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Key takeaways
- Healthcare organizations face urgent financial pressures requiring faster, more structural responses than traditional cost-cutting.
- Deferred decisions and discretionary cuts are no longer sufficient. Organizations need scenario-based divestitures, partnerships, and liquidity strategies.
- Three pathways, divestitures and rationalization, partnership and joint ventures, and cash/liquidity management form a complementary near-term stabilization playbook based on an organization's liquidity status, strategy clarity, and execution capability.
- A 180-day action plan can help providers and payers coordinate strategy, financial operations, and transaction readiness ahead of 2027 OBBBA-related operational challenges.
- Near-term stabilization protects valuation and strategic optionality, but must be followed by a thoughtful portfolio redesign.
Facing high medical inflation, labor shortages, and shifting federal requirements, healthcare organizations in 2026 cannot rely on traditional, wait-and-see financial tactics. Organizations need a pragmatic, disciplined playbook for near-term financial stabilization centered on three core pathways: divestiture/rationalization, strategic partnerships, and urgent cash/liquidity optimization. This requires diagnosing the current state and choosing an appropriate combination of levers tailored to their capital strength, strategic clarity, and execution ability. This should be accomplished with the explicit goal of preserving cash, unlocking capital, and maintaining strategic optionality. A detailed 180-day tactical action plan ensures coordinated execution across clinical, financial, and operational domains to mitigate risk before disruptive changes such as the 2027 One Big Beautiful Bill Act (OBBBA) further stress margins. Ultimately, near-term actions stabilize performance and serve as a precursor to longer-term portfolio strategy decisions focusing on sustainability and growth.
What do you do when time is not on your side?
The health services sector is facing an unprecedented convergence of external disruptions that makes waiting for policy clarity a risky strategic choice as the sector’s financial sustainability worsens.
The coming year will bring a host of disruptive operational changes to health services as the operating requirements of the One Big Beautiful Bill Act (OBBBA) including expanded Medicaid eligibility verification, work requirements, and tightened provider tax rules begin to take effect. The next six months matter disproportionately because eligibility, coverage, and reimbursement effects will hit operations before organizations have time to redesign workflows reactively.
Current financial pressures in healthcare are different from previous cycles, and traditional responses fall short.
Medical inflation remains near multi-decade highs, labor shortages persist, and federal policy shifts including the operational requirements of the OBBBA are adding new headwinds to an already strained system. But you can turn this scenario into an actionable framework. When reimbursement pressure, labor inflation, and consumer financial fragility are compressing health services margins to critical levels, you can reduce risk and preserve strategic options. The circumstances facing healthcare organizations currently are unique enough to require a different category of response than most leadership teams have historically chosen. Operating reality in 2026: macroeconomic disruptions, adverse policy changes and structural sector cost trends are converging to create extreme, near-term financial risks for many health services organizations.
Implication: For those organizations, business as usual cash management options will be insufficient if these forces converge.
Why the traditional playbook breaks down
The familiar response in periods of pressure is to cut discretionary spending, freeze hiring, tighten operating discipline, and defer major strategic decisions until the environment improves. Currently, those levers still matter, but they do not solve a structural mismatch where cost trends and reimbursement trends are moving in opposite directions. American Hospital Association data shows hospital expense growth outpaced price growth by more than 2x in 2025, with labor, pharmaceutical, and supply inflation all remaining elevated1,2. The organizations that will fare best in this environment are not the ones that wait for certainty. They are the organizations that recognize the moment is different and move accordingly, with more speed, more focus, and more willingness to consider structural action than a conventional cycle would require.
When traditional cost management levers are mostly exhausted, leadership teams should consider more aggressive options that preserve cash and/or provide fast and meaningful access to external capital while preserving long term strategic options.
The three pathways for near-term stabilization
Three pathways form the core of this playbook and work best in combination rather than in isolation. Cash acceleration buys runway to pursue a divestiture. A liquidity sprint can free up cash and extend the runway that makes a partnership or divestiture viable in the first place. The question is which combination fits, which pathway matches the organization's constraints, strategic intent, and service-line economics?
Pathway 1: Divestiture and rationalization
Divestitures are frequently misunderstood as a distressed move. In disciplined settings, they are a capital and focus move. The strongest portfolios are often built not only by what organizations buy, but by what they are willing to sell. So, how do divestitures differ from distressed sales, and what criteria should organizations use when considering asset rationalization?
In healthcare, organizations should consider which assets are mismatched to the parent operating model, not just those that are non-core. The distinction matters because assets that look viable in isolation often consume management attention, capital, and margin capacity that would perform better concentrated elsewhere. Divestiture decisions hold up best when they are tied to clinical and reimbursement logic, not historical ownership patterns.
Potential sellers often worry whether buyers exist. The pool of potential buyers is larger than most leadership teams realize, and economic volatility does not necessarily mean the M&A market disappears, especially when valuable strategic assets are available. Regional health systems and payers are actively looking to acquire assets that fill network gaps or add market density they cannot build organically. Private Equity backed specialty platforms, particularly in behavioral health and home-based care, continue to see acquisitions that anchor referral flow. None of these buyers require a seller to be in pristine financial condition; however, they do require a seller that moves before operational deterioration reaches a point of concern.
PwC's Health Services Deal teams support this pathway through portfolio diagnostics to identify candidates; comprehensive commercial and financial diligence to establish defensible valuation; regulatory risk assessment, and transaction structuring that accelerates buyer identification while protecting seller credibility and realized value.
- Use cases: underperforming physician groups with rising subsidy requirements, geographically isolated outpatient sites with weak referral pull-through, and ancillary businesses with reimbursement profiles misaligned to enterprise strategy
- Financial effect: liquidity release, reduction in stranded corporate overhead, and improved service-line mix toward higher-contribution clinical programs
- Execution point: value is highest when sellers transact before EBITDA is compressed by denial growth, payer-mix deterioration, or labor premium escalation in hard-to-staff specialties
Pathway 2: Partnership and joint structures
For organizations who choose not to pursue full exits of some of their service lines or operating units, partnerships can unlock capital and capabilities while retaining strategic optionality. Joint ventures, recapitalizations, and platform affiliations can be designed to separate control from economics, allowing organizations to accelerate performance without forcing a binary sell-or-hold decision.
What risks and governance considerations should be addressed when structuring healthcare partnerships or joint ventures?
Healthcare-specific partnership design matters. Imaging, ambulatory surgery, behavioral health, home-based care, and infusion are frequent candidates because they depend on throughput, referral management, and contracting sophistication that can be difficult to build internally at speed. Partnerships in these areas can improve revenue cycle performance and physician alignment, but only when governance is explicit around clinical quality standards, referral compliance, and shared savings mechanics.
- Use cases: Service lines that are viable but too capital-intensive to grow at required speed; providers in behavioral health, home-based care, ambulatory surgery, or infusion where throughput economics favor a specialized operating partner.
- Financial effect: Joint venture structures provide access to partner capital and stronger commercial contracting and have been shown to correlate with lower long-term debt and positive financial outcomes for participating organizations.
- Execution point: Partnership structures carry governance risk that divestitures or wholesale acquisitions do not. Agreements must define quality thresholds, referral terms, shared savings mechanics, and exit provisions before signing. Regulatory sequencing across certificate of need, anti-kickback safe harbor, and FTC notification thresholds should be mapped before transaction design is finalized.
Pathway 3: Cash and liquidity management
For organizations facing severe financial pressure, the most immediate question is not which strategic transaction to pursue, but rather how much runway exists to pursue anything at all. Where divestitures and partnerships create value over a horizon of months, liquidity actions can change the trajectory of cash within weeks. For organizations where the window between current state and covenant breach is measured in months rather than years, this pathway is not optional. It is what makes the other two pathways possible. A key question is which liquidity management levers can generate measurable cash improvements in under 90 days for struggling healthcare organizations?
The critical distinction is between two types of liquidity actions.
The first is reactive, emergency cost cuts, hiring freezes, deferred capital spending. The second is structural, designed to release cash from existing operations without impairing future performance. These actions target working capital inefficiencies and revenue cycle gaps that are already present and quantifiable.
PwC's Health Services and Business Recovery Services teams support this pathway through rapid liquidity runway assessment, cash flow stress testing, and an integrated acceleration program operational within the first 60 days.
Highest-yield near-term levers:
For providers: accounts receivable acceleration through targeted denial appeals and prior-authorization workflow fixes; revenue cycle integrity sprints across outpatient categories; contract labor reduction; and payables optimization with major supply and drug vendors.
For payers: medical management acceleration targeting authorization cycle times and avoidable emergency utilization; renegotiation of high-cost provider contracts where rates are materially above market; and risk-adjustment and premium receivables audits to ensure cash owed is collected on the fastest available schedule.
- Use cases: organizations with less than 60 days of cash on hand, covenant headroom is narrowing, or margin deterioration is outpacing the timeline to close a transaction or partnership
- Financial effect: improvement of 15-30 cash days on hand within 90 days is achievable for most organizations with identifiable working capital and revenue cycle gaps, often materially shifting negotiating posture in a parallel transaction process
- Execution point: success requires a single accountable executive sponsor, weekly metric cadence, and a cash governance structure connected to both operating leadership and the board. Without that architecture, liquidity programs lose momentum before delivering full impact
How to choose: A scenario-based decision framework
The pathway your organization chooses should be based on three diagnostic facts: current liquidity runway, clarity of enterprise strategy, and demonstrated execution capacity. Organizations that misread any of those three variables tend to choose strategies that look attractive on paper and underperform in practice.
| Capital scenario | Enterprise strategy | Most effective pathway mix | Why this works |
|---|---|---|---|
| Strong balance sheet | Clear strategy | Targeted divestiture + selective cash optimization | Preserves valuation while simplifying portfolio before pressure compounds |
| Moderate stress | Growth intent remains | Partnership structures + cash and liquidity acceleration | Unlocks capital and capabilities without full strategic surrender |
| Severe pressure | Short-runway stabilization | Rapid divestiture + immediate cash acceleration + immediate margin actions | Prioritizes liquidity and survival |
| Constrained runway | Strategy unclear | Partnership bridge + cash acceleration + structured portfolio review | Buys time while converting uncertainty into explicit choices |
| In default or covenant breach | Survival and creditor management | Immediate lender engagement + restructuring counsel + expedited asset monetization and cash triage | Preserves negotiating credibility with creditors, creates a defensible liquidity bridge, and frames any transaction within a restructuring context |
How should boards and executive teams evaluate if a near-term action truly contributes to margin improvement, revenue realization, or capital flexibility?
For boards and executive teams, one useful test is whether each proposed move clearly improves at least one of three outcomes within six months: margin performance, revenue realization, or capital flexibility. If a move does not have a credible path to one of those outcomes, it is likely a deferral mechanism rather than a strategy. The decision frame above determines what to pursue; the agenda below determines when. Organizations in the “severe pressure” or constrained runway” rows should weigh the first 60 days toward cash and liquidity actions, even while preparing transaction workstreams in parallel. Organizations with stronger balance sheets can lead with portfolio diagnostics in the first 60 days and let liquidity actions follow. The 180-day calendar is the same; the sequencing within it is scenario-dependent.
The 180-day action agenda
What to complete in the first 60 days
Establish one enterprise control structure that aligns strategy, finance, clinical operations, revenue cycle, and transaction workstreams on a single 180-day value plan. PwC's Health Services Deal teams can co-lead this effort, facilitating diagnostic workshops, establishing portfolio assessment frameworks, and defining decision criteria for pathway selection and transaction readiness.
What to complete by day 120
Quantify the additional financial cushion needed under specific adverse scenarios and identify which actions can collectively close that gap. PwC's Health Services Deal teams can co-lead this effort, facilitating diagnostic workshops, establishing portfolio assessment frameworks, and defining decision criteria for pathway selection and transaction readiness.
What to complete by day 180
Complete first-wave execution, reallocate capital, and lock in governance so portfolio decisions continue to drive measurable healthcare outcomes. PwC's Health Services Deal teams support transition execution, working across the organization to ensure regulatory compliance, operational continuity, and value realization.
Near-term financial stabilization is no longer just an operations management issue. It is a portfolio design issue with timing risk. The organizations that navigate this environment and move first do not avoid hard choices; they make them while valuation, credibility, and optionality are still intact.
Near-term actions can stabilize performance, but stabilization alone is not a strategy. The next step is to decide what your organization’s portfolio should look like in this new era for the health services ecosystem.
Next up: A practical framework for choosing what to hold, what to grow, and what to exit based on strategic fit, margin trajectory, capital intensity, and market position.
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