Ardent Health Services (NYSE: ARDT) is preparing for long-term financial disruption stemming from the One Big Beautiful Bill Act.
But executives say the Nashville-based health system is well-positioned to mitigate the effects while continuing to expand ambulatory access and surgical capacity.
“If implemented as planned, these cuts would begin ramping in 2028, disrupting care delivery for millions,” Ardent Health CEO Marty Bonick said during the company’s second quarter 2025 earnings call on Wednesday. “In a worst-case scenario, we estimate this could ultimately result in an EBITDA impact of $150-$175 million by the time the cuts are fully effective all the way out in 2035, assuming no material changes to the legislation.”
The act includes provider tax caps and a phase-down of federal matching funds for Medicaid. Yet Bonick said the legislation does not pose a significant threat to Ardent’s earnings in the short term.
Ardent reported a total revenue of $1.65 billion for the second quarter of 2025, up 11.9% compared to the same period last year.
“We expect a de minimis impact to earnings in 2026 and 2027,” Bonick said. “We do anticipate the net impact will likely be lower supported by, at minimum, the rural hospital fund and other state-level supplemental programs.”
CFO Alfred Lumsdaine pointed to the renewal of the New Mexico Directed Payment Program (DPP) in late June as an example of how support on the state level can be a buffer against federal cuts.
“That program is renewed and was renewed in late June for the next fiscal year,” Lumsdaine said. “It is a meaningful program. It provides improved access and high quality care for the Medicaid population, … and from a financial contribution, is fully consistent with the EBITDA contribution assumptions embedded in our full year 2025 guidance.”
CMS proposal to phase out IPO list seen as supportive, but limited
Just as Surgery Partners Inc. (Nasdaq: SGRY) addressed the three-year phase-out of the Medicare Inpatient Only (IPO) list on its recent earnings call, Ardent executives had thoughts to share on the removal.
Bonick said he supports the shift in principle but sees limited opportunity for significant case migration in the short term.
“This is a clinical question of clinical acuity,” he said. “Some of these patients have other comorbid conditions that require a higher level of specialization or inpatient attention.”
While the IPO list changes could unlock more flexibility for certain cases, most volume growth at Ardent is still occurring on the inpatient side, Bonick said.
“Our inpatient surgeries have been really strong, particularly in orthopedics, cardiology and general surgery, which is exactly consistent with the service plan rationalization we’ve talked about,” he said. “It has opened up the doors, so to speak, for those higher margin and higher acuity procedures.”
ASC expansion and urgent care growth remain priorities
Despite regulatory uncertainty, Ardent is moving forward with plans to expand its ambulatory footprint, particularly in surgery centers and urgent care, Bonick said. The company opened 18 urgent care locations earlier this year, and it is on track to add five more urgent care centers and two imaging centers by the end of the year.
“We do think that this is part of that strong growth that we’ve seen,” Bonick said. “It’s just continuing to open up the access points in our markets.”
He said Ardent evaluates each market individually to determine whether additional ambulatory development is justified.
“We look at each one of our markets in terms of what is the capacity and what is our opportunity,” Bonick said. “What we’re trying to do is ultimately grow the number of unique patients served in each of our markets.”
The urgent care platform has proven to be a key access point for new patients and downstream referrals.
“About 45% of those patients were new to Ardent,” Bonick said, referring to the patients visiting the newly acquired urgent care sites. “About 30% of those actually go on to have follow-up care within 30 days.”
On the surgery center front, Bonick said Ardent remains committed to growing ambulatory surgery center (ASC) capacity over time, including through its joint venture strategy.
“ASCs and having the right complement of ASCs to catch the patients as they do shift from the inpatient [to] outpatient is part of our core strategy, and where we expect to see more investments to come,” he said.
And the introduction of the One Big Beautiful Bill Act has not dampened interest in partnerships with Arden, Bonick said. In fact, the opposite is true.
“If anything, I would say that the amount of outreach and discussions have increased since the bill,” he said. “It will require us to be disciplined, … but it doesn’t dissuade us from our growth strategy.”
