Article
How to achieve operational efficiency in healthcare
A provider roadmap to navigate industry challenges
Jun 16, 2025 · Authored by Mark J. Ross, Jennifer Schwalm, Ed Ricks, Debra K. Bowes, Krista K. Pankop, Joseph Loiacono
Mid-year update
As we reach the halfway point of 2025, many of the themes from our “Provider Industry Forecast for 2025 and Beyond” webinar remain highly relevant, yet new developments are emerging that healthcare providers should be mindful of, and that Baker Tilly continues to monitor closely.
One of the most significant legislative shifts under discussion is the “One Big, Beautiful Bill.” While still in early stages, its potential implications on reimbursement, regulation and competition could be profound.
Cybersecurity is also climbing the priority list for healthcare executives, particularly after recent high-profile breaches prompted increased federal oversight. New HHS guidelines and pending rulemaking signal a shift from reactive to proactive cyber risk management in healthcare.
Additionally, labor pressures have evolved, with some markets seeing early signs of stabilization while others grapple with persistent shortages in nursing, behavioral health and primary care. More systems are investing in AI-powered productivity tools, talent retention strategies and collaborative staffing models to fill the gaps.
Finally, reimbursement challenges are growing more complex. The impact of the “One Big, Beautiful Bill” on future Medicaid and Medicare funding is a concern for healthcare providers across the continuum of care. Further, challenges relative to reimbursement rates under managed care contracts as well as increasing scrutiny around prior authorization and value-based care reporting demand renewed focus on managed care contract performance and payer relations. Organizations that haven’t reviewed contracts or developed payer scorecards since the start of the year should revisit these strategies now.
At Baker Tilly, we’re closely tracking these developments and working with providers to adapt their strategies for financial stability, regulatory alignment and long-term growth.
The following article was originally published from insights shared during Baker Tilly’s “Provider Industry Forecast for 2025 and Beyond” webinar, held January 29, 2025. While some conditions have evolved, the themes and perspectives presented remain valuable for understanding the foundational challenges and strategies shaping the year ahead.
The healthcare industry is undergoing a profound transformation. As providers navigate potentially significant changes, they must contend with rising financial pressures, workforce shortages, regulatory changes and technological advancements, all while maintaining high-quality patient care. In an era where private equity investment and increased federal scrutiny are reshaping the landscape, healthcare organizations must adopt proactive strategies to ensure financial sustainability and operational efficiency in healthcare, positioning themselves for long-term resilience and growth.
The role of technology for operational efficiency in healthcare
The digital age continues to transform the way healthcare operates. Technology has the potential to revolutionize patient care, streamline administrative workflows and enhance financial sustainability. However, providers still struggle to maximize the potential of their existing technology. The full capabilities of Electronic Health Records (EHR) and Enterprise Resource Planning (ERP) systems are often underutilized. The challenge lies not in acquiring technology but in optimizing its use to streamline workflows and enhance decision-making.
Organizations must embrace healthcare automation and artificial intelligence (AI) to alleviate administrative burdens. AI has the potential to transform clinical workflows, from assisting in diagnostics to predicting patient deterioration. Additionally, healthcare systems must ensure interoperability across platforms, especially in the wake of mergers and acquisitions. Without seamless data integration, organizations risk inefficiencies that can hinder patient outcomes and operational performance. As the volume of data increases, cybersecurity also becomes a critical concern. Cyber threats pose a significant risk to patient information, making it imperative for providers to invest in robust security frameworks to protect sensitive data and maintain compliance with regulatory requirements.
Addressing workforce shortages and preventing burnout
Workforce shortages remain one of the most pressing challenges in healthcare today. From clinical roles to administrative functions, the strain on staffing continues to disrupt operations, impact patient care and drive costs. Burnout among healthcare professionals has become a critical concern, contributing to declining morale and high turnover rates. Organizations must take proactive measures to address these issues, ensuring that they can attract and retain top talent in a competitive labor market.
American Hospital Association [1]More than half (58%) of health system executives expect workforce challenges, including talent shortages, retention issues and the need for upskilling, to influence their organizational strategies in 2025.
One effective strategy is leveraging technology to automate administrative tasks, allowing healthcare professionals to focus more on patient care. Telehealth and flexible scheduling have emerged as solutions to alleviate workforce pressures, offering providers the flexibility needed to maintain high-quality care while reducing burnout. Additionally, recruitment efforts must prioritize specialized professionals, particularly in high-demand fields such as behavioral health. Healthcare leaders must rethink traditional workforce models by incorporating cross-training opportunities and restructuring employment strategies to create a more adaptable and resilient labor force.
Strengthening managed care contracts for financial sustainability
Financial viability of healthcare organizations partially depends on their ability to negotiate effective managed care contracts. In 2025, the focus must shift towards strategic payer relationships that maximize reimbursement while ensuring sustainability. Many healthcare providers operate under outdated contract terms that fail to account for evolving payment models, leading to unfavorable financial outcomes.
To navigate this landscape, organizations should consider developing comprehensive payer scorecards or conducting a comparative review for each payer to measure contract effectiveness. It's important to be able to measure the health of the relationship. Price transparency tools can provide valuable insights, allowing providers to benchmark reimbursement rates against industry standards and identify areas for improvement. Additionally, alternative payment models that align with value-based care initiatives can create new opportunities for revenue generation while enhancing patient outcomes. By conducting thorough contract reviews and renegotiating outdated or unfavorable terms, organizations can strengthen financial sustainability and improve operational efficiency in healthcare.
Expanding services in senior care and behavioral health
Demographic shifts and evolving patient needs are driving increased demand for senior care and behavioral health services. The aging population presents both opportunities and challenges for healthcare providers, requiring innovative solutions for sustainable, effective care delivery.
One key behavioral health strategy is the continued growth of Certified Community Behavioral Health Clinics (CCBHCs) and behavioral health urgent care centers. More than 500 CCBHCs now operate across 46 states, Washington D.C., Guam and Puerto Rico, with 14 additional states and D.C. recently receiving grants to develop programs — underscoring strong momentum in behavioral health expansion.
Senior care is also transforming, as health systems seek to partner with organizations to facilitate the transition from acute to post-acute care. While assisted living and independent living occupancies have generally returned to pre-pandemic levels, nursing facilities continue to face financial pressures. Providers are reevaluating delivery models, continuing the shift toward home- and community-based care, right-sizing campuses and engaging boards and residents more deeply in strategic planning.
Looking ahead, providers in both sectors should be intentional about where and how they grow. Whether through affiliations, geographic expansion or new program and service offerings, success will depend on aligning services with evolving community needs and ensuring the operational and financial infrastructure is in place to support long-term viability.
Navigating private equity investments and regulatory changes
Private equity continues to play a prominent role in the healthcare landscape, particularly across outpatient care, behavioral health and home-based services. According to Private Equity Stakeholder Project cited more than 1,000 unique PE-backed healthcare deals, including 166 leveraged buyouts, 262 growth or expansion investments and 621 add-on acquisitions [2].
Baker Tilly’s Healthcare M&A Update – H2 2024 report confirms that healthcare M&A activity remains active, with 276 closed deals in the second half of 2024 alone. While overall volume dipped slightly from previous periods, deal value surged, driven by several large transactions exceeding $1 billion in enterprise value. Notably, healthcare IT and tuck-in hospital deals continue to draw strong interest from investors seeking scalable platforms.
Regulatory scrutiny over private equity transactions is intensifying, with agencies such as the Federal Trade Commission (FTC) and Department of Justice (DOJ) implementing measures to increase transparency in healthcare ownership and pricing models. Healthcare providers must stay informed about evolving regulations and develop strategies to manage capital investments while mitigating compliance risks. By proactively addressing regulatory requirements and aligning with best practices, organizations can navigate the complexities of private equity involvement while maintaining their operational integrity.
Looking ahead
Staying ahead requires a strategic approach that aligns with industry trends and regulatory developments. Leveraging technology, refining managed care contracts, addressing workforce challenges, expanding services and proactively managing compliance are all essential components of a successful healthcare strategy. Organizations that embrace innovation and adaptability will be best positioned to navigate the evolving healthcare landscape and achieve long-term sustainability.
At Baker Tilly, we understand the complexities of the healthcare industry and offer tailored advisory, assurance and tax solutions to help providers navigate these challenges. To learn more about how we can boost your operational efficiency in healthcare or support your organization, contact our dedicated team.
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