Federal funding cuts are already rippling through the healthcare workforce

President Trump’s One Big Beautiful Bill Act (OBBBA) will pull back federal funding from health and science-related initiatives and is challenging HR leaders in the healthcare sector to consider how such decisions will affect their budgets, and in turn, in their workforces.

Changes to Medicare and Medicaid that are set to take effect in January of 2026 have already triggered layoffs at health systems like Providence, Adventist Health, and Children’s Hospital Los Angeles.

Medicaid is the most common form of health coverage in the US after employer-sponsored insurance, and hospitals are set to lose a significant source of revenue should patients lose coverage due to provisions included in the OBBBA. The roughly $900 billion cut to the federal health insurance program included in the bill could result in annual job losses of more than 300,000 by 2034, according to an analysis published in JAMA Health.

At the same time, HR leaders at healthcare institutions that have historically depended on federal research grants to fund their work are seeing that money dry up, as well. The Trump administration canceled an estimated $1.8 billion in medical research funding allocated by the National Institutes of Health earlier this spring as part of its efforts to halt support for DEI-related initiatives.

How two health organizations are navigating federal funding cuts. Boston Children’s Hospital, which is the largest recipient of NIH funding for pediatrics in the world, is keeping a close eye on how the administration’s actions might affect its workforce, EVP and CHRO Lisa Abbott said during an industry panel hosted at WBR Research’s HR Healthcare conference on Oct. 7.

“We’re really trying to think very strategically and creatively,” Abbott said. She added her team leans heavily on data to inform where they need to do targeted outreach for hard-to-fill roles, such as radiology techs, while being careful not to “over-staff” in areas where the number of patients hasn’t returned to pre-pandemic levels.

Boston Children’s hasn’t yet had to lay off workers as a result of federal funding cuts and is “trying to put a strategic lens on our hiring” to avoid doing so, she said.

About 600 employees have already been laid off from the University of California San Francisco (UCSF), which was the largest public recipient of NIH funding last year, according to David Jones, interim associate vice chancellor for HR.

UCSF currently employs some 45,000 employees, 80% of which are represented by a union. It’s also part of the University of California system, which has its own rules and regulations, adding another layer of complexity. In preparing to respond to cuts, Jones said he’s worked on “mobilizing teams, getting in rooms, bringing design thinking and other innovations into the conversation, trying to figure out: How do we navigate this? How do we get ready for something we’ve never dealt with before? How do we ensure the organization can survive through this?”

AI offers one potential solution, he said. Jones’s team is looking not only into how the technology might help make employees more productive and efficient, but also how it can help the organization “navigate significant and major cost reductions.” This might mean leveraging applications to “cut out chunks of work,” improve data insights and analytics, and “help inform how work is done.” UCSF is even experimenting with AI in the clinical space to improve administrative tasks like documentation, he said.

Norma Tirado-Kellenberger, CHRO of Access Community Health Network, similarly said her organization is exploring ways to leverage technology in light of cuts.

“We’re losing funding from the federal government very quickly,” she said of her organization, which is one of the largest federally qualified health centers in the US. “So we have to make sure that people understand how important it is to have high levels of productivity…that helps us deliver care in a financially sustainable way. There are no really clear answers to that right now, but I do believe some of that is going to come with how we use technology.”