4 Ways Health Care Organizations Can Address Funding Uncertainty - Healthcare Business Today (2025)

Recently, health care organizations have faced navigating a flurry of executive orders and federal programs announcing significant changes to grants and funding mechanisms. In some cases, these announcements have halted funding for certain initiatives, either permanently or temporarily, disrupting the progress of critical functions to advance consumer-focused care. Additionally, organizations dependent on grants provided by the National Institutes of Health for advancing medical research will likely need to adapt to newly proposed caps on indirect costs, which put $4 billion of funding at risk. This potentially adds another layer of uncertainty for health care organizations and their revenue streams.

Despite this looming uncertainty related to funding, however, organizations can take several steps now to address potential funding gaps and set a foundation for future growth.

Evaluate revenue composition and cash flows

In this current climate, organizations should proactively identify and mitigate operating risks tied to federal funding. This entails a comprehensive review of current funding sources, assessing the risk to each revenue stream, including grants and loans, and evaluating current and future cash flows alongside financial resilience. It’s crucial to analyze the potential impact of temporary funding suspensions on operations, timelines, cash flow and overall financial stability. A thorough understanding of grant terms, including cost allocations and termination clauses, is essential to prepare for any potential cost recovery in the event of terminations. Additionally, organizations should assess the impact of operational suspensions due to funding pauses under various scenarios and expedite the drawdown of funds to accelerate cash payments.

Examine expense allocations and cost reductions

Health care organizations should strategically assess whether alternative cost allocations can mitigate the impact of reduced reimbursements for overhead costs. This process may involve identifying other cost allocation factors to reclassify indirect costs as direct program costs. To achieve this, employees might need to meticulously track their project-related time or reassess the square footage utilized for various program services or research activities. Conducting a thorough margin analysis to reduce overall expenses is key. Leveraging technology to enhance efficiencies and cut costs is also crucial. Additionally, forming partnerships with peer organizations and establishing cost-sharing arrangements can further facilitate cost reductions to enhance operational efficiency

Investing in technology can significantly improve operational efficiency and reduce costs. Implementing advanced data analytics tools can help health care organizations better understand their financial health and identify areas for improvement. Automation of routine tasks can free up staff time for more strategic activities, while digital platforms can enhance communication and collaboration among team members.

Identify alternative revenue streams

In this time of uncertainty, organizations should also strategically diversify their funding sources to mitigate reliance on federal funding. This can be achieved by expanding networks and launching comprehensive fundraising campaigns to strengthen relationships. Seeking grants from private foundations or community foundations with aligned missions can also be helpful. Additionally, organizations should explore alternative funding sources that do not depend on contributions or grants, such as fee-for-service revenue streams. Collaborating with other entities to engage in diverse business ventures can further enhance financial stability and resilience.

Strengthening relationships with donors is also crucial for diversifying funding sources. Organizations can develop targeted communication strategies to keep donors informed about their impact and the importance of their contributions. Hosting events, both virtual and in-person, can provide opportunities for donors to engage with the organization and see firsthand the difference their support makes.

Advocate for the industry

Finally, advocacy is another critical component in this uncertain funding climate. Engaging with policymakers and stakeholders to communicate the importance of continued funding and support for essential programs can influence decision-making processes. Health care organizations can align with other organizations and seek out advocates to tell their story to lawmakers. At the same time, organizations should also stay informed about legislative changes and actively participate in advocacy efforts to support interests.

By taking proactive steps now to navigate the uncertainty surrounding federal funding, health care organizations can stay ahead of risks and strengthen their long-term sustainability in the communities they serve.