City hospital systems Northwell Health, NYU Langone and New York-Presbyterian have tightened their belts in recent months as the Trump administration considers and implements health care budget cuts.
Financial executives from the three hospital systems directed clinicians and administrators to preemptively cut their budgets late last year after President Donald Trump took office, they revealed in a panel hosted Thursday by the New York chapter of the Healthcare Financial Management Association and moderated by Amanda Glodowski, assistant managing editor of Crain’s New York Business.
The executives acknowledged that it’s difficult to plan for budget cuts in a fluctuating political landscape, but recognized that containing costs and seeking out private funders is key as the administration considers shrinking the Medicaid budget and reducing federal research dollars.
“We are all preparing for it, but when and how?” Joseph Lhota, chief financial officer at NYU Langone, said during the panel. “It’s just a big question.”
The federal government has made some cuts to individual institutions, and threatened that more could be on the way. House Republicans are considering cuts of $880 billion from the Committee on Energy and Commerce – which oversees the Medicaid program – and the administration has said it plans to cut billions in federal research dollars. Many of the policy changes have been blocked by the courts or remain unclear because of pending budget negotiations. However, some institutions have already had their funding cut. The administration revoked $400 million in grants from Columbia University, for example, which is affiliated with New York-Presbyterian, over what it said was a failure to protect students from antisemitism. Columbia has agreed to meet some of the administration’s demands to restore that funding.
The health systems took early steps to offset potential cuts. Two weeks after Trump won the election, NYU Langone directed that leaders implement a 2% cut to their operational budgets to prepare for a potential drop-off in funding, Lhota said. Northwell took similar steps in the early days of the new year, according to Michele Frankel, regional chief financial officer at the health system.
Potential cuts to the Medicaid program could negatively impact hospitals’ bottom line, even with cost containment measures. Medicaid makes up a little over $2 billion of New York-Presbyterian’s $13 billion operating budget, said Michael Breslin, the health system’s chief financial executive.
The executives said that they are seeking out philanthropists and private funding to help diversify their revenue streams amid potential cuts. The current reimbursement proposals are already insufficient for hospitals, especially as the aging population increasingly shifts more people onto public insurance programs, said Michael Dowling, chief executive of Northwell Health, said in a keynote speech at the event on Thursday.
“We have to find alternative sources of revenue,” Dowling said, adding Northwell has created an entire commercial arm of its business including its own pharmacy, transportation and supply chain companies.
