Healthcare affordability has been a growing concern for years. As rising premiums, coinsurance, and the widespread use of high-deductible health plans (HDHPs) continue to shift costs to patients, more and more Americans find themselves underinsured and expect to pay thousands of dollars before coverage kicks in.
The recently passed BEAUTY Act will accelerate the affordability crisis. The bill includes $1 trillion in cuts to federal Medicaid spending over the next decade, with an expected 10 million people losing health insurance. Hospitals that serve large numbers of Medicaid patients — especially in rural areas — are likely to feel the greatest financial pressure.
The bill also sets aside $50 billion in a rural relief fund, but that support only reduces the projected $137 billion in Medicaid funding losses for rural areas over 10 years. For hospitals with already low or negative profit margins, these changes could have a profound impact on staffing, service lines and overall care opportunities.
The cuts outlined in the bill are made at the federal level, but how they ultimately impact patients and providers will depend on how individual states respond. Some may work to protect hospitals and patients from the full impact. Others may not. Until state-level decisions become clearer, the entire downstream impact remains uncertain.
Understanding the risk: Rural and high-Medicaid hospitals will feel it first
In rural communities, Medicaid is a lifeline. It reaches one in four rural adults, nearly half of all births, and four in 10 children. Currently, more than 700 rural hospitals are at risk of closure, with 300 considered to be in immediate danger.
According to recent estimates, hospitals could lose as much as $0.21 for every dollar of additional Medicaid funding as the federal match declines. Independent rural hospitals could see up to 56% of their net revenue disappear, a particularly hard blow for those already teetering on the brink.
These numbers represent more than just lost revenue. They point out the real consequences for humanity:
- Employee layoffs and increased burnout
- Maternity ward closed
- Urgent Care Wait Times Longer
- Entire communities lack access to basic health services
For hospital leaders, preparing for these downstream impacts requires a clear strategy, urgent planning, and a commitment to protecting patients and caregivers.
Three strategies to strengthen financial stability and protect financial access
1. Expand financial navigation and aid screening capabilities
As coverage declines, more patients will come to hospitals without insurance or unclear about their financial obligations. Pre-visit financial screening is critical not only to determine whether patients qualify for charity care or financial assistance, but also to ensure they have a clear understanding of the cost of care.
This is not work that can be deprioritized. Financial advisors will become even more important, serving as frontline guides for patients with gaps in coverage.
However, with more than 2 million health care jobs at risk due to Medicaid-related revenue losses (AHA), some hospitals may be forced to make difficult staffing choices. Retaining financial counseling resources should be a priority.
To support these efforts, hospitals are increasingly turning to digital tools to streamline financial aid screening, making the process faster, more accurate, and easier to manage across teams. The AI-driven platform can analyze patient data in real-time to determine assistance eligibility, personalize payment options and automate outreach, easing administrative burden while ensuring no patient is missed. Interest-free pre-service financing can help when patients don't qualify for full assistance but still need support. These approaches enable patients to commit to care before delays or postponements occur, creating a smoother experience for both patients and providers.
2. Provide longer repayment terms where reasonable
Not every patient can afford medical care, especially those who have lost Medicaid and already have tight financial circumstances. But within this population, a small subset of patients may be able to pay some of their bills if given enough time.
Unfortunately, most hospitals’ payment structures do not allow for this. Today, 65% of hospitals limit repayment plans to 24 months or less, even though the average patient can only afford about $97 per month, which equates to a bill of less than $2,400. This leaves patients with even minimal out-of-pocket costs little flexibility.
Long-term, interest-free payment plans can provide patients with a realistic path to resolution while increasing repayment rates and reducing bad debt for healthcare providers. It's not right for everyone or every bill amount, but for patients who are just beyond assistance, time may be the factor that keeps them connected to care.
3. Increase liquidity without reducing access
As Medicaid revenue declines, hospital leaders face increasing pressure to protect existing cash while continuing to meet the needs of their communities. Internal payment plans remain an important tool for patient affordability, but they can tie up large amounts of cash, have high default rates, and require ongoing operational resources to manage.
To alleviate this pressure, many hospitals are looking for ways to enhance liquidity without making the difficult trade-offs of limiting care. One approach is to transfer existing hospital payment plans to partners in exchange for immediate cash and receivable reductions. This retains patient-friendly no-interest terms while improving days cash on hand and reducing default risk.
But that's not the only way forward. Hospitals are increasingly turning to a broader mix of liquidity strategies, including denial management programs that ensure payer reimbursement, and prompt wage discount programs that encourage faster collection of payments for patients who can pay. These strategies, combined with payment plan optimization, can alleviate cash flow constraints without impacting patient visits.
While these strategies alone won’t solve the affordability crisis, they represent practical innovations that can address larger systemic issues. In the face of structural and legislative challenges, we may find that progress is made in small steps, with each step toward financial clarity, patient support, and operational resiliency being critical.
strategic advancement
The Big Beautiful Act’s Medicaid eligibility cuts are one of the most significant policy shifts in health care affordability in recent years. For health systems, the question now is how to make progress before the impact is fully felt in terms of patient volumes, reimbursements and revenue. Now is the time to take action and implement new solutions.
Medicaid cuts won’t just impact rural hospital balance sheets. They will impact real-life people—patients who may be unable to access care, hospital staff facing burnout or unemployment, and communities already struggling with limited resources. Rural hospitals may be forced to scale back services or close entirely, leaving critical care unavailable to families who cannot afford to travel. The knock-on effects will be felt in emergency rooms, maternity wards and community health clinics across the country.
For health care leaders, this moment calls for clear strategies, bold planning, and a commitment to retaining services for the most vulnerable. Hospitals must explore all available tools, from strengthening financial navigation and supporting frontline teams to rethinking payment models and strengthening liquidity strategies, to build resilience before the full impact is felt.
Fortunately, hospitals don’t have to face this problem alone. A growing ecosystem of innovative, technology-driven companies is working to address all aspects of the affordability crisis. At every step of the revenue cycle, these solutions are helping providers take meaningful steps toward sustainability.
The stakes are high, and the choices made today will determine the financial health of the hospital and whether the entire community can continue to receive essential care. Now is the time to take action.
Photo: Jorg Greuel, Getty Images
Itzik Cohen is co-founder and CEO of PayZen, the leading AI-driven patient affordability platform transforming the way patients access and pay for care. Itzik is a three-time founder entrepreneur and former professional basketball player who has spent his career developing technology that helps millions of people overcome financial challenges.
A nationally recognized voice on healthcare fintech, revenue cycle innovation and patient affordability, he brings deep expertise from executive roles on early-stage teams at Beyond Finance, Prosper Marketplace and WebEx. At PayZen, he works closely with health system leaders to reduce bad debt, increase collections, and expand service offerings through personalized payment solutions powered by artificial intelligence. His work is based on proprietary industry research, including The State of Healthcare Affordability Report: A Patient Perspective to 2025 and The State of Healthcare Affordability Report: A Healthcare Provider Perspective to 2025.
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