When the familiar becomes risky

When the most familiar path could also be the riskiest

I think most of us would agree that healthcare executives are living through one of the most challenging, high-stakes periods of change in our careers. Certainly, I’ve never heard as many leaders admit to feeling exhausted and nervous about how their organizations will fare in the years ahead.

Many healthcare leaders have muscle memory for how to lead through difficult periods. The familiar response has been to stay disciplined, tighten the reins on costs, operations, and finances, and work toward restoring stability. After the past several years, this is the position many organizations are in now, and they are making good progress.

But I wonder if some of our instincts about stabilization need to change.

When facing immediate challenges, we need to address near-term fires, but they can't take all our energy. I often hear some version of, “We will right the ship first, and then we can look at what comes next.” For decades, that may have been the right instinct. When the landscape felt uncertain, delaying future thinking until the ground felt more stable was a reasonable course of action.

I would argue that today this choice could be the riskier one.

What if the business model that served your organization so well in the past won’t be enough to achieve financial stability over the next five years? What will be required in efficiency, consumer expectations, workforce, technology, and competitive creativity are changing. And as these requirements change, the economics will change as well. 

I believe that business model innovation and differentiation are part of stabilization rather than something that comes after it.

The last several years have been difficult for the healthcare industry, and although some areas are beginning to stabilize, many organizations still face significant challenges. A few data points tell the story. In 2024, 72% of 111 nonprofit health plans studied in HealthScape's cohort operated at a loss. A large share of hospital mergers in 2025 involved a financially distressed organization. Operating margins for many provider-led health plans remained below 2% in 2024, while FQHCs' national net margin fell to negative 2.1% in 2024.

It is not unusual to have financial challenges in some sectors, but it is unusual to face headwinds in most sectors, and for payers, in all lines of business at the same time.

The broader landscape itself is undergoing so much change that there is unlikely to be solid ground to land on under any circumstances. Therefore, in parallel to righting the ship, this is precisely the time to also challenge long-held assumptions and address consumer and system needs that continue to go unmet.

The shifting sands create openings

New tools can address, and in some cases bypass or leapfrog, gaps that have historically been difficult to solve. The changing environment is also opening minds and creating space for new offerings and business models that define the healthcare value proposition in broader or more targeted ways. In an industry that has historically had few levers for true differentiation, there is significant room for blue ocean opportunity.

When I talk about business model innovation, I don’t mean expanding in ways that are new to your organization, but still within the current model. I mean asking some fundamental questions about how an organization creates value, who it creates that value for, who pays for it, what existing capabilities could be applied differently, and what it no longer needs to own or do itself. The answers will look different depending on the organization, its market, and the role it plays in its community.

Establishing a path to business model innovation doesn’t need to be a major new capital investment or even a big distraction. Even beginning to define a different future can give leaders and staff a compelling direction they believe in and want to help build.

Of course, what I’m talking about leads to a differentiating strategy: creating value in a way that others can not easily replicate. Strategy being the answer may be what you would expect to hear from someone who offers strategic planning services. But that doesn’t mean it isn’t true.

Business history is rife with examples when forward-looking leaders used periods of change as an opportunity to revisit their assumptions and reinvent their organizations. Some succeeded, some did not, and none of these transformations were as simple as they appear in hindsight. Today’s challenges are difficult, and healthcare organizations urgently need to remain focused on them.

But I submit that leaders who don’t seriously consider their underlying strategy and how to differentiate may remain exhausted and nervous much longer than those who do.

The process of questioning a business model can invigorate a team. Thinking more broadly about where an organization is headed, and the unique role it can play in the lives of the people and communities it serves, gives permission to imagine a future that is genuinely its own. It clarifies decision-making about where to invest, where not to invest, and even which of today’s fires may no longer need to be fought at all.

For those of us who love strategy, I can’t remember a more purposeful time to be in healthcare. There are real problems in front of us, and real sleepless nights. But, there is also an extraordinary opportunity to address some of the challenges that brought many of us to work in healthcare in the first place.