Responding to regulatory and policy upheavals

9 minute read

Healthcare CFOs have become accustomed to being on the front lines as their organizations cope with disruptions in the industry. These unprecedented times demand that manufacturers and providers — and their financial teams — stay ahead of the game to anticipate and weather changes.

In no area is that more obvious or important than managing whirlwind changes in the federal regulatory and policy environment. The pace and unpredictability of policy revisions and additions — as well as broader uncertainty about product approvals — now directly influence capital structure, liquidity and revenue modeling.

Where regulation once was a compliance issue for a healthcare organization, today it’s a balance sheet event — and needs to be part of strategic planning.

“For healthcare companies, policy changes used to be things that were fairly predictable, even one or two years out. But the pace of regulatory changes has accelerated,” says Douglas Marshall, Transformative Healthcare Group Executive at Bank of America. “Sometimes changes are happening a quarter out, or being implemented even faster. As a CFO, it’s challenging to forecast out a year or more when so much seems uncertain.”

In this new environment, input from the regulatory team has become an urgent part of financial planning. “In the past, the financial team would get input from the staff monitoring regulatory changes. Now the CFO needs to accommodate those viewpoints more actively in forecasting,” Marshall says. But even that’s not necessarily enough. “It’s not enough to build in just one scenario; the CFO needs to consider a range of potential scenarios of regulatory change and how to respond,” he says. “And all this means that the interaction between compliance and finance has changed.”

Healthcare executives are still confronted with familiar operational challenges, including perennial staffing shortages, battles with payers and lagging approval processes. But CFOs named external factors — predominantly regulatory and policy issues — as their biggest organizational concerns, according to the Deloitte Center for Health Solutions 2025 U.S. Health Care CFO survey. Surveyed executives said they were most concerned about the impact of tariff policy changes, drug pricing policy changes and pending Medicaid reform. Specific pressures varied by industry sector.

In addition to chronic payment lags, providers are preparing for the potential downstream effects of proposed federal and state-level Medicaid and Medicare changes that, if fully implemented, could increase uncompensated care and lower reimbursement rates. Even ahead of full implementation, uncertainty around eligibility rules and benefit design has already begun influencing payer behavior and coverage decisions in some markets.

For medtech firms, a philosophical shift in the government’s approach to healthcare technology combined with drastically reduced staffing at the Food & Drug Administration (FDA) are slowing approval times — and even when approved, new devices must still wait for Medicare/Medicaid reimbursement approval before being available to patients.

Life sciences firms also face growing FDA review disruptions: shifting evidentiary standards, varying approval timelines and increased scrutiny of accelerated pathways. Approval issues as well as changes via the Inflation Reduction Act’s negotiated pricing for select drugs directly affect not only a new product’s launch date, but also the parent company’s valuation and financing opportunities. Tariffs can also impact pricing and profitability.

For all three healthcare sectors, these changes in the regulatory and policy environment are compressing margin assumptions, affecting long-term planning, and reshaping the ability to commercialize products and seek new funding. Everything is even more difficult to forecast when the tariff structure shifts up and down, and with threats to alter or repeal current legislation.

All of this also means that the costs of an organization’s regulatory infrastructure are likely on the rise. Monitoring legislative and policy changes is a priority, and one that needs to be rigorously evaluated and justified.

Compliance can no longer sit in a silo, Marshall says. “Historically, compliance and legal has been more of a cost center. But now, not only do you have to put more resources into that area and treat it as more of an investment — you need to bring that team to the table in order to integrate the regulatory viewpoint into your forecasting and balance sheet,” he says.

Beyond that, what can CFOs do to stay on top of regulatory changes and fortify their organizations’ financial position?

CFOs can take a page from what the industry learned during the 2020 pandemic, which required healthcare operators and manufacturers to respond to a crisis in real time. To avoid the need for that kind of instant action, systems can use scenario planning and modeling that posits a variety of regulatory changes, and be prepared with possible responses. Those exercises and calculations should already be under way as the industry braces for the impact of potential Medicaid work requirements and eligibility changes now being debated and implemented on a state-by-state basis, with material implications expected over the next several years.

“Healthcare executives need to think ahead,” Marshall says. “If you’re a provider, how many people are going to become uninsured, and how will you manage that? If you’re a pharma or life sciences firm, how do you think about both the short-term approval process and the long-term exit strategy? On top of that, the FDA approval process and CMS pricing process are often disjointed for medtech and life sciences — creating additional financial concerns. The CFO needs to anticipate those delays and plan accordingly.”

Stress testing the balance sheet means asking important questions that can help assess the organization’s financial viability in the face of these and other potential or pending regulatory changes. The number of inputs is much greater now, making the CFO’s job more challenging. Says Marshall, “For instance, if you’re a life sciences or medtech firm, there’s increased uncertainty around path to approval. Sometimes the government is moving the goal posts. You have to ask: Do I have enough capital to make sure I have the wherewithal to survive an uncertain path to approval?”

CFOs can bolster their organization’s financial stability with actions to keep the capital plan flexible and protect needed liquidity.

Working from this practical playbook, healthcare executives can help protect their organizations from future policy volatility.