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By Karen Blanchette, MBA PAHCOM |
Navigating the HHS Overhaul: What Medical Practice Managers Need to Know About Funding Cuts and Restructuring

Practice Management


Navigating the HHS Overhaul: What Medical Practice Managers Need to Know About Funding Cuts and Restructuring

Date Posted: Wednesday, May 28, 2025

 

The healthcare landscape is shifting again, and, this time, the tremors are coming from Washington, D.C. As of April 10, 2025, the U.S. Department of Health and Human Services (HHS) is undergoing a dramatic transformation under the leadership of Secretary Robert F. Kennedy Jr. With a workforce reduction of 20,000 employees (from 82,000 to 62,000), the consolidation of 28 divisions into 15, and the abrupt cancellation of over $12 billion in public health grants, medical practice managers across the country are left wondering: What does this mean for us? For the Professional Association of Health Care Office Management (PAHCOM) community, these changes signal a need for vigilance, adaptability, and proactive planning.

 

The HHS Restructuring: A Snapshot

 

Announced in late March 2025, the HHS overhaul is part of President Donald Trump's broader initiative to streamline federal agencies. The cuts include 2,400 jobs at the Centers for Disease Control and Prevention (CDC), 3,500 at the Food and Drug Administration (FDA), and 1,200 at the National Institutes of Health (NIH), among others. Alongside these layoffs, the administration has terminated $11.4 billion in CDC grants— previously allocated for pandemic preparedness, infectious disease tracking, and community health—and $1 billion from the Substance Abuse and Mental Health Services Administration (SAMHSA) for mental health and addiction programs.

 

 

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The stated goal? Efficiency. Secretary Kennedy has promised to “do more—a lot more—at a lower cost to the taxpayer,” arguing that the agency's budget ballooned by 38% under the Biden administration without corresponding health outcomes. Critics, including 23 Democratic-led states suing HHS, call it reckless, warning of disrupted services and increased strain on local healthcare systems.

 

Impacts on Medical Practices

 

For medical practice managers, the ripple effects are already emerging. First, the loss of federal grants could reduce state-level support for programs like respiratory virus monitoring and childhood vaccinations—services that many practices rely on to keep patients healthy and costs down. In California alone, over $1 billion in public health funding is at risk, potentially forcing practices to absorb higher operational burdens or pass costs to patients.

 

Second, the restructuring may delay regulatory guidance from agencies like the FDA and CMS (Centers for Medicare & Medicaid Services), where 300 jobs were cut. Practice managers who depend on timely updates for billing, coding, and compliance could face uncertainty. For example, the Administration for Community Living, which supports older adults and people with disabilities, is being folded into other agencies, raising questions about how Medicare-related services will be managed moving forward.

 

Finally, cybersecurity—a perennial concern for PAHCOM members—may take a backseat. With HHS's Administration for Strategic Preparedness and Response (ASPR) losing staff and merging into the CDC, federal support for healthcare cybersecurity could weaken at a time when ransomware attacks are surging. Rural practices, already stretched thin, may feel this most acutely.

 

What Practice Managers Can Do Now

 

Adaptability is key.

 

Here are three steps to weather this storm:

 

1.  Reassess Revenue Streams: With potential cuts to state and federal support, review your practice's reliance on public health programs. Diversify revenue where possible—telehealth expansions or value-based care models could offset losses. Stay updated on CMS policies, as any shifts in Medicare reimbursement could hit your bottom line. Professional expertise including the Certified Medical Manager (CMM) credential provides a significant advantage.

2.  Strengthen Cybersecurity Defenses: Don't wait for HHS to lead. Invest in staff training, update software, and conduct risk assessments. The American Medical Association (AMA) recently highlighted that 75% of Chief Information Security Officers believe healthcare lags in attracting cybersecurity talent—making internal preparedness critical. Experience navigating technology solutions in a healthcare environment is a critical asset. The value of Health Information Technology Certified Manager (HITCM-PP) training can't be overstated.

3.  Engage with PAHCOM and Local Networks: Leverage PAHCOM resources (including the Forum) to share insights and strategies with peers. Connect with state health departments to understand how funding cuts might alter local services. Collective advocacy could also pressure HHS to clarify its plans for essential programs.

 

Looking Ahead

 

A federal judge's temporary block of the $11 billion funding cut on April 3, 2025, offers a brief reprieve, but the lawsuit's outcome remains uncertain. Meanwhile, the HHS vision of a leaner “Administration for a Healthy America” is taking shape, promising efficiency but risking gaps in support. For practice managers, this is a moment to double down on resilience—because in healthcare, uncertainty is nothing new. By staying informed and proactive, PAHCOM members can turn challenges into opportunities, ensuring their practices thrive no matter what comes next.

 

Source: Karen Blanchette, MBA

 

Karen Blanchette is the Executive Director of PAHCOM. The PAHCOM collaborative network enables solo providers and small group physician practices to access focused information vital to managing their healthcare businesses effectively. Contact Karen at https://my.pahcom.com/contact-karen

 

Join the conversation at The PAHCOM Forum https://my.pahcom.com/forum

 

 

 


 

 


 

 

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