By Julie Cummings, Nicole Painter, and Jennifer Pyck
Healthcare organizations are facing difficult workforce decisions as reimbursement pressure, coverage changes and rising operating costs create greater financial uncertainty. When margins tighten, hiring freezes or broad workforce reductions can seem like the most direct path to controlling costs.
But reducing labor expense without understanding the broader operational impact can create new—and potentially more costly—problems.
Vacancies can increase overtime and contract labor costs. Staffing reductions can contribute to burnout and turnover. Eliminating the wrong role can affect patient access, revenue, compliance or the organization’s ability to respond when conditions improve.
That makes workforce planning more than a headcount exercise. It is a financial and operational strategy.
According to the American Hospital Association’s 2025 Cost of Caring Report, workforce spending represented approximately 60% of total hospital expenses in 2025, while workforce costs increased 5.6% from the previous year.
Plan for more than one outcome
When the financial outlook is uncertain, healthcare leaders do not have to predict exactly what will happen. They do need to understand how they will respond if conditions change.
Scenario planning can help leadership teams model several potential outcomes—such as expected, moderate-pressure and high-pressure scenarios—and determine workforce actions before financial pressure forces a rushed decision.
As leaders evaluate each scenario, consider:
- Which roles must we protect? Identify the positions and capabilities most closely tied to patient care, revenue generation, regulatory requirements and essential operations.
- Where could a vacancy cost more than it saves? Consider whether reducing a position could increase overtime, contract labor, turnover or service disruption.
- Where do we have flexibility? Explore cross-training, redeployment, schedule changes or other alternatives before eliminating positions.
- What would cause us to act? Establish specific financial and operational indicators that signal when a workforce adjustment is necessary.
- Who owns the decision? Assign responsibility for monitoring those indicators, evaluating options and communicating next steps.
Establishing these parameters in advance gives leaders a clearer framework for making difficult decisions—and helps the organization respond deliberately rather than reactively.
Protect the capabilities your organization will need next
The most important workforce planning question is not simply, “Where can we cut?”
It is also, “What capabilities do we need to protect?”
A position that appears expensive on a spreadsheet may support revenue, preserve patient capacity, reduce compliance risk or prevent greater spending elsewhere. Looking at workforce decisions through both a financial and operational lens can help leaders distinguish between costs that can be reduced and capabilities the organization cannot afford to lose.
That perspective matters beyond the immediate budget cycle. Healthcare organizations still need the people and expertise required to serve patients, support their teams and adapt as conditions change.
Effective scenario planning gives leaders a way to balance those priorities. The goal is not to preserve every position or avoid difficult decisions. It is to make those decisions with a clearer understanding of their short- and long-term consequences.
Sorren Human Capital Advisory helps organizations connect workforce strategy with broader business priorities, giving leaders greater clarity as they evaluate costs, capabilities and future needs.
For additional year-end workforce planning considerations—including how to assign clear owners, deadlines and next steps—read Sorren’s September HCA Brief.
