Table Stakes

The correct term for the state of management of America’s hospitals and health systems must be “very challenging.”

The regulatory and legislative environments have moved sharply away from our hospitals’ best interests. The hospital revenue ecosystem is fraying badly, and the “public safety net” that hospitals have depended on since 1965 is rapidly losing insureds, among other substantial changes. Care innovations are coming faster than ever, which challenges hospitals’ technical capabilities and available labor to execute such innovations. And finally, there is the “affordability” word coming from both sides of the political aisle, demanding that the hospital industry reduce costs and provide the American patient with more efficient care at better prices.

So much to do. Hospital C-suites and boards hardly know which way to turn. On the one hand, there is the understandable and laudable desire to excel: to achieve truly differentiating performance in highly desirable areas, from high-tech, sophisticated care of complex health conditions to making measurable improvements in the health of historically underserved populations.

However, this sort of excellence is only possible for organizations that first attend to the table stakes of running a healthcare organization—table stakes that, in the current environment, are increasingly difficult to achieve.

In poker, table stakes are the cost of entering the game. You can’t sit at the table if you don’t have the necessary chips. In American business, table stakes are those tactics that must be accomplished and executed to assure that any commercial organization can remain competitive given rapidly changing external conditions.

For hospitals and health systems, table stakes in 2026 can be viewed within three critical categories.

Money

The commanding table stakes to maintain or even improve hospital competitiveness is—to put it right out there—money. Over the past 30 years, we have seen extraordinary changes to the American economy. We have quickly graduated to an economy that rewards scale and is driven by unprecedented innovation and customer convenience, which has resulted in almost-never-before-seen profitability and investable cash flow.

These economic trends have created an outsized commercial success, but also have also created an environment in which the amounts of absolute money necessary to compete continues to grow larger and larger.

All of these commercial and corporate trends pertain to hospitals as well. Investments in facilities, clinical capabilities, virtual convenience for patients, and AI require available cash and increasing capital capacity. Furthermore, such investments create new financial risks that can only be hedged by strong and liquid balance sheets.

Some hospitals are prepared for the “money” prerequisite. These hospitals have prioritized profitability for some time and have targeted that profitability to support competitive strategic plans and robust balance sheets.

However, over 40% of our hospitals have been breakeven or losing money for quite some time and must now answer the question of whether they can find the necessary profitability and cash flow to sustain competitiveness in a time of unfavorable external conditions.

Quality

The second item on the table stakes list is quality of care. Quality has, obviously, been an essential element of the hospital mission for many years. But I think the quality agenda is changing in a fundamental way right now, and the nature of that change will affect hospital competitiveness in markets across the country,

Historically, quality was a characteristic that I would refer to as “outward facing.” In this regard, hospitals organized around a wide variety of clinical services and through doctors and other clinical professionals to make every attempt to deliver high-quality care on a 24/7/365 basis.

Of course, despite the best intentions of all hospitals, quality of care was never created equal. If there were four cardiac surgery programs in a specific market area, over time, one program was best, and another program was worst when measured by surgical outcomes.

The key issue, of course, was that generally patients could not recognize the quality and capability of specific doctors and hospitals for any particular service. It would be naïve and wrong to say that, given these conditions, quality wasn’t an important objective. However, given the lack of transparency and easily obtained information, quality in most markets was not a competitive differentiator among hospitals

Things are quickly changing on this front. Whereas, before, quality was a factor in which the hospital faced out to the patient, we now have a situation in which, relative to quality, the patient now faces toward the hospital.

Given the internet, and now AI, patients can identify what the available information indicates are the best doctors and hospitals for a particular condition, and those patients can determine whether they prefer to be treated locally or need to travel for care at another location.

This change in the direction of the quality decision is a very big deal going forward. To maximize quality as a critical competitive factor, hospitals need to have excellent doctors, a constantly improving medical staff, and quantitative measurements that prove the superiority of a wide range of clinical services.

Quality is now an essential component of the 2026 list of table stakes, but it needs to be viewed and acted upon from this very different perspective.

Welcoming Journey

Another item on the list of table stakes is creating a welcoming journey for all patients, regardless of their illness or severity of condition.

The board and C-suite must recognize that every patient is entitled to a care experience that is constructed around convenience and a sense of contemporary service. Creating such a customer experience will likely develop from a combination of virtual and AI technology overlaid by constant human interactions that make patients feel seen, valued, and cared for at all moments in the care journey.

Getting to the welcoming journey is going to be real work that will require first-class technical savvy coordinated with the highest possible organizational EQ. Nothing easy here, but gaining a reputation for this exceptional level of patient service will translate into a compelling competitive advantage both now and going forward.

How to Think about Table Stakes

In the colloquial sense, “table stakes” are not terribly daunting. Table stakes are the minimum necessary, not the maximum achievable. If you don’t have table stakes, you don’t even think about sitting down to play.

In 2026 U.S. healthcare, however, nothing is easy. The three issues I’ve placed on the table-stakes list are issues that even the very best hospitals and health systems have struggled for many years to master. And they are issues that, as I have described, are becoming even more complex and demanding.

The real virtue of this concept of table stakes is to encourage serious, honest, and open conversations among executives and boards, addressing the most fundamental of questions: as a hospital, what must we do well, and how well are we really doing?

Were you forwarded this email? Subscribe to The Ken Kaufman Blog here—it’s always free.

Ken Kaufman is Managing Director and co-founder of Kaufman Hall.

Disclaimer: The views and opinions expressed in this newsletter are those of the author and do not necessarily reflect the views or positions of Kaufman, Hall & Associates, LLC, Vizient, Inc., or their affiliates.