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SAN ANTONIO – Hospitals and other health care facilities that prepare effectively could mitigate the impact of “black swan” events, a leadership consultant told attendees of a rural health care leadership conference here. Black swan events are rare, seemingly unexpected, yet high-impact happenings that people – in hindsight – believe could have been predicted after all.

Jamie Orlikoff, president of the Orlikoff & Associates health care governance and leadership consultancy, told the audience of a plenary session of the 2025 American Hospital Association Rural Health Care Leadership Conference in February that it is necessary for health care leaders to adopt “black swan thinking.” Orlikoff defined such thinking as being willing to accept that crises can and will come and to engage in comprehensive planning for when they do.

As a top-of-mind example, he said that while hospitals and health systems will press their elected officials to protect Medicaid rather than cut it, they also must recognize that significant cuts could come and plan for that contingency.

“It’s about rethinking the concept of risk, embracing the black swan, and thinking about a radically different world assuming that the cuts go through,” he said. “Should we stop the cuts? Yes, but let’s not be in denial that they could happen. Let’s be prepared and ready so we’re not so stunned by the event that we can’t act.”

New normal
Orlikoff, who is the national adviser on governance and leadership to the American Hospital Association, set the stage for his talk on hospital risk management by acknowledging the extremely challenging environment that hospitals are in.

Health care providers, he said, are dealing with pressing workforce shortages, ongoing supply chain disruptions that perhaps will be magnified by tariffs on imports, public anger with and distrust of health care, overwhelmed clinicians, aging health care infrastructure, weakened balance sheets, and the repercussions of disruptors such as Walgreens and Amazon taking a share of the health care market that they are now starting to exit.

The current environment is even more difficult for rural health care providers to weather, he said. By and large, rural populations are aging and can be disproportionately poorer than those in suburbs. Population trends are changing rural hospitals’ payer mix, and those hospitals have more patients who are uninsured or insured by Medicaid or Medicare, so they have more exposure and vulnerability to changes made by government insurers. Also, the acuity and lengths of hospital stays among rural patients have worsened.

These and other trends are endangering rural hospitals’ sustainability. From 2023 to 2024, the percentage of rural hospitals in the red increased to 50% from 43%, Orlikoff said. He added that between 2011 and 2023, nearly 300 rural hospitals dropped their obstetrics services, and between 2014 and 2023, more than 400 rural hospitals stopped providing chemotherapy services. Citing the Center for Healthcare Quality and Payment Reform, he said that more than 30% of rural hospitals are at risk of closure within the next three years.

He said it is likely that the pressures that hospitals are facing are not an aberration but the “new normal.”

New mental models
Orlikoff, who has consulted with hospital and health system governing boards since 1985, told the conference attendees that even while navigating the challenges of the new normal, they also must prepare for other black swan events.

As examples, he cited natural disasters like earthquakes, firestorms, volcanic eruptions and hurricanes; pandemics; cyberattacks; financial crises; mass technological failures; political instability; environmental catastrophes like oil spills; and terrorist activity.

And, in the present day, he said, significant reduction of reimbursement from government payers is a potential black swan.

To try to prepare for such crises, Orlikoff said, requires a change in mental models. Hospital and health system leaders can and should be developing scenarios to explore possible impacts and responses, creating business continuity plans to maintain operations during and after such events, rehearsing responses, building resilience throughout the organization, obtaining appropriate insurance coverage and educating and training staff to respond.

“It’s impossible to predict what will happen,” he said, “but we need to theoretically prepare by thinking about what could happen.

The great challenge will be to still be standing after whatever is coming, comes.”