As Washington weighs sweeping federal healthcare funding reductions, A&M and Alston & Bird are sounding the alarm: nonprofit health systems must strengthen board oversight to navigate mounting financial and operational pressures.
Based on a recent survey with executives at top-performing systems, the firms point to persistent gaps in governance structures that, if left unaddressed, could hinder health systems’ ability to respond to inflationary pressures, reduced revenue streams and increasingly complex operating environments. Drawing from a decade of research and this most recent series of interviews, the report outlines a clear message: boards must evolve to meet the moment.
“Now is the time for health system boards to lead with clarity, agility and accountability,” Chris George, a managing director in Alvarez & Marsal’s healthcare industry group and health systems practice leader, said. “In the face of declining federal support, strong governance is no longer optional; it is essential to sustainability.”
“As health systems prepare for significant policy changes and potential funding reductions, the role of the board has never been more critical,” Larry Gage, senior counsel at Alston & Bird and founder of the National Association of Public Hospitals (NAPH), now known as America’s Essential Hospitals, said. “Our report showcases the need for board agility, success planning and strategic foresight to guide their organizations through uncertainty while staying true to mission.”
Key Findings That Demand Attention
The report identifies several evidence-based governance practices that high-performing health systems are using to position themselves for long-term success, including:
- Modernize Board Composition: Strengthen succession planning and trustee recruitment with defined criteria and external search support. Boards must also expand skill sets to include digital health, cybersecurity, risk and population health expertise.
- Evolve Governance Practices: Conduct regular board evaluations (at least every 10 years) and shift away from legacy, representational models to support integrated, system-wide oversight—especially post-M&A.
- Streamline for Impact: Reduce meeting frequency but extend duration to prioritize strategy, quality and patient experience—key to navigating funding cuts and operational complexity.
Implications for Academic Health Centers and Faith-Based Systems
The report also highlights unique governance challenges within academic medical centers and faith-based systems — especially as these entities balance historic missions with financial realities. Clear delegation of authority, academic integration and adaptability to sponsor expectations are critical components of effective board leadership in these environments.
Preparing for the Future Amid Fiscal Uncertainty
With more than $150 billion in combined revenue among surveyed systems, the report emphasizes that size alone is not enough. Health systems must establish governance infrastructure capable of supporting hard decisions, reallocating resources and steering innovation during financial tightening.
The report findings validate a direct call to action:
- Reassess your board structure
- Define a clear board development strategy
- Strengthen the alignment between governance, strategy and execution
