Healthcare’s Viability Tests in 2026 Put a Premium on Enterprise Risk Management
By Pete Reilly
Even before the COVID-19 pandemic, the healthcare industry was resiliency-challenged. Ongoing and new disruptions in 2026 will keep the pressure on, putting a premium on the ability to successfully anticipate and adapt to the pressures of an increasingly risky environment.
Here is a look at the forces shaping the sector in the new year.
Economic viability sapped by financial instability
It will be hard to get around the various financial risks that make the road ahead rocky for all providers.
Start with Medicare and Medicaid underpayments, growing at 14% annually even without the Medicaid reductions in the 2025 federal budget reconciliation bill. Another pressure point: Commercial insurers’ three-month-plus delay in paying one in three inpatient claims.
Balance those against rising operational and labor costs, aggravated by federal policy shifts—from aggressive immigration enforcement to tariffs impacting pharmaceuticals and medical supplies and cuts to medical research funding that may destabilize healthcare finances on several levels.
Providers can pursue several strategies to bolster their positions in 2026 with restructuring and cost-cutting top of the list. Another option is mergers. Activity slowed in 2025 from 2024’s pace but picked up substantially as year-end approached. Fifteen hospital deals were announced in the third quarter, but life sciences and pharmaceuticals dominated volume. Observers expect more activity in 2026.
The environment also makes the time right for strengthened enterprise risk management programs, paired with the right insurance solutions to minimize costs and advance the maturity risk curve.
Labor shortage and costs spotlight role of training, retention, and engagement
The shortage of healthcare professionals is hamstringing a sector that will need to fill 1.6 million new positions by 2033. In 2024, labor costs accounted for 56% of total hospital expenses, and the inability to fill openings has driven up salaries, which are growing 26.6% faster than inflation.
While turnover is declining, the industry will still need to grapple with declining engagement across the spectrum of workers, especially nurses and advanced providers. Disengaged workers are 1.7 times more likely to exit their jobs. Also concerning is the high rate of workplace violence injuries in healthcare versus other industries and workers’ continuing mental health issues.
Restoring a frayed employer/employee connection must be a priority in the new year. That starts with a commitment to workers’ physical and emotional safety. Using advanced data-driven tools like Workforce Persona Analysis, healthcare employers will be better able to design personalized benefits packages that help restore trust, loyalty, and engagement.
Moving toward improved risk management
The variety of continuing and intensifying risks on every front makes it essential for providers to ensure their Enterprise Risk Management program is sufficient for meeting the formidable challenges threatening their long-term survival.
Providers face mounting challenges related to allegations of negligence, litigation funding and its impact on social inflation’s impact on jury awards. These pressures account for ~10% of the overall Medical Professional Liability (MPL) costs.
In 2024 nearly 50% of the MPL underwriters raised their rates, according to the AMA. While there have been some recent efforts at measured tort reform, these measures have been inconsistent across the U.S. With carrier consolidation expected to continue into the near future, proactive risk mitigation efforts are warranted.
Funding pressures are one resiliency test. Other mounting risks like medical safety, cyber threats, and climate change need optimal navigation skills. Preventable medical errors, for example, are a leading cause of death in the U.S.; nuclear verdicts exceeding $10 million are keeping pace. The 50 largest verdicts in 2024 averaged $56 million, roughly double the 2019 average.
These risk trends directly shape the insurance landscape. Underwriters are increasingly selective, especially toward insureds with extensive claims histories or elevated risk portfolios. The upshot: medical professional liability premiums will rise by as much as 15% in 2026. General liability and umbrella/excess liability, by as much as 20%. Affordable business interruption coverage may be difficult to secure. And cyber insurance for a sector that accounts for almost a quarter of all reported data breaches could rise another 10% in 2026.
But if underwriters are increasingly selective, they also are rewarding institutions that demonstrate strong ERM frameworks and robust governance with more favorable terms and lower rates.
An effective ERM integrates operational, financial and clinical insights to improve the ability to anticipate emerging threats and align strategic decision-making with resilience goals—and make success navigating the rocky road in 2026 that much more achievable.
Pete Reilly is the practice leader and Chief Sales Officer of global insurance brokerage Hub International’s North American healthcare practice. In this role, he directs and coordinates HUB’s healthcare planning, growth and strategic initiatives. He also works with other leaders and experts within HUB to develop and introduce proprietary products that will help healthcare organizations and providers across the care delivery spectrum.