National Daily Hospital News
Executive Briefing
Wednesday November 26th, 2025
Today:
>Rural Health Transformation Fund and Site-Neutral Cuts
>Margins still thin as non-labor costs surge
>Three Case Studies in margin improvement
>EHR Interventions Reduce Errors and Readmissions
>Case Study of Hospital Readmissions Reduction Program (HRRP) Improvement
>Case Study of Hospital Quality Improvement Contractor (HQIC) Improvement
>Recommendations: Scale HQIC-Informed Safety and Readmissions Collaboratives
>Recommendations: Run a CY 2026 OPPS and Site-Neutral Stress Test
Global and Health Sector Headlines
Rural Health Transformation Fund and Site-Neutral Drug Policy – Washington Post / WP Intelligence (may require subscription)
The Washington Post’s Health Brief describes how a new $50 billion Rural Health Transformation Fund, created in a recent Republican tax-and-domestic-policy law, could reshape rural care by financing hospital restructuring, acquisitions, and technology partnerships rather than simply shoring up existing facilities. Arkansas’s proposal would use the fund to analyze struggling hospitals’ finances, improve revenue-cycle performance, and potentially support acquisitions or service “right-sizing,” including decommissioning underused space and redeploying staff. The report warns that consolidation could increase prices and, based on prior studies, may degrade access or quality if not carefully overseen. The same brief highlights CMS’s finalized site-neutral payment policy for physician-administered drugs in off-campus hospital outpatient departments, which will save Medicare over $200 million and beneficiaries about $70 million in 2026, while prompting concern from teaching hospitals about reduced resources for complex patients. It also notes new transparency requirements for hospitals to publish real, consumer-usable prices and the phase-out of the inpatient-only list, accelerating migration of procedures to ambulatory surgery centers.
https://www.washingtonpost.com/wp-intelligence/health-brief/2025/11/24/50-billion-rural-health-gamble/ The Washington Post+1CY 2026 OPPS Final Rule: 2.6% Rate Increase and Expanded Site-Neutral Cuts
CMS’s 2026 Hospital Outpatient Prospective Payment System (OPPS) and ASC final rule increases Medicare outpatient payment rates by a net 2.6%, but also expands site-neutral payment for drug administration in grandfathered off-campus hospital outpatient departments to 40% of the OPPS rate, with rural sole community hospitals exempted. The rule phases out the inpatient-only list over three years, adds 547 procedures to the ASC covered list, and maintains a 0.5% annual conversion factor reduction starting in 2026 to recoup earlier 340B-related overpayments, drawing strong objections from the AHA over added strain on rural and safety-net providers.
https://www.aha.org/news/headline/2025-11-21-cms-issues-cy-2026-opps-final-rule American Hospital AssociationHospital Price Transparency Tightened in 2026 OPPS Rule
A companion CMS fact sheet details new hospital price transparency provisions that replace estimated allowed amounts with actual median, 10th, and 90th percentile allowed charges in machine-readable files and require hospitals to encode counts of allowed amounts, making payer-specific negotiated rates more comparable. These changes will require substantial data and IT work but are intended to give patients “real, consumer-usable prices,” backed by enforcement with civil monetary penalties.
https://www.cms.gov/newsroom/fact-sheets/cy-2026-opps-ambulatory-surgical-center-final-rule-hospital-price-transparency-policy-changes CMSMedicare Site-Neutral Reform: Modest but Directionally Important
A new Kaiser Family Foundation quick-take reviews the 2026 OPPS final rule and characterizes the drug-administration site-neutral change as a relatively modest step that still leaves much higher payments for many services in hospital outpatient departments vs physician offices. The analysis notes that MedPAC and others have urged broader site-neutral reforms and stresses that hospitals treating sicker, more complex patients will need targeted protections as payment differentials narrow.
https://www.kff.org/quick-take/the-trump-administration-moves-forward-with-medicare-site-neutral-payment-reform/ KFFMedicare Margins Under Pressure Despite Overall Hospital Recovery
MedPAC’s March 2025 Report to Congress documents long-running negative Medicare margins for hospitals even as all-payer margins gradually recovered after the pandemic, underscoring that many hospitals still rely on commercial payers to cross-subsidize Medicare and Medicaid. The chapter emphasizes that while hospitals have adapted to financial pressure through cost control and service-line shifts, persistent negative Medicare margins raise concerns about access in rural and safety-net markets.
https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch3_MedPAC_Report_To_Congress_SEC.pdf
Today’s Focus Topics
For today’s deeper dive, this briefing concentrates on:
Hospital Finance, including margin, charges and reimbursements
Hospital Quality, Infection Control, and Hospital Readmissions / Transitional Care / Case Management
Hospital Finance, Including Margin, Charges and Reimbursements
A. News
Margins Still Thin as Non-Labor Costs Surge
Strata’s September 2025 financial benchmarks show the median year-to-date health system operating margin inching up from 1.0% in August to 1.1% in September, while total hospital expenses rose 7.5% year-over-year, driven by 12.8% growth in drug costs, 12.1% in supply expenses, and 8.0% in purchased services.
https://www.stratadecision.com/monthly-healthcare-industry-financial-benchmarks Strata Decision TechnologyCY 2026 OPPS: 2.6% Update with Site-Neutral Drug Cuts and IPO Phase-Out
CMS’s CY 2026 OPPS final rule increases OPPS rates by 2.6% but also implements site-neutral payment for drug administration in grandfathered off-campus HOPDs at 40% of the OPPS rate (excluding rural sole community hospitals), while continuing 340B recoupment and phasing out the inpatient-only list, which the AHA warns will disproportionately harm rural and high-acuity providers.
https://www.aha.org/news/headline/2025-11-21-cms-issues-cy-2026-opps-final-rule American Hospital AssociationOPPS Changes to Reduce Spending and Patient Coinsurance
Reporting on the final rule estimates that OPPS spending will fall by about $290 million in 2026, including $220 million in Medicare savings and $70 million in reduced beneficiary coinsurance, largely due to the drug-administration site-neutral policy and related payment changes.
https://www.fiercehealthcare.com/regulatory/cms-finalizes-26-payment-increase-hospital-outpatient-centers-ascs Fierce HealthcareDialysis Provider Earnings Highlight Cost-Cutting Trend
Fresenius Medical Care, which derives most of its revenue from the U.S., reported a 28% year-over-year increase in adjusted Q3 operating income to €574 million, attributing gains to an aggressive cost-cutting program targeting up to €1.05 billion in annual savings by 2027, even as elevated flu-related mortality among patients continues to drag on volumes.
https://www.reuters.com/business/healthcare-pharmaceuticals/fresenius-medical-care-beats-quarterly-profit-estimates-helped-by-cost-cuts-2025-11-04/ Reuters
B. Recommendations
Model Site-Neutral Exposure by Service Line
KFF’s analysis of the 2026 OPPS final rule recommends that hospitals quantify revenue at risk from shifting drug-administration services in off-campus HOPDs to the 40% site-neutral rate, and consider aligning care delivery so that lower-acuity infusion and chemotherapy services migrate to lower-cost sites when clinically appropriate to preserve margin and protect patient access.
https://www.kff.org/quick-take/the-trump-administration-moves-forward-with-medicare-site-neutral-payment-reform/ KFFUse Legal and Financial Briefs to Stress-Test CY 2026 Scenarios
A Ropes & Gray client alert on the 2026 IPPS and OPPS rules urges hospitals to run side-by-side financial impact analyses for proposed and finalized site-neutral policies, highlighting the need to re-evaluate PBD strategy, on-campus clinic designations, and capital planning assumptions as drug-administration payments move closer to physician-fee-schedule levels.
https://www.ropesgray.com/-/media/files/alerts/2025/10/2026%20IPPS%20Final%20OPPS%20Proposed%20PFS%20Proposed%20Summary%20%28002%29.pdf Ropes & GrayLeverage State Hospital Association Analyses for Localized Impacts
The California Hospital Association’s summary of the CY 2026 OPPS rule provides a detailed breakdown of proposed and final policy changes, including tables illustrating how the 40% relativity adjuster affects payment for common drug-administration APCs and specific estimates of lost savings for exempt rural hospitals, offering a template for state-level impact modeling.
https://calhospital.org/file/cha-cy-2026-opps-final-proposed-rule-summary/ California Hospital AssociationAlign Transparency Investments with New CMS Data Requirements
CMS’s transparency fact sheet stresses that hospitals must replace estimated allowed amounts with actual median, 10th, and 90th percentile allowed amounts and encode counts of claims behind each figure, signaling that systems should prioritize data infrastructure and governance capable of supporting more granular payer-specific pricing analytics.
https://www.cms.gov/newsroom/fact-sheets/cy-2026-opps-ambulatory-surgical-center-final-rule-hospital-price-transparency-policy-changes CMS
C. Case Studies
Kaiser Permanente: Stable but Slim Margins with Continuing Investment
Kaiser Permanente’s Q3 2025 financial report shows a 0.7% operating margin and $25.9 billion in operating revenue, reflecting modest financial stability after pandemic-era losses, supported by premium growth and ongoing investments in facilities, technology, and workforce even as cost pressures remain elevated.
https://about.kaiserpermanente.org/news/our-stories/kaiser-permanente-reports-third-quarter-2025-financial-results Fierce HealthcareProvidence: Turnaround Toward Positive Operating Performance
Providence’s third-quarter 2025 results highlight a return to positive operating margin after years of losses, driven by a 5% increase in inpatient admissions, nearly 9% growth in emergency department visits, and targeted cost-reduction and revenue-cycle initiatives, illustrating how volume recovery plus disciplined expense control can slowly restore financial health.
https://www.providence.org/news/press-releases/2025/11/providence-reports-third-quarter-2025-results To Your Health BlogDialysis Sector: Cost-Savings Programs as Margin Strategy
Fresenius Medical Care’s cost-savings plan—already delivering €174 million in savings in the first nine months of 2025 and targeting €1.05 billion annually by 2027—demonstrates how large providers are using scale, portfolio restructuring, and share buybacks to protect margins in the face of elevated mortality and reimbursement pressure.
https://www.reuters.com/business/healthcare-pharmaceuticals/fresenius-medical-care-beats-quarterly-profit-estimates-helped-by-cost-cuts-2025-11-04/ Reuters
Hospital Quality, Infection Control, Readmissions, Transitional Care & Case Management
A. News
HQIC Support Linked to Better Readmissions and Safety Outcomes
A recent preprint evaluating the CMS-funded Hospital Quality Improvement Contractor (HQIC) program finds that hospitals receiving targeted quality-improvement support achieved significantly lower 30-day readmission rates and improvements across eight patient-safety outcomes (including falls, pressure injuries, and hospital-acquired infections) compared with non-participating facilities.
https://www.medrxiv.org/content/10.1101/2025.09.26.25336719v2 medRxiv+1EHR-Based Interventions Reduce Medication Errors and Harm
A systematic review of hospital EHR interventions reports that computerized provider order entry, clinical decision support, and electronic medication reconciliation collectively reduce medication errors and adverse drug events, highlighting the importance of well-designed CDS rules and workflow integration to convert EHR capabilities into measurable patient-safety gains.
https://pmc.ncbi.nlm.nih.gov/articles/PMC12272288/ PMCReadmissions Reduction Program Still a Major Revenue Lever
CMS’s Hospital Readmissions Reduction Program (HRRP) continues to adjust payments to acute-care hospitals based on excess readmissions for selected conditions; while the program has evolved over time, its design still creates meaningful financial penalties for hospitals with persistently high readmission ratios and reinforces the link between transitional care performance and margin.
https://www.cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps/readmissions-reduction-program CMSHRRP Spillovers to Broader Quality Performance – Management Science (may require subscription)
A Management Science article from the INFORMS journal series examines HRRP’s impact and finds that the program produced substantial declines in 30-day readmissions for targeted conditions, without clear evidence of systematic increases in mortality, and smaller but meaningful spillover improvements in readmissions and quality for non-targeted diagnoses. The authors show that hospitals responding to HRRP often invest in discharge planning, care-coordination infrastructure, and post-acute partnerships that benefit a wider swath of patients than those explicitly covered by the policy. They argue that well-designed financial incentives can push organizations to adopt process improvements that generalize beyond the specific metrics being measured. For hospital leaders, the study reinforces that treating HRRP as a narrow penalty-avoidance exercise leaves value on the table compared with broader redesign of transitional care processes.
https://pubsonline.informs.org/doi/10.1287/mnsc.2023.01062 INFORMS Journals
B. Recommendations
Use HQIC-Style Playbooks to Scale Safety Gains
The HQIC evaluation suggests hospitals should emulate the program’s core strategies—structured data feedback, standardized toolkits, regular coaching, and peer learning collaboratives—to sustain reductions in readmissions and harm across conditions, even if they are not formal HQIC participants.
https://www.medrxiv.org/content/10.1101/2025.09.26.25336719v2 medRxiv+1Prioritize High-Yield EHR Interventions in Medication Safety
Given evidence that EHR-based interventions substantially reduce medication errors and adverse events, hospitals should prioritize optimization of order sets, allergy and dose-checking alerts, and electronic medication reconciliation for high-risk populations (older adults, polypharmacy, renal impairment) as a cornerstone of their medication-safety strategy.
https://pmc.ncbi.nlm.nih.gov/articles/PMC12272288/ PMCIntegrate HRRP and Transitional Care Into System-Level Strategy
The HRRP literature indicates that hospitals with robust transitional care programs—early discharge planning, post-discharge calls, pharmacist review, and strong SNF/home-health partnerships—perform better on readmissions, suggesting that HRRP compliance should be embedded in an enterprise-wide strategy for managing longitudinal risk rather than treated as a siloed compliance project.
https://www.cms.gov/medicare/medicare-fee-for-service-payment/acuteinpatientpps/readmissions-reduction-program CMS+1
C. Case Studies
Multi-Hospital HQIC Collaboratives
The HQIC preprint describes multi-hospital collaboratives in which participating facilities implemented standardized fall-prevention bundles, pressure-injury protocols, and discharge follow-up workflows, achieving improvements in both targeted safety measures and overall readmissions compared with non-HQIC hospitals, illustrating the power of shared playbooks and external coaching.
https://www.medrxiv.org/content/10.1101/2025.09.26.25336719v2 medRxiv+1EHR CDS Programs Reducing Adverse Drug Events
The EHR systematic review highlights hospitals that deployed real-time CDS alerts for high-risk medications (e.g., anticoagulants, insulin, opioids), reducing dosing errors and preventable adverse drug events, particularly when alerts were tightly integrated with pharmacist review and nursing workflows rather than added as generic pop-ups.
https://pmc.ncbi.nlm.nih.gov/articles/PMC12272288/ PMCHRRP-Driven Transitional Care Redesign
The Management Science study notes that hospitals responding most effectively to HRRP often created cross-disciplinary readmissions teams, standardized discharge summaries and follow-up appointments, and strengthened data sharing with post-acute providers, leading to broader quality improvements beyond the program’s target conditions.
https://pubsonline.informs.org/doi/10.1287/mnsc.2023.01062 INFORMS Journals
Early Morning Briefing Highlights
Payment Rules and Rural Funding Will Reshape Care Settings
The combination of a $50 billion Rural Health Transformation Fund and the CY 2026 OPPS rule’s site-neutral drug-administration cuts and price-transparency provisions points toward more care shifting to ambulatory and ASC settings, coupled with heightened scrutiny of rural hospital performance and consolidation.
https://www.washingtonpost.com/wp-intelligence/health-brief/2025/11/24/50-billion-rural-health-gamble/ The Washington Post+2The Washington Post+2Margins Remain Razor-Thin Despite Volume Recovery
National YTD operating margins hovering around 1.1%, combined with double-digit drug and supply-cost increases, underscore that even modest negative shocks—such as site-neutral cuts or rising labor costs—could push many hospitals back into the red unless productivity and cost-management initiatives keep pace.
https://www.stratadecision.com/monthly-healthcare-industry-financial-benchmarks Strata Decision TechnologyED Boarding is a System-Wide Symptom, Not Just an ED Problem
Vizient’s ED overcrowding analysis and Connecticut’s newly released boarding data both show that emergency departments are functioning as the “canary in the coal mine” for hospital-wide throughput issues, with older adults driving a disproportionate share of visits and boarding times worsening where post-acute and behavioral health capacity is constrained.
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding Vizient+1Quality Programs and EHR Optimization Deliver Measurable Safety Gains
Emerging evidence from HQIC evaluations and EHR systematic reviews confirms that structured safety collaboratives and targeted CDS interventions can reduce readmissions and adverse drug events, reinforcing that quality investments can protect both patients and margins under HRRP and related incentive programs.
https://www.medrxiv.org/content/10.1101/2025.09.26.25336719v2 medRxiv+2ResearchGate+2
Strategic Implications for Leadership
Re-Segment Services for a Site-Neutral World
Leaders should map all outpatient drug-administration services by site, payer mix, and acuity, then run CY 2026 OPPS scenarios to determine which infusions and injections can safely migrate to lower-cost settings (or be consolidated on campus) while protecting access for complex and rural patients who depend on hospital-based care.
https://www.aha.org/news/headline/2025-11-21-cms-issues-cy-2026-opps-final-rule American Hospital Association+1Treat Price Transparency as a Strategic Analytics Capability
Rather than viewing transparency rules as a compliance burden, hospitals can use the required median and percentile allowed amounts to build internal benchmarks, identify under- and over-priced services by payer, and inform negotiations and service-line strategy.
https://www.cms.gov/newsroom/fact-sheets/cy-2026-opps-ambulatory-surgical-center-final-rule-hospital-price-transparency-policy-changes CMSStand Up an ED Boarding and Throughput Command Center
Given ED overcrowding projections and boarding data, systems should create cross-continuum command-center structures that link ED, inpatient, perioperative, discharge planning, and post-acute partners to manage daily capacity, supported by Sg2 forecasting data and real-time dashboards.
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding Vizient+1Scale HQIC-Style Quality Infrastructure Across the Enterprise
Hospitals can replicate HQIC elements—standard toolkits, peer benchmarking, coaching, and rapid-cycle improvement methods—to reduce readmissions and harm across service lines, integrating these efforts with HRRP performance management and board-level quality oversight.
https://www.medrxiv.org/content/10.1101/2025.09.26.25336719v2 medRxiv+1Prioritize High-Impact EHR and Medication-Safety Enhancements
With evidence that targeted CDS and e-medication reconciliation reduce errors and adverse events, leadership should prioritize build and optimization resources toward high-risk medications and transitions of care, aligning clinical governance, pharmacy, and IT teams around a shared safety roadmap.
https://pmc.ncbi.nlm.nih.gov/articles/PMC12272288/ PMC
Quality Metrics to Share with Your Team (≤7)
System-Level Operating Margin – Median year-to-date health system operating margin rose from 1.0% in August to 1.1% in September 2025, remaining historically thin despite revenue growth.
https://www.stratadecision.com/monthly-healthcare-industry-financial-benchmarks Strata Decision TechnologyNon-Labor Expense Growth – Total hospital expenses increased 7.5% year-over-year in September 2025, with drug expenses up 12.8%, supply costs up 12.1%, and purchased services up 8.0%—outpacing labor expense growth.
https://www.stratadecision.com/monthly-healthcare-industry-financial-benchmarks Strata Decision TechnologyCY 2026 OPPS Rate and Savings Impact – CMS’s CY 2026 OPPS rule provides a 2.6% net payment increase but is projected to reduce OPPS spending by roughly $290 million, including $220 million in Medicare savings and $70 million in reduced beneficiary coinsurance.
https://www.aha.org/news/headline/2025-11-21-cms-issues-cy-2026-opps-final-rule American Hospital Association+2Fierce Healthcare+2ED Volume and Aging Population – EDs saw about 139.8 million visits in 2024 (42.7 visits per 100 people), and forecasts project ED volumes to grow 5% and inpatient days 10% over the next decade, with ED visit volume for adults 65+ expected to grow 28% and for ages 75–84 by 45%.
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding VizientConnecticut Boarding Snapshot – Connecticut hospitals recorded nearly 1.7 million ED visits in 2024, with 13.7% resulting in admission and 9% of ED volume in “observation” status—observation volume has grown 30% since 2021—contributing to prolonged boarding and corridor care.
https://www.ctinsider.com/business/article/ct-emergency-room-boarding-hospitals-20363439.php CT InsiderPhysician Practice Economics – In Q3 2025, median investment per physician FTE in surveyed practices was $311,264 (down 1.8% vs Q3 2024), median total expense per physician FTE was about $1.1 million, and median net patient service revenue per physician FTE was $761,684.
https://www.stratadecision.com/monthly-healthcare-industry-financial-benchmarks Strata Decision TechnologyDialysis Sector Performance – Fresenius Medical Care increased adjusted operating income by 28% year-over-year in Q3 2025, reaching €574 million, supported by €174 million in year-to-date cost savings toward a target of up to €1.05 billion in annual savings by 2027.
https://www.reuters.com/business/healthcare-pharmaceuticals/fresenius-medical-care-beats-quarterly-profit-estimates-helped-by-cost-cuts-2025-11-04/ Reuters
Leadership Call to Action (≤5)
Run a CY 2026 OPPS and Site-Neutral Stress Test
Direct finance and service-line leaders to model the combined effect of the 2.6% OPPS rate increase, drug-administration site-neutral cuts, 340B recoupment, and inpatient-only list phase-out on 2026 operating margin, with special focus on oncology, infusion, and rural facilities.
https://www.aha.org/news/headline/2025-11-21-cms-issues-cy-2026-opps-final-rule American Hospital AssociationStand Up a Price Transparency and Contracting Steering Group
Create a cross-functional team (finance, revenue cycle, IT, legal, and strategy) responsible for meeting the new CMS transparency data requirements and using the resulting allowed-amounts data to benchmark prices, inform payer negotiations, and support consumer-facing tools.
https://www.cms.gov/newsroom/fact-sheets/cy-2026-opps-ambulatory-surgical-center-final-rule-hospital-price-transparency-policy-changes CMSLaunch an ED Boarding Reduction Initiative Linked to Post-Acute Capacity
Use ED volume and boarding data to charter an enterprise-wide initiative that synchronizes ED, inpatient, perioperative, and post-acute capacity, borrowing strategies from Vizient and Connecticut’s statewide boarding workgroup to set measurable targets for boarding times and discharge throughput.
https://www.vizientinc.com/insights/all/2025/from-every-angle-emergency-department-overcrowding Vizient+1Scale HQIC-Informed Safety and Readmissions Collaboratives
Aggressively expand or join HQIC-style collaboratives that provide standardized toolkits and coaching on falls, pressure injuries, infection prevention, and discharge transitions, ensuring that HRRP performance and key safety indicators are reviewed routinely at the executive and board levels.
https://www.medrxiv.org/content/10.1101/2025.09.26.25336719v2 medRxiv+1Prioritize EHR Optimization for High-Risk Medications and Transitions
Charge your CMIO, CPOE/med-safety committees, and pharmacy leadership with a focused 12-month roadmap to implement or refine decision support and medication reconciliation for high-risk medications and post-discharge transitions, using evidence from EHR systematic reviews to define success metrics.
https://pmc.ncbi.nlm.nih.gov/articles/PMC12272288/ PMC
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