The Soft Volume Reality in Q2

The second quarter of 2026 confirmed what many hospital executives feared: outpatient and ASC volumes softened across the for-profit hospital sector, with pricing and acuity mix largely offsetting the decline. Tenet Healthcare’s USPI posted net operating revenues of $1.39 billion, up 9.3% year over year, though same-facility surgical cases fell 1.2% . Revenue per case rose 6.3%, which Tenet attributed to higher acuity and a more favorable service mix .

HCA Healthcare saw outpatient surgery volumes decline 3.4% on a same-facility basis, alongside a 2.3% drop in inpatient surgeries, continuing a softening trend in elective procedures . The bright spot was the emergency department, where ER visits rose 3.6% for the quarter .

Community Health Systems saw the most pronounced shift in site of care. CEO Kevin Hammons noted procedural softness is concentrated in elective specialties, citing orthopedics — “being the largest decline” — and cardiac surgery, which “is following the same path, though the underlying care is less discretionary” . CHS is seeing bigger declines on the inpatient side while its surgery centers are picking up volume, though it’s “lower acuity surgeries and not the orthopedic and some of the cardiac procedures” the company would normally expect . Hammons also pointed to patients delaying follow-on procedures for economic reasons, tied to commercially insured patients’ copays and deductibles .

The ASC Land Grab Accelerates

The strategic shift toward outpatient care is accelerating one of healthcare’s biggest moves: investment in ambulatory surgery centers. Kaufman Hall’s latest “National Hospital Flash Report” found outpatient revenue per calendar day increased 8% year over year through May, outpacing the 5% increase in inpatient revenue . At the same time, adjusted patient days rose 1% while inpatient discharges remained relatively flat, underscoring the industry’s steady shift away from traditional inpatient care .

The financial backdrop is becoming increasingly challenging. Through May, operating revenue per calendar day increased 6% year over year, but total expense per calendar day climbed 7%. Labor expense rose 4%, while nonlabor expense increased 9%, reflecting continued inflationary pressures across hospital operations . “Traditional hospital care delivery is fundamentally shifting,” Kaufman Hall analysts wrote .

The transaction market reflects this reality. Physician medical groups accounted for a record 46% of all healthcare transactions in the first quarter of 2026, generating nearly three times as many deals as any other healthcare subsector . ASCs remain one of the industry’s most sought-after assets. A VMG Health survey found outpatient surgery ranked as health systems’ top service line for joint venture investment, with more than 60% of executives identifying ASCs as a primary growth priority .

The scale of consolidation is dramatic. Ascension completed its $3.9 billion acquisition of AmSurg, expanding its ASC network to roughly 300 facilities nationwide . Amber Sims, Ascension’s executive vice president and chief strategy and growth officer, told Becker’s the health system had to “get ahead in the ambulatory business, because that’s where care is going” . “It’s where patients want to receive care, where payers want to seek care, and where providers want to provide care,” Ms. Sims said .

Other systems are making similar bets, though not at the scale of Ascension. Cleveland Clinic partnered with Regent Surgical to develop ASCs in several markets. Bon Secours Mercy Health teamed up with Compass Surgical Partners to develop more than 30 ASCs. ChristianaCare and Atlas Healthcare Partners formed a joint venture for an ASC network . The strategy is about more than following patients into outpatient care — owning or partnering with ASCs can increase reimbursement rates, strengthen physician alignment, capture downstream referrals, and shift procedures into lower-cost settings .

The For-Profit Speed Gap

Tenet Healthcare offers the clearest example of a health system fully committing to an ASC-first identity . In 2024, the parent company of USPI sold 14 hospitals for more than $4.8 billion, channeling the proceeds into ambulatory growth. CEO Saum Sutaria, MD, framed the move as a turning point, describing Tenet as entering “a new era” with a growing share of performance driven by its “highly efficient ambulatory surgical business” .

Ascension is on track to become one of the largest ASC operators in the country. Since 2022, the system has shrunk its hospital footprint from 139 facilities to 90, with recent divestitures including the transfer of four Michigan hospitals to Beacon Health System and the sale of nine hospitals in the Chicago area to Prime Healthcare Services . The system’s quarterly report described the shift: “Ascension is evolving alongside patient preferences, prioritizing the shift of select procedures to outpatient settings. The continued growth of ambulatory surgery center partnerships remains a pillar of this strategy, driving broader access to high-quality, patient-centered care” .

Community Health Systems has been executing a parallel playbook . In 2025, the company announced plans to divest seven hospitals while doubling down on ASC investment. In 2026, CHS opened new surgery centers in Birmingham and Foley, Alabama, and acquired a majority stake in an Anchorage, Alaska, ASC, bringing its total to 36 affiliated centers . A pending acquisition of Surgical Institute of Alabama would push that number to 37 .

Erik Swanson, managing director at Kaufman Hall, warned: “Demand in outpatient services is on the rise, and hospitals without an outpatient footprint will struggle” .

The Policy Storm: $510 Billion in Cuts Beyond Statutory Intent

The dominant near-term threat to hospital credit profiles is the One Big Beautiful Bill Act (OBBBA), enacted in 2025. The law cuts nearly $1 trillion from Medicaid over 10 years . However, the rule implementing OBBBA provisions would increase federal funding cuts to $510 billion over 10 years — 3.4 times more than what Congress intended, according to CMS estimates .

“This is 3.4 times more than Congress intended,” wrote Melanie Landrum, interim CEO of the Kentucky Hospital Association, noting that resource reductions of this magnitude “could lead to service losses and hospital closures, which would impact everyone in our community, not just those individuals who are served by the Medicaid program” . Although Kentucky is only the twenty-sixth most populous state, its $4.3 billion SDP is tied with two other states as the sixth largest .

Common concerns raised by hospitals include :

  • Benchmarking to Medicare rates: The proposed rule would extend the statutory requirement to limit SDPs for certain services to either 100% or 110% of the Medicare rate to additional payment types.
  • Per-service Medicare limit: The rule would apply the Medicare payment limit at the individual service level rather than the aggregate level.
  • Phase-down: Beginning Jan. 1, 2028, OBBBA requires phasing down total funding for grandfathered SDPs by 10 percentage points annually until it reaches the applicable Medicare rate. The rule would apply annual 10% cuts.
  • Elimination of uniform increase SDPs: The rule would bar new uniform dollar or percentage increases to provider classes.

America’s Essential Hospitals estimated OBBBA will increase hospital uncompensated care costs by $466 billion over 10 years .

State impacts highlight geographic concentration of exposure . Sweetwater Hospital in Tennessee warned the phase-down approach would cut more than $320 million annually from hospitals in the state. Louisiana, which is tied for sixth largest SDP ($4.3 billion), covers 30% of its population through Medicaid. Paul Salles, president of the Louisiana Hospital Association, wrote that the rule’s cuts would “inevitably force hospitals to reduce services, defer capital investments, delay workforce initiatives or reconsider access points that are already financially vulnerable” .

Over 400 Hospitals at Risk

Democratic-aligned advocacy group Protect Our Care reports tracking 1,000 hospitals, clinics, hospital wards, nursing homes, and providers that are closing, cutting services, or are at risk due to the cuts . They found over 400 hospitals are at risk of closure or cuts, and more than 80 hospital wards — including maternity and pediatric units — have already shuttered .

The impact is not limited to rural hospitals. Urban safety-net hospitals face the same exposure for the same reason: many of their patients rely on Medicaid .

The Backloaded Cliff

The implementation timeline gives hospitals a limited window to adapt . Only 6% of total cuts take effect from 2025 to 2027 (ramp-up). The 80-hour monthly work requirement for Medicaid expansion adults ages 19 to 64 takes effect in January 2027 . From 2028 to 2034, the remaining 76% of funding reductions take effect, increasing pressure on states to fund programs from general revenues, reduce optional benefits, or narrow provider networks . This timetable gives hospitals time to adapt, but the delayed impact means the full weight of the cuts will arrive after the 2026 midterm elections.

The Credibility Era: GEO for Healthcare

As patients increasingly use AI search and chatbots to find health information, health system marketers are pivoting from SEO to GEO—generative engine optimization . Sixteen percent of Americans now turn to chatbots such as ChatGPT and Gemini for medical advice . The shift is measurable: AI search visits grew 42.8% year over year, rising from 15.6 billion in Q1 2025 to 27.4 billion in Q1 2026 .

Why Healthcare Needs GEO

Patients increasingly start health research inside AI assistants rather than a search results page. When an AI engine answers a symptom or treatment query, it pulls from a small set of trusted sources . A health system absent from that set loses visibility at the exact moment a patient is choosing where to seek care . The patient journey has moved upstream — many people now ask an AI assistant to explain a diagnosis or compare treatment options before they ever contact a provider .

How AI Engines Pick Sources

AI engines reward content that is structured, sourced, and verifiable . Evidence matters more than tone :

  • Adding statistics increases AI visibility by 22%
  • Adding quotations raises it by 37%
  • Cited text is nearly twice as likely to contain definitive language: 36.2% versus 20.3%
  • 44.2% of ChatGPT citations come from the first 30% of page text
  • 65% of AI bot hits target content published within the past year

Build Expert-Reviewed Content

Expert review is the foundation of healthcare GEO . Every clinical page should name the reviewing physician, list credentials, show a review date, and link to current medical literature . These signals tell AI engines the content is accountable and protect patients from inheriting errors .

Structure Pages for Extraction

AI engines extract structured content far more reliably than prose . The format gap is large: tables get extracted by LLMs at 81% versus 23% for prose . Use clear question-style headings, short answer paragraphs, comparison tables, and FAQ blocks . Add medical schema markup — MedicalOrganization, Physician, MedicalCondition, and FAQPage — so AI engines can parse authorship, conditions, and procedures without guessing .

Real-World GEO Results

A medical GEO case study showed AI visibility improved from 18% to 44% (+26%), SOV increased 133%, brand citations rose 157%, and semantic hallucination rates dropped from 22% to 9% over a 5-month optimization period . These gains are within a reasonable engineering optimization range — 30% to 80% — suggesting systematic improvements rather than statistical noise .

How Health Systems Are Responding

Marketing leaders across the country are reorienting strategies to the AI-driven discovery era:

SSM Health is changing the way it writes and distributes content to optimize “patient and consumer understanding and AI interpretation” . Ashley Pollard, vice president of marketing, captured the shift: “The traditional model where consumers ask Google a question and navigate multiple websites for answers is becoming obsolete. As AI evaluates every digital touchpoint, a holistic focus on the quality, credibility and structure of our content across the entire digital ecosystem is no longer optional — it is essential” .

Banner Health is “auditing and modernizing legacy content, using performance data and external search optimization tools to identify gaps and emerging patient intent” . “Our focus has shifted from traffic volume alone to high-intent visibility and conversion,” said Don Stanziano, senior vice president and chief marketing officer .

Intermountain Health is “trading pageviews for high-intent engagement,” no longer relying on web traffic as a performance benchmark . Chief Marketing Officer Megan Mahncke explained: “Instead, our goal is to be a reliable source that AI tools reference in their search results. Success is measured by consumer conversion after that first discovery” .

NYU Langone Health is “laser-focused on showing up as a trusted and authoritative source” within AI platforms, ensuring “AI tools recognize NYU Langone Health as a leading clinical authority and source of truth” . Elizabeth Golden, executive vice president for communications and marketing, said: “Our goal is not just maintaining online traffic, but ensuring we remain a leading destination that patients trust and choose” .

CommonSpirit Health is leaning into nonpaid, credible content . Chief Marketing Officer Adam Rice said: “Building on a strong SEO foundation, we are restructuring content for AI readability and implementing technical standards that improve how large language models interpret and accurately cite our trusted health information” .

Universal Health Services is putting “emphasis on building continued trust and credibility through service-line-specific video content, including doctor/expert-led explainer videos and patient and community endorsements, and actively managing Google reviews — key strategies in a time of rising health misinformation” . Roselle Charlier, VP and chief marketing officer, also noted the organization is “focused on SEO and AEO (answer engine optimization) — enabling prospective patients and their loved ones to easily access timely, relevant information” .

Key Takeaways for Hospital Marketing Leaders

1. The outpatient speed gap matters. Health systems are decoupling outpatient facilities from central hospital overhead. If your system is still planning while competitors execute, address that gap .

2. Build comprehensive content clusters with expert review. Specialized condition and treatment pages with named physician reviewers are required — not one-page overviews .

3. Optimize for GEO, not just SEO. AI search visits grew 42.8% year-over-year. Your content must be structured, sourced, and verifiable for AI extraction .

4. Technical foundations are non-negotiable. Schema markup, accessibility, internal linking, and AI crawler access are critical for both search and AI visibility .

5. Credibility is the new currency. Systems investing in expert-reviewed, structured content earn AI citations and patient trust .

6. Quantify policy exposure. Rating agencies and boards are asking: What’s your Medicaid hit? What’s your mitigation plan?

Conclusion

The US hospital industry in 2026 is navigating structural pressures: a $3.9 billion ASC consolidation wave, $510 billion in Medicaid cuts beyond statutory intent, and a patient discovery layer increasingly dominated by AI answer engines. The for-profit speed gap is clear — Tenet, CHS, and HCA are deploying outpatient capital at scale while many NFP systems remain in the planning phase .

For hospital marketing and SEO professionals, the mandate is clear: every patient who finds you online is a patient your competitors cannot see. The hospitals that invest in structured, expert-reviewed content, technical excellence, and AI-optimized visibility will capture patients in a system where demand outpaces supply. In an era of AI-mediated discovery, credibility is not just a marketing tactic — it is a survival strategy .