Regulatory Uncertainty Drives New Business Models for Healthcare

As healthcare provider and payer organizations look toward 2026 planning, regulatory and reimbursement complexity has become one of the most powerful forces reshaping the industry. These dynamics are no longer background considerations; they are primary drivers forcing organizations to rethink their operating and financial models to remain viable.

Industry drivers

Regulatory and reimbursement dynamics are no longer background considerations; they are primary drivers forcing organizations to rethink their operating and financial models to remain viable. What makes this moment different is not any single policy shift, but the cumulative effect of overlapping, fast-moving changes that are reshaping incentives, margins and strategic decision-making across providers and payers alike.

One Big Beautiful Bill Act (OBBBA)

Recent federal policy shifts highlight the scale of this challenge. The One Big Beautiful Bill Act tightens federal spending by reducing Medicare reimbursement rates and cutting Medicaid funding, increasing uncompensated care and bad debt for provider organizations already operating on thin margins. For many health systems, this pressure is structural, not temporary.

Expiring subsidies and reimbursement

Payers face parallel uncertainty. The likely expiration of Affordable Care Act subsidies introduces a meaningful risk of member churn as premiums rise, requiring health plans to continually recalibrate membership and risk pools. This volatility complicates pricing strategies, care management investments and long-term growth planning.

Unresolved questions around telehealth reimbursement and hospital-at-home programs add another layer of complexity. Telehealth reimbursement and the hospital-at-home waiver are both set to expire at the end of this month, with Senate approval still pending for an extension through 2030. These unknowns make it difficult for organizations to confidently plan virtual care investments, workforce models and downstream operational capacity.

Funding cuts

Funding cuts are also reverberating across the ecosystem. Provider organizations—particularly academic medical centers and research institutions—are absorbing the impact of last year's grant reductions. These cuts affect not only research staff, but also the technology infrastructure required to support research, including compute, data platforms and advanced analytics. At the same time, both payers and providers are feeling the effects of reductions in Centers for Disease Control and Prevention (CDC)-funded mental health and addiction programs, which have significant implications for service lines and community care delivery.

Interoperability pressures

Interoperability mandates further intensify the pressure. CMS's interoperability and prior authorization rule, which requires a 72-hour turnaround time for prior authorizations, places substantial demands on payers to meet API-based data access requirements by January 2027. Providers, meanwhile, continue to manage the operational consequences of 21st Century Cures Act compliance, including HL7 FHIR-based interoperability and expanded patient data access expectations.

Policy volatility

Healthcare saw unprecedented policy volatility beginning in 2025. Rapid executive orders, shifting regulatory guidance and evolving judicial decisions are occurring at a pace healthcare organizations have never experienced. Conflicting guidance—such as CDC vaccination recommendations diverging from American Academy of Pediatrics guidelines—creates real operational risk, with potential downstream impacts on reimbursement, clinical workflows, supply chain planning and demand forecasting.

Reimagining business models

These industry drivers explain why healthcare leaders are rethinking how they operate their core business as they plan for 2026. Financial resilience now depends on deliberate investments in these key areas that align with changing regulatory realities and healthcare consumer expectations.

1. Care delivery redesign 

Providers are serving a growing population of uninsured and underinsured patients who increasingly rely on emergency and acute care settings, driving bad debt while reimbursement declines. In response, health systems are expanding profitable, scalable care models—even when reimbursement per encounter is lower than traditional inpatient care. This includes maturing ambulatory procedural service lines such as gastroenterology and ophthalmology, building freestanding ambulatory surgical centers, strengthening post-acute capabilities, and increasing investment in oncology programs.
 

2. Strategic mergers, acquisitions and divestitures 

Some health systems are divesting underperforming service lines, hospitals or provider groups, particularly in low-reimbursement or rural markets. The sale of laboratory assets or home health services illustrates how divestitures are helping provider organizations improve access and affordability while freeing resources to focus on core priorities. At the same time, private equity investment—especially in ambulatory medical groups—continues to reshape the competitive landscape.
 

3. New partnership models 

Health systems and payers are forming nontraditional relationships to improve financial resilience. Retail partnerships are expanding to meet the expectations of Gen Z and Millennial consumers who favor urgent care and retail clinics. In parallel, direct-to-employer (D2E) models are gaining traction as health systems partner directly with employers to offer bundled pricing, packaged procedures and competitive fee schedules.
 

4. Workflow transformation

AI-driven solutions are being deployed to reduce administrative burden, lower operating costs and fundamentally change how organizations function across the enterprise. Organizations are shifting from AI pilots to scaled, governed enterprise AI across clinical and operational functions. AI solutions will need to go beyond accelerating the status quo to creating and delivering on new jobs that were previously inconceivable – with game-changing impact.

What healthcare leaders should do now

As 2026 approaches, leaders should focus on a few decisive actions:

1. Plan for volatility, not stability. Build financial, operational and technology models that can flex as reimbursement and policy shift.
2. Prioritize care models that scale. Invest in ambulatory, post-acute and virtual care capabilities that balance access, quality and margin.
3. Be intentional with portfolios. Actively evaluate which service lines to grow, partner, divest or exit.
4. Use automation strategically. Deploy AI to redesign workflows, not just optimize existing ones.
5. Modernize for interoperability now. Treat API-first architectures as foundational to compliance, innovation and future partnerships.