Medicaid. Greenville, S.C.-based Prisma Health, a health system with 29,910 employees and 18 hospitals across a 21-county service area, has conducted extensive calculations on the law’s potential effects — revealing a significant financial impact.

With this in mind, the organization is focused on staying as lean as possible from a human resources perspective, Amy Linsin, executive vice president and chief human resources officer, said.

“In terms of [full-time equivalents] in the field, in the hospitals and in the outpatient setting, we’re looking at our productivity and benchmarking and figuring out, in the most appropriate way, if we have places that can be run a little bit more efficiently,” she said. 

She said Prisma Health is also evaluating partnerships and “areas where we think an outside group could do a piece of our more peripheral business — in a way that is at a better price point, at a very high-quality level.”

From a benefits standpoint, Ms. Linsin is focused on shifting the plan toward care management. She specifically pointed to one of Prisma Health’s largest markets, the Columbia, S.C., area, which is an area with a significantly high incidence of amputations due to diabetes.

“We’re trying to figure out, not just from our employee benefits plan, but also from our care-management teams internally that work in our communities, how can we get more efficient with that?,” Ms. Linsin said. “We realize that we work with other members of the community and other members of the clergy to help us approach that team.”

Cincinnati-based UC Health, which is home to UC Medical Center, the region’s only adult academic health system, also anticipates workforce strategy adjustments amid increased financial pressure. UC Health Chief Human Resources Officer Margie Zyble told Becker’s this comes as the organization aims to protect the progress made over the past 18 months — specifically, lower turnover and higher employee engagement scores.

“We’re trying to protect the core of what we do in the employee experience while also making ‘big swing’ decisions that might feel tough in the short term but position us for long-term success in a new landscape,” Ms. Zyble said.

Reevaluating compensation and capital investment

The OBBBA will affect systems across the country, prompting executives to examine decisions related to the workforce and other areas.

At Prisma Health, “everything’s back on the table,” according to Ms. Linsin.

“Everything that was on the table in terms of longer-term capital investment is all being reconsidered,” she said. “We’re not stopping — we’re moving forward. We’re a strong system, but any of the little bit more nicer-to-have programs are now being questioned, and that’s not good for South Carolina, because we already have an access problem.”

Prisma Health is also focused on continued investment in team members, particularly those in the lower income group. 

“[For] that group, we are working on another adjustment to minimum wage to get that up again. We’ve been doing that every year for the last six years, and making sure that that group has access, through benefits and fairs, to local resources,” Ms. Linsin said.

Ms. Zyble said leaders at her organization have also discussed compensation and will continue on the path that they’ve been on for fiscal year 2026, knowing that shifts may be needed in the future. 

Additionally, she said leaders are evaluating benefits to ensure competitive premiums for employees in the market.

Overall, Ms. Zyble acknowledged that UC Health is reevaluating every decision around the workforce.

“It doesn’t mean that we’re changing it,” she noted. For example, “this past year, we made a massive investment in some AI technology to enable our people leaders. We’re committed to doing that, but not without having first gone back and reevaluated it.

“Our leadership team is very much in the mindset that if we lose our workforce and the discretionary effort that comes with being engaged, then we’re going to be leaning into a turnover situation, which is where we’ve come from. And turnover costs money down to the bottom line.”

A ‘pruning’ exercise

Ms. Linsin and Ms. Zyble agreed that, in addition to this work, long-term workforce planning will be crucial, since various provisions of the bill will be implemented over multiple years. But Ms. Linsin sees a bright spot.

“We knew that the industry was going to take a minute to recover [after the COVID-19 pandemic], and we very proactively started maintaining a pretty tight corporate overhead structure so that, luckily, we’re not having to be draconian now. We’re not having to be drastic,” she said.

It does, however, mean carefully considering future partnerships and taking as many steps as possible to help protect programs related to health insurance and other benefits, she noted.

“In South Carolina, for example, we have inpatient psychiatric care for teens, and I want to make sure that I keep that in our health plan so that they don’t have to go someplace else for that [care],” Ms. Linsin said. “Those are the parts that really feel onerous for me, particularly where the children are involved. And that makes it hard to sleep. It keeps you up at night.”

Ms. Zyble said UC Health also understands choices are forthcoming in response to the state budget, as well as the federal legislation.

“We already were in the mindset that we are going to have to make choices about how we best serve the greater Cincinnati community, and it’s probably going to mean we’re able to do less for the community,” she said. 

“Of course, patients are a top priority, but we need to make sure we have a great breadth of [offerings], and we’re going to have to be a lot more strategic about [offerings] that intersect directly with the community’s biggest needs, versus having the luxury of offering things that are definitely needed in the community but are maybe serving less of the community or have greater financial pressure.

“I think about it as a pruning exercise with some tough choices.”