Anyone who’s ever been sick knows that the U.S. health care system has serious challenges: rising costs that make it difficult for patients, providers and payers; a health care system that’s difficult to navigate on even the best day; and data showing that while the U.S. spends much more on health care than other developed countries, our country's health outcomes are worse.

On this episode of HealthChangers, host Ashley Bach spoke with Dr. Lisa Bielamowicz, chief clinical officer at TrustWorks Collective. Dr. Bielamowicz has spent her career figuring out how to make health care better, first as a physician and now as a longtime advisor to health systems and provider groups. She explores the market forces impacting American health care today, and how hospitals and health systems can best adapt to rapid change.

Listen to the full podcast episode on the player above. Below are some highlights, which have been edited for length and clarity. 

AB: What are the market forces pressuring the traditional health care model right now?

LB: When you look back over the past four or five years since COVID, there aren't many things where the market forces are different. It's just that everything is moving faster. Of course there's a ton of uncertainty in the economy. We got through one recession in COVID, and now everyone is watching tariffs and looking toward how that might increase the prices of supplies and pharmaceuticals. It makes consumers feel uncertain; that, of course, then feeds into how health care organizations are looking at consumer demand for care.

Given that the vast majority of Americans now have a significant deductible in their health insurance plans, if I'm carrying a $2,000 or $3,000 deductible and I feel strapped for cash, I might think twice about whether I'm going to refill that prescription or go forward and get that elective surgery that I had been planning to have, which creates a lot of uncertainty for doctors and hospitals.

The other thing that has really ramped up for providers is that they've seen a whole new level of competition come in with disruptors coming from the retail side, vertically integrated payers like UnitedHealth and CVS Health, getting into the care and delivery space and building just huge enterprises that are aggregating a lot of different assets.

And then finally, as we've all been geared to for the past few months, there's been a lot of changes in the policy space as the Trump Administration has taken seat and of course, the passage of the “One Big Beautiful Bill,” as President Trump calls it, which has big implications for health care.

AB: The “One Big Beautiful Bill,” approved by Congress this month, includes some significant cuts to Medicaid. How will that legislation impact the health care industry?

LB: It's going to be huge, particularly on the hospital and health system side. If you look at the bill, and you add up the cuts that are coming to Medicaid, as well as cuts to the Obamacare [Affordable Care Act] exchanges, it's going to be about $1.2 trillion in cuts over the next decade.

The Medicaid expansion [under the Affordable Care Act] that has now rolled out to all but eight or nine states has been really helpful to hospitals in decreasing the amount of uncompensated care, the number of uninsured Americans. Just to give you an idea, with the Obamacare Medicaid expansion, if you are in an expansion state versus a non-expansion state, a hospital who has the same characteristics will have about an additional 2 percent positive points to their margin compared to a similar organization in non-expansion states.

We're predicting that once these Medicaid cuts [under the new bill] roll through in full force, it could be an even bigger impact in the opposite direction to their bottom lines. And what's interesting is the states that have expanded Medicaid the most generously probably have the furthest to fall. So, it's most of your blue states, California, New York, Massachusetts, Oregon, Washington, that are going to see the biggest impact. If you're in a red state, even ones that haven't expanded, though, you will probably still feel it through rate cuts.

It's going to be a direct hit to hospital margins, but it's also going to change a lot of dynamics in how patients are seeking care, and I think how they will work with commercial payers and others.

AB: How are the broader industry challenges, not just the federal legislation, impacting hospitals?

LB: Hospitals have had a rough five years. There's no question. When COVID hit in 2020, of course, it was completely destabilizing, for any of us who work in health care, and especially the clinicians on the front lines.

Rising costs, whether it was on the supply and drug side, but especially the labor side, really hit health system margins hard. You had a sharp rise in cost, and then you also had consumers pulling back on accessing care, so they would get on the revenue side as well. If we go to ’20, ’21, ’22, their margins dipped pretty precipitously, and the average health system in the country was in the red. In 2023, they started to recover. Fortunately, the average system in the country is now back in the black, although, you know, if you look even pre-COVID era, health systems operate on pretty slim margins. You're doing good if you make 4 percent; the average is 2 to 3 percent.

What we have seen now is that there's a real difference in those systems who are at the top of the pack and those who are having trouble getting above, back to positive. The systems who are at the top tend to be well organized regional systems, often they're in a good market.

You can't look at the industry with one single lens. You really have to look at an organization where they are, what is their strategy, what's their position in their market, what are their opportunities for growth, and then you get a better read on where they can go.

But in general, in the industry, it feels like we're in a time — and I don't want this to sound too Debbie Downer — but of strategic stasis; and it's a challenge right now, because systems aren't feeling like there is a clear direction forward.

Of course, there's the political and economic uncertainty. You've got a lot of leaders who are late-career baby boomers, which if you and I were having a beer with those CEOs, they probably tell you, “you know what, I got three years, five years left in seat. I'm going to keep the trains on the track and, I'm going to keep it running, and then figuring out the next big thing will be the next guy's problem.” That’s a little bit worrisome, to think about an organization just standing still and treading water because, in any industry where there's a lot of change, disruption and innovation, if you're standing still, you're probably falling behind.

AB: We have seen a trend of hospital systems buying each other, or buying up smaller groups and merging them into their larger system. How have these mergers helped these health systems?

LB: When you look at health-system-to-health-system mergers, the regulatory environment has not been as favorable for the historically traditional in-market horizontal mergers, where, one hospital system merges with another close by, and they have a bigger footprint in the same geographic area. It's become very hard to get that across the line with state and federal regulators. Because that has been so challenging, we now have seen different in-kind combinations of systems where you have, a system merging with another in a completely different part of the country. And I think when you do that, there are opportunities for advantage from that scale, but you have to work really hard to get them.

I had a colleague who described one of those mega-mergers as two drowning men hugging each other. Just because you take two organizations and put them together doesn't mean they immediately become more innovative. If neither of you knows how to build consumer technology, you probably won't be able to do it faster together because the process of coming together takes you five years, so you got to be very honest about what you will get from it. And I think one test that I would hold myself to if I was a health system would be, you know, if you're merging with someone, how would you explain to a doctor in your system or a patient or a guy on the street, if you're a system in Colorado, who merges with a system in Florida, how is this going to make my job, my care, my community better because we're doing this deal?

Interestingly, despite the fact that we're kind of in this point of economic uncertainty, 2025 has been the slowest year for mergers that we've seen in a decade. Even during the pandemic, we had more deal action going than we have right now. And, you know, it’ll be interesting to see what happens across the second half of the year.

But one of the challenges, I think, is that we're lacking an organizing principle for the industry. If you look back over the past 20 years, health system strategy often pointed in the same direction at most organizations. The early 2000s it was service lines and clinical technology. We're buying all these Da Vinci (surgical) robots. We're putting billboards up on the side of the freeway. We have CyberKnives, Gamma Knives to treat cancer. It was this big innovation boom.

Then we had Obamacare. Everyone is becoming an Accountable Care Organization pursuing population health and risk. Then at the end of the last decade, it was digital and consumer. Right now, there is not a prevailing theme in strategy and direction across health systems today, which I think leaves some of them thinking like, “Huh, I'm not exactly sure where we're going. I know the old playbook is not going to work as well as it used to, but I don't know how to write the new one.”

AB: You've said that for hospitals to succeed, they need to focus on the basics, right?

LB: The knee-jerk reaction for health systems is, “Oh, my gosh, we need to go out. We need to hire consultants. And do a whole bunch of studies and, group our consumers by lifestyle or by demographics to come up with a framework to figure out what our consumers want.” It turns out doing that in health care is actually really hard. So we tried to lift it up to get health systems thinking, “well, consumers want from health care what they want from everything else, and that is what we call AARP. It's an acronym that's easy to remember. We want health care that is Accessible, Affordable, Reliable and Personal.

Accessible. Bring it closer to me. Have it available when I need it, when I want. It doesn't mean you have to offer everything all the time, but meet consumers where they are for the specific decisions they're making and closer to where they live and work.

Affordable. Health care, we don't always want the cheapest. We don't want Walmart health care for everything, but please don't bankrupt me, and for a lot of consumers, a $5,000 deductible can feel like it's doing that.

Reliable means, of course, clinical quality, but it also means, make health care easy for me. When I show up, greet me. Don't make me wait too long, make it a seamless experience.

And then Personal, you've got all this data about me. You paid millions of dollars for these electronic medical records. Know me. Don't make me repeat things over and over again. Don't make me fill out all these paper forms and go even one better. Can you personalize and create recommendations for me. It always makes me chuckle when I get the postcard in the mail or the e-mail from my vet or my dentist saying, “You know what? Penny your dog is due for her shots.” Or, “Lisa, you need to come in and get your teeth cleaned.” Frankly, my primary care physician doesn't do that very well. Dentists and vets are a much more consumer-focused industry and they've gotten parts of that personalization right.

AB: What are the bright spots for hospital systems?

First, there is a new wave of innovation that is coming. You know, one of the other things that the pandemic did is we had fantastic innovation in digital health and of course on the vaccine side. But it has felt for a lot of the last decade, like technology in health care, the innovation curve had kind of flattened a little bit. It feels like it's back now and that we're seeing a new spate of treatments for diseases that are going to have a real impact for consumers. Now, a lot of those bring new costs, particularly on the pharmaceutical side; but for organizations who can figure out how to weave those into care pathways and a broader service offering, there's a lot of potential there.

And then the last thing I’d mention that I know is a strength for our hospitals and doctors, is we retain the trust of patients. I think particularly when you find patients who are dealing with a tough decision or thinking about how they're going to access health care, we are expecting to see much more innovation coming directly into patients’ homes. Someone's going to have to bring that there. If I think about who I want to let into my home to help with my health care, I am much more likely to think about my doctor, my local health system. My health system has probably been a presence in this community for 50 years or more. There's a lot of trust there.