It’s an easy assumption to think that hospitals are making tons of money. After all, healthcare bills seem high to those who use the services. But the truth of the matter is way more complicated than you think.
In fact, when you look at the data, many hospitals are struggling under looming policy changes and potential cuts, according to the Nebraska Hospital Association (NHA). According to recent NHA survey, 55% of hospitals say their current fiscal year will be “challenging” or “very challenging.”
So, what creates these challenges? One of the first things to consider is that not all patients have insurance. Non-profit hospitals like Mary Lanning Healthcare provide millions of dollars per year in charity care to people who have no means to pay. Hospitals are required to offer the same services at the same prices to all patients. However, the payment for those services is not the same. For example, the healthcare organization receives about 34 cents for every dollar spent to care for a Medicaid patient.
The bottom line of hospital finances is that positive margins depend on the number of patients with private insurance vs. Medicare or Medicaid.
In addition, potential national policy changes and Nebraska’s $471 million budget shortfall have Nebraska healthcare providers working hard to prevent cuts. The Nebraska Department of Health and Human Services has proposed eliminating retroactive Medicaid coverage for most enrollees in 2026. Currently if a patient comes to a healthcare organization without Medicaid, the organization helps the patient apply for Medicaid. If they qualify, Medicaid would then retroactively cover their stay and the costs incurred. If the proposal passes, it would increase uncompensated care for hospitals and add significant medical debt for patients.
Jeremy Nordquist, NHA president, discussed the Rural Transformation Program funding Nebraska received in late December. The funding was intended to offset Medicaid cuts that would disproportionately harm rural hospitals across the country. Nordquist said the way funding will be distributed in Nebraska likely won’t be enough to get the state’s rural hospitals out of crisis mode.
The program – passed in the “One Big Beautiful Bill,” or H.R. 1 – was intended to offset sweeping Medicaid cuts and lift up rural hospitals. Nebraska received $218 million in funding for 2026, but Nordquist said the state’s funding application fell short.
“I think we need to be pretty clear that despite lots of stories being written about the dollars going directly to rural hospitals, if you look at the state's application, there's not that much that's clearly directed towards rural hospital investments,” Nordquist said. “We're certainly going to continue to work with Governor Pillen and his administration to try to improve the allocations within that application.”
Potential Medicaid cuts also could reverse legislative actions Nebraska has taken to stabilize hospitals with Medicaid expansions, like the Medicaid State Directed Payment Program.
“This program allowed Nebraska to obtain additional federal funding to finally pay adequate Medicaid reimbursement rates for many Nebraska hospitals.” Nordquist said. “The State Directed Payment Program means the difference between a budget in the black versus one in the red at this point.”
At MLH, our accounting team is dedicated to working on the issues facing the hospital while being as fair as possible to patients. It’s definitely a balancing act that requires the support of the community and the region.
