What’s on the Horizon for Children’s Hospitals

Children’s hospital leaders have a full plate in 2025—managing the challenges and opportunities presented by innovative therapeutics, emerging technologies and artificial intelligence, policy uncertainties, regionalization and subspecialty shortages—the list goes on and on. To help you focus and cut through the noise, Sg2 experts have identified four top priority strategic action items for children’s hospital leaders for the year ahead.

Strategic Action Items

1. Prepare for changes under a new administration: Among potential changes are cuts to federal spending on Medicaid, however no legislative changes have been proposed or occurred yet. Also, as is typical with Medicaid, the impact and response will vary by state and could result in loss of coverage, reduced coverage, and/or reduced rates. Children’s hospitals must lean into their state government partnerships and advance their exceptional advocacy efforts in the years ahead.
   Other policy changes are likely as appointed officials settle into their roles. We’ll be watching RFK Jr’s actions as the HHS Secretary, particularly as it relates to mandatory childhood vaccinations. Also keep an eye on CMS’ Center for Medicare and Medicaid Innovation (CMMI) models, particularly the Cell and Gene Therapy (CGT) Access Model. The model was developed in response to a Biden executive order (EO) that was reversed by a Trump EO, though the EO doesn’t directly halt the program. Finally, another Trump EO has created uncertainty related to gender affirming care, halting select services as several states challenge the order.
2. Embolden your pharmacy strategy: Organic growth in pediatric specialty pharmaceuticals is impossible to miss; however, capturing the opportunity—and associated revenue generation—requires a fresh look at your pharmacy strategy. Ensure your Chief Pharmacy Officer has a seat at the leadership table in 2025 and beyond, as the bursting pipeline of late-stage biologics and cell and gene therapies treating pediatric conditions has implications on growth, operations, facilities, financials and rev cycle. Children’s hospitals succeeding in this space have developed high-cost drug committees, enhanced processes for prior authorization, and embedded pharmacy specialists across the continuum of care and in high-utilizing service lines (eg, GI, rheumatology, endocrine). See Trend 2 in the Vizient® 2025 Trends Report for more on pharmacy innovation.
3. Target systemic drivers of the pediatric subspecialty physician shortage: Several recent reports have sounded the alarm on the pediatric physician workforce problem (see: The 2023 National Academies Science Engineering Medicine (NASEM) Report that calls out the disincentives for pursing a career as a pediatric subspecialist; and the American Academy of Pediatrics' news article describing the significant 1 year drop in pediatric residency match rate). Solutions here will not be hospital-specific and instead require physician community action and federal level advocacy. Ongoing efforts include the Pediatric Workforce Initiative, which has developed 4 workgroups aligned to the NASEM report and aimed at building rewarding careers for Pediatricians; and the Children’s Hospital Association (CHA) and Vizient’s advocacy efforts such as enhancing Children’s Hospital Graduate Medical Education (CHGME) funding. Given the federal government’s current efforts to reduce costs (see #1 above), the pediatric community must focus on inspiring a new generation of pediatric subspecialists despite existing disincentives.
4. Review the 2024-2025 RSV season: Two questions are top of mind in Q1: 1) Are pediatric RSV-associated hospitalizations down as anticipated due to improved supply of the RSV monoclonal antibody, nirsevimab; and 2) what was the uptake of the preventive therapy? Early findings suggest 1) yes! and 2) not bad!
   • The cumulative RSV-associated pediatric hospitalization rate from October-December 2024 was down 45% from the same time period in 2023 (87.2 hospitalizations per 1,000 people versus 47.5). The 2024-2025 respiratory season is trending slightly above the 2019-2020 season, and we expect additional decline in the 2025-2026 RSV season.
   • According to the National Immunization Survey December 2024 results, 53% of women who have an infant <8 months during the RSV season either received the RSV vaccine during their pregnancy or their infant received nirsevimab. An additional 10% reported they definitely will get nirsevimab for their infant. Among the remaining 37%, 25% probably will or are unsure, and 13% definitely will not get nirsemvimab for their infant. These data suggest higher uptake of the RSV monoclonal antibody than the flu vaccine among children this season.

Sg2 members can access a full library of pediatric-focused intelligence to help prepare your organization for what’s on the horizon.

Not a member, and want to learn more about how Sg2 can help your children’s hospital or health system achieve smart growth in 2025 and beyond? Check out the details here and contact us today.