• December 17, 2025
• | Credentialing

Since the signing of the “One Big Beautiful Bill,” massive cuts in Medicaid spending are expected to take effect as soon as 2026. A KFF analysis shows that the bill will cut federal Medicaid spending by $1 trillion over 10 years, a change that’s already raising alarm across the healthcare sector. 

Rural communities are expected to feel the hit especially hard. Medicaid covers 1 in 4 adults in rural areas, a higher share than in urban regions, and plays a key role in maintaining patient access to care in their communities. Under the enacted reconciliation package, federal Medicaid spending in rural areas is estimated to decrease by $137 billion over 10 years.

While millions of individual Medicaid beneficiaries are expected to lose coverage and face increased administrative burden, healthcare providers will also be impacted. The Commonwealth Fund reported that “Coverage losses will impact hospitals in particular by reducing their revenue and increasing uncompensated care costs. These adverse outcomes will affect not only hospitals and Medicaid patients, but also the entire community. That’s because lower revenues and increased uncompensated care could force many hospitals to reduce staff or eliminate important services.”

Many hospitals already operate on thin margins. From 2010 through 2023, more hospitals closed than opened. More specifically, over this 14-year period, 300 hospitals closed, and only 192 hospitals opened.

“You have a very profound effect on hospitals and physicians because some [Medicaid patients] might not be able to pay at all,” said Paul Ginsburg, professor of the practice of health policy and management at USC and a senior scholar at the USC Schaeffer Institute. “Hospitals will lose these paying customers … particularly rural hospitals, which in many areas are struggling financially. This could lead to them closing, and that’s affecting a much broader population in those areas than those eligible for Medicaid.”

Working within staffing shortages in healthcare  

While hospitals can’t prevent federal funding cuts, they can control how efficiently they respond to workforce disruptions. While there is no silver bullet for staffing shortages, utilizing technologies such as telehealth and virtual care, focusing on initiatives that promote retention and retaining current staff, and investing in the employees and resources they have can go a long way.  

Additionally, modernizing how your hospital or health system credentials providers is one small but effective way to help adapt faster when other resources are strained.

Modern credentialing systems can:

• Reduce administrative delays, helping new providers start work faster
• Improve compliance and reduce costly credentialing errors
• Lower overhead costs by centralizing and digitizing verification
• Support staffing flexibility, ensuring patient-to-provider ratios remain safe even as budgets tighten, and that providers can work quickly where and when they are needed

Prioritizing the use of industry-leading credentialing platforms can help hospitals and health systems weather staffing challenges and maintain access to quality care during uncertain times, such as now. We’ve helped physician practices and health systems unlock hundreds of thousands of dollars in revenue by streamlining provider credentialing practices.  

Looking ahead

No one yet knows the full extent of the fallout from the upcoming Medicaid cuts. But the consequences could be far-reaching, affecting hospitals, providers, and patients alike. Hospitals that act early, by strengthening their workforce planning and modernizing credentialing processes, can be better equipped to adapt in the face of uncertainty.

See how Modio can help your organization prepare. Schedule a demo today.