Bracing for Impact: Preparing Wound Care Programs for 2026

You may have seen the headlines:

Hospital margins stuck at 1%.

Federal Medicaid cuts of $911B on the horizon.

Eight Medicare Advantage insurers exiting the market.

Five million Americans losing Medicaid coverage.

These aren’t just isolated challenges unfolding gradually over time. They're converging in 2026 to create unprecedented pressure on hospital-based wound care programs, and the patients who rely on them.

For wound care teams, this convergence has the potential to create the perfect storm: financial constraints tightening just as patient populations lose coverage, payor options shrinking, and authorization processes multiply.

But here's what the headlines miss: this isn't a crisis – it’s a turning point. The wound centers that will thrive in 2026 and beyond aren't the ones with the biggest budgets or the most resources. They'll be the ones that are actively building operational resilience today, before storm hits.

In this post, we’ll explore how these four interconnected pressures are reshaping the wound care landscape, explain why they matter, and what forward-thinking programs can do now to prepare.

The Financial Pressure: When Margins Leave No Room for Error

If you're managing a hospital-based wound care program, you've likely felt the budget squeeze intensifying over the past year.

Hospital operating margins have been stuck at 1% throughout 2025 – down from 2.1% at the end of 2024.¹ That's a 52% margin erosion in less than a year. For context, expense growth is running at 5.6% while revenue growth barely edges ahead at 5.7%.¹ The gap between staying operational and facing difficult decisions has shrunk.

So what does a 1% margin mean in practical terms?

Little room to absorb unexpected costs, delayed reimbursements, or capital investments. When margins are this thin, every service line must justify its existence in not only terms of clinical value, but also financial performance.

The Small Hospital Advantage

Not all hospitals are feeling the financial strain equally though. Surprisingly, smaller facilities – those with 26 to 99 beds – are outperforming larger hospital, posting margins of +1.4% compared to  -1.1%.¹ That’s a 2.5 percentage point gap in favor of smaller facilities.

So how does this affect wound care? Because wound care programs align naturally with the small hospital model. They're capital-efficient, outpatient-driven service lines that don't require major expansions or years-long construction projects. They convert existing clinical space into revenue-generating programs, often achieving positive ROI within 12 to 18 months.

Additionally, outpatient revenue is growing faster than inpatient – 6.3% versus 4.3%.¹ Wound care centers, are well-positioned to tap into this shift in where healthcare dollars are flowing.

Then the Federal Cuts Hit

Now layer the federal budget realities on top of already-tight hospital margins.

The Omnibus Budget Reconciliation Act proposes $911 billion in Medicaid cuts over the next decade.² States like Oregon are facing $490 million in losses between 2025 and 2027. Illinois is bracing for 20% cuts.² Hospitals in these states aren’t waiting to see what happens — they’re already making hard choices and trimming the fat.

Meanwhile, The Affordable Care Act's enhanced premium subsidies are also set to expire, which could trigger a 93% premium increase for 24 million Americans.² Even if a fraction of those individuals lose coverage, hospitals will see an immediate shift in payor mix.

Medicare Advantage plans – which now cover 54% of Medicare beneficiaries – saw claim denials jump 55.7% between 2022 and 2023.² For wound care programs, that means prior authorization delays, enhanced documentation scrutiny, and revenue risk - even when care is clinically appropriate.

Then there's the 340B drug pricing program, which many wound centers rely on to offset costs for advanced therapies like cellular and tissue-based products. CMS has proposed accelerating the $7.8 billion clawback and shifting to a post-sale rebate model starting January 1, 2026.²

What It Means for Wound Care Programs

While hospital margins are stuck at 1% and federal cuts are on the horizon, every service line gets reevaluated. Administrators ask: Is this program adding to the bottom line? Is it supporting our patient population? Can it operate on lower capital requirements than our other expansion options?

Wound care programs check all three boxes – but only if they're positioned correctly.

When a hospital is under financial pressure C-Suite decision makers consolidate operations to service lines that generate revenue, meet community needs, and require less capital investment.

The Coverage Crisis: When Patients Lose Access Mid-Treatment

Financial pressure is one thing. Watching your patient population lose coverage while they're in active treatment is another.

Currently, there are two major shifts that are converging to disrupt the payor landscape.

Medicare Advantage Plans Exit the Market

Eight major insurers are fully exiting Medicare Advantage (MA) market in 2026.³

UCare, for example, is dropping MA coverage for 158,000 members across Minnesota and Wisconsin.³ Blue Cross Blue Shield of Vermont is pulling out of the entire state's MA market altogether.³ Also, provider-sponsored health plans like Michigan Medicine, Ochsner Health, and Carle Health are shuttering their insurance branches entirely.³

So, what does this mean for wound care programs?

Each displaced beneficiary will need to transition to a new insurer and for wound care teams that often means reobtaining prior authorizations for advanced treatment modalities that are already underway. Even when documentation clearly supports medical necessity, new payors come with unfamiliar requirements, varying MAC criteria, and authorization workflows that can take days or even weeks. Without a team skilled in payor navigation, treatment delays are inevitable. And in wound care, a delay of even a few weeks can mean the difference between positive outcomes and complications.

The timing here makes planning accordingly particularly urgent. These payor exits take effect in 2026 – which means patients are making coverage decisions right now, during fall 2025 open enrollment, often without realizing their wound care access is about to change.

Medicaid Work Requirements Displace the Wound Care Population

While some Medicare Advantage plans are exiting the market, Medicaid coverage is shrinking from another direction.

New work requirements could displace up to 5 million adults by 2034.⁴ And statistics say that these aren't healthy, low-risk individuals. The data shows, 86.8% have chronic conditions and among those ages 50 to 64, more than two-thirds (66.3%) have three or more.⁴ These are patients with pre-existing conditions such as: diabetes, obesity, hypertension, and chronic pain.⁴ Patients who will more than likely need advanced wound care at some point in their care plan.

When the new Medicaid work requirements take effect next year many of these patients will lose coverage and won't qualify for subsidized Marketplace plans or traditional Medicare until they reach age 65.

The result is costly. Wound care prevents amputations, reduces in-patient hospital stays, and reduces the overall cost of long-term care. But when patients lose coverage mid-treatment, those potential cost benefits may evaporate. A wound that might have healed with 12 weeks of coordinated care can spiral into loss of function, loss of limb, or even loss of life.

The Compound Effect

These aren't isolated problems. They're compounding.

Take this scenario for example. A patient loses Medicaid coverage due to new work requirements. They try to enroll in a Medicare Advantage (MA) plan, only to find their preferred insurer has exited the market. So they choose an unfamiliar plan with different prior authorization rules and regulations. When they arrive for their wound care appointment, they discover their standing order for weekly assessments no longer applies.

In 2026 wound care programs will no longer have to navigate just one payor change, but cascading disruptions across multiple coverage types simultaneously. Staff trained on one MAC's LCD requirements must now maintain expertise across several. Prior authorization specialists who built relationships with specific insurers start over with new payor contacts. Documentation systems optimized for one set of medical necessity criteria need to flex across multiple frameworks.

The programs that weather this aren't necessarily the ones with the biggest budgets or the most resources. They're the ones with thorough documentation mechanisms in place, workflows geared towards multiple MACs, and operational resilience that doesn't depend on payor stability.

What Wound Care Programs Can Do Now

So, here's the reality: tight margins, federal cuts, payor exits, and coverage losses are all converging in 2026. C-Suite decision makers are reevaluating every service line. Patients may lose coverage mid-treatment cycle. Authorization workflows may need to be reengineered.

What separates wound care programs that thrive from those that have to adapt on the fly isn't budget size or market share. It's operational readiness.

Build Payor-Agnostic Documentation Systems

When a patient transitions between payors, medical necessity doesn't change – but documentation requirements might.

Programs that rely on payor-specific workflows risk disruption every time a coverage shift occurs. By contrast, payor-agnostic documentation means building a process that supports medical necessity regardless of which payor reviews the claim. That means documenting standard of care treatments thoroughly and consistently. Wound measurements are recorded systematically using valid methodologies. Healing progression and appropriate response to a therapy captured in the medical record during every visit.

This isn't about creating more documentation. It's about creating smarter documentation that works across payor types, translates between MAC requirements, and holds up under scrutiny.

Train Teams on Multi-MAC Navigation

Staff who know one MAC’s Local Coverage Determination (LCD) and Article (LCA) inside and out are valuable. But in a shifting payer landscape, staff who can navigate multiple MACs’ requirements become essential.

This means cross-training authorization specialists on various MAC requirements and developing relationships with multiple payer contacts.

When UCare's 158,000 Medicare Advantage members transition to new insurer plans, wound care teams that are already familiar with a range of insurers' requirements will process authorizations faster and more efficiently than teams starting from scratch.

Position as Essential, Capital-Efficient Service

When hospitals face budget pressure, administrators consolidate priority service lines that generate revenue, meet community needs, and require less capital investment than other service lines.

Wound care checks all three boxes – but leadership needs to see that value in action.

Demonstrate the revenue potential. Show how wound care serves populations at risk of losing coverage under Medicaid work requirements. Prove that converting an underutilized clinical space into a wound treatment center is a revenue generator – one that will not only deliver positive patient outcomes, but operating margins.

Today, small hospitals are outperforming larger systems, in part because they're focusing on capital-efficient, outpatient-driven service lines. Wound care fits that model – but programs must be ready to articulate their value in financial terms decision-makers understand.

Prepare Patient Transition Protocols Now

Don't wait until January 2026 when payor exits take effect. The time to prepare is now – during fall 2025 open enrollment.

Identify which patients have coverage through exiting payors. Proactively identify at-risk patients and offer support in understanding how coverage changes may affect their access to care. Prepare authorization packets that can be submitted quickly once new coverage begins. Flag patients at risk of Medicaid coverage loss due to work requirements and connect them with eligibility, enrollment, and social support resources.

The programs that prepare now will maintain continuity of care and clinical outcomes. Those caught off guard will face delayed healing trajectories and administrative chaos.

The Bottom Line

With hospital margins stuck at 1%, federal cuts approaching, eight insurers exiting Medicare Advantage, and five million Americans losing Medicaid coverage – the perfect storm is fast approaching.

The wound care programs that will navigate it successfully aren’t waiting for the crisis to arrive. They’re building operational resilience now:

• Documentation systems that translate across payers

• Teams trained on various MAC requirements

• Financial positioning that proves value when budgets tighten

• Transition protocols that preserve patient care continuity

This is the work of fall 2025. The preparation that happens now determines which programs thrive in 2026.

For strategic guidance on preparing your wound care program for 2026's challenges, contact Shared Health Services at (800) 474-0202 or sales@sharedhealthservices.com.