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As BerryDunn’s Healthcare Practice Group lead, Lisa Trundy-Whitten is closely attuned to the healthcare industry. From challenges faced by healthcare organizations to the solutions BerryDunn’s experts can provide, Lisa shares thoughtful insights for healthcare leaders.  

Today’s healthcare leaders are navigating a perfect storm. Workforce shortages, financial strain, regulatory uncertainty, technology integration challenges, cybersecurity risks, and persistent inequities converge to create unprecedented pressure across the industry. Meanwhile, leaders are being asked to innovate, improve operational efficiencies, and deliver exceptional care—all while remaining compliant and financially viable. 

In this shifting climate, thinking strategically about the key challenges you face is essential, including for: 

• Financial pressures and reimbursement: Identifying ways to navigate cuts to the Physician Fee Schedule, constrained reimbursement growth, and shifting payer mix 

• Revenue cycle management: Reviewing the full life cycle of your revenue—from patient access to final payment—and determining where to optimize reimbursement and minimize inefficiencies 

• Federal and state policy changes: Monitoring the latest developments, such as the impacts of the Inflation Reduction Act, the One Big Beautiful Bill Act (OBBBA), and new payment models 

• Compliance and credentialing: Staying compliant with evolving standards is a constant challenge, especially for organizations expanding into new markets or service lines for financial sustainability 

• Reducing costs and improving efficiency: Seeking creative approaches to service delivery, leveraging teams, and adopting digital solutions to streamline operations 

• AI adoption: Employing AI for operational efficiency, predictive analytics, and member advocacy while balancing concerns about cost, governance, and compliance 

As healthcare leaders, you grapple with these concerns daily. And even though the issues are familiar, the urgency is new. The key to staying viable is investing in innovation and collaboration and placing a strategic focus on operational efficiency, workforce well-being, and patient-centered care, all while remaining adaptable. 

Considering these pressures, what sets successful organizations apart? 

Recommendations for healthcare leaders 

There are common threads among healthcare organizations that are finding operational success and remaining compliant in today’s fickle environment. These include: 

• Adaptability 

• Willingness to explore new ideas 

• Ability to anticipate change 

• Commitment to data-driven decision-making 

• Collaboration across finance, operations, and clinical teams 

Consider assessing how your organization is performing in each of these areas. Can you find ways to pivot by applying innovations and strategic thinking? Are your teams working seamlessly to carry out your strategic vision and drive meaningful results? What guides your operational decisions? Are there areas where seeking external help may benefit your organization? 

For guidance on the latest related to the OBBBA, executive orders, and other federal and judicial actions impacting the healthcare industry in both the short- and long-term, we encourage you to download this full summary created by BerryDunn’s industry experts. The summary outlines topics, including key provisions, potential impacts, and important dates.  

You can count on us to keep you abreast of the latest changes through updates to our summary and timely communications, as with the recent shift in application deadline for the Rural Health Transformation Program from December 31 to November 5 announced in September. Look to our healthcare team to provide educational opportunities and key industry insights to empower you to uncover actionable strategies for improving operational efficiencies. 

Our dedicated team of experts meets regularly to track the latest developments affecting healthcare. We recommend routinely visiting the BerryDunn website for the latest insights from our industry thought leaders. 

We’re here for you 

BerryDunn’s Healthcare Practice Group has unmatched depth and breadth of services that truly span the healthcare continuum. Our areas of expertise are focused on helping organizations by providing financial, health IT, revenue cycle, and compliance consulting, as well as offering research and data analytics, coding and OASIS services, and home health training and education. 

Our expert advisors deliver practical, up-to-date advice to improve your performance and can help with issues like high taxes, financial and regulatory compliance, cash flow constraints, leadership transitions, evolving technology needs, and workforce development gaps.    

I encourage you to learn more about our services and team and reach out to us to start a conversation on how BerryDunn can support and guide you toward sustainability and compliance. Let’s work together to create a strategy that fits your unique needs. 

We're here for you. 

Best,  

Lisa Trundy-Whitten 

In a move that has sparked widespread attention across higher education, the US Department of Education (ED) recently placed Harvard University on Heightened Cash Monitoring (HCM) status. This designation is typically reserved for institutions facing serious financial or administrative challenges. While Harvard’s inclusion may come as a surprise, the decision underscores the importance of understanding the HCM framework and its implications for colleges and universities nationwide. 

What is Heightened Cash Monitoring (HCM)?

HCM is a regulatory mechanism used by ED to increase oversight of institutions participating in federal Title IV financial aid programs. There are two levels of HCM: 

• HCM1: Institutions must disburse federal aid to students using their own funds first, then submit disbursement records to ED. 
• HCM2: A more stringent level, requiring institutions to submit detailed documentation for each student before receiving reimbursement. This includes student eligibility, disbursement records, and confirmation of credit balance payments. 

Institutions may be placed on HCM due to concerns about financial responsibility, administrative capability, audit findings, accreditation issues, or other compliance problems. The goal is to monitor institutions to determine whether federal student aid is awarded and disbursed appropriately.  

When an institution is placed under HCM, institutions can be faced with operational burdens such as: 

• Using institutional funds to cover federal aid disbursements upfront 
• Experiencing delays in being reimbursed for the federal disbursements covered with operational funds 
• Posting a letter of credit as financial collateral may be required 
• Undergoing increased scrutiny from ED, including periodic reviews and documentation audits 

These requirements can impact student services, financial aid processing, and institutional reputation. 

To be removed from HCM, institutions must: 

• Resolve the underlying issues by taking actions such as submitting overdue audits, improving financial metrics, or addressing compliance violations. 
• Demonstrate sustained compliance with Title IV regulations. 
• Maintain transparent and timely reporting to ED. 
• In some cases, undergo a probationary period before full reinstatement to the advance payment method. 

The process is rigorous and can take months or even years, depending on the severity of the issues. 

How higher ed institutions can mitigate the risk of HCM

HCM is a powerful tool for federal oversight, designed to apply accountability and protect public funds. While some have questioned the rationale behind Harvard’s HCM designation, the broader framework of HCM remains a key component of ED’s oversight. The following are key areas where institutions can focus and take proactive steps to mitigate their risk of HCM designation:

1. Maintain strong financial health
Institutions should prioritize maintaining a Federal Financial Responsibility Composite Score above 1.5, as calculated by ED. This score reflects the overall financial health of an institution and is a key indicator used in HCM evaluations. Institutions should also avoid taking on excessive long-term borrowings without clear repayment strategies and maintain long-term borrowing levels relative to an institution’s revenue streams. Additionally, institutions should make certain of accurate and timely filings of their audited financial statements.

2. Maintain effective administrative operations
Operational efficiency and regulatory compliance go hand in hand. Institutions should provide adequate training to all financial aid staff members, avoid turnover in key financial aid positions, and promptly address any audit findings. Delays in disbursement or reconciliation of federal funds can trigger red flags during ED reviews. Investing in robust administrative systems and staff training can help institutions stay ahead of potential issues.

3. Monitor compliance and risk indicators
Institutions should conduct regular internal reviews of Title IV funds, including policies and procedures to address compliance with all federal regulations. Institutions should respond promptly to inquiries from the Federal Government. Maintaining good standing with accrediting bodies not only supports eligibility for federal aid but also signals institutional integrity to students and the public.

Strategic Insights for higher education institutions

BerryDunn offers a wide range of assurance and consulting services to meet the specific needs of higher education institutions. We focus on building strong client relationships that stand the test of time, helping colleges and universities minimize risk and maximize efficiencies. Learn more about our team and services.

Assuring access to behavioral health services in rural communities remains one of the most persistent and critical challenges that state governments face today. Research shows that nearly 18% of large rural areas and over 40% of small or isolated rural areas are at least 30 minutes away from any mental health care facility. In comparison, fewer than 10% of urban areas face this issue. According to Rural Health Information Hub, over 70% of rural counties lack a psychiatrist, and many have no psychologists or licensed counselors. Rural communities often struggle to access behavioral health services, which can harm community well-being, economic stability, and family life. 

Most rural communities also lack reliable public transportation, which makes it difficult for people without personal vehicles to access behavioral health services and support. Even for those with personal vehicles, costs related to fuel, insurance, and vehicle maintenance can be prohibitive for low-income households. Based on our experience and observations in rural communities, many people rely on family and friends for rides, which can be an inconsistent resource and may compromise privacy or people’s willingness to access services.  

Many individuals in rural communities are also unaware of treatment options or where to seek behavioral health services and support. Behavioral health services are often poorly advertised. In addition, our experience shows that rural communities tend to prefer receiving information through word of mouth, relying on trusted neighbors, friends, and local leaders to share news about available services. 

Misconceptions about behavioral health services persist in many rural communities and in small communities where “everyone knows everyone.” Based on our experience, people may avoid seeking help due to stigma around mental health and fear of being judged, especially when behavioral health services are visibly located within the community. Rural culture often emphasizes self-reliance, which can discourage help-seeking behavior and reinforces the belief that mental health challenges should be managed privately.  

The areas below highlight essential steps to help promote access, strengthen collaboration, and increase awareness of behavioral health services in rural communities. 

Expand transportation access 

Transportation is a critical barrier for many rural residents. To help expand transportation access, consider the following: 

• Add or increase reimbursement rates for transportation providers to incentivize them to operate in rural communities. 
• Research and stay apprised of any new funding sources (e.g., Rural Health Information Hub) to support expanded transportation options.  
• Partner with local transit agencies, non-profits, and community organizations to coordinate rideshare programs, volunteer driver networks, or shuttle services tailored to behavioral health appointments. 

Expanding transportation services—whether through partnerships, subsidies, or new infrastructure—can significantly improve access to care and support. 

Improve how information is shared 

Clear and consistent communication is essential to increase awareness of available behavioral health services and begin to destigmatize mental health treatment. To help improve information dissemination, consider the following: 

• Establish or reinforce partnerships with local and national organizations and advocacy groups to develop a communication plan and design and implement effective awareness campaigns that inform the public of available behavioral health services.  
• Partner with trusted local leaders (e.g., faith leader, fire marshal, sheriff) to help deliver messages that challenge mental health stigma and promote accessing services.  
• Host town halls and/or community forums to address concerns about behavioral health facilities and services.  
• Establish and actively manage a centralized inbox where rural community members can submit questions, concerns, or feedback about behavioral health services. Ensure timely responses and track recurring themes to inform outreach and service improvements. 
• Share data and success stories about how behavioral health services improve community well-being, reduce usage of emergency services, and support economic stability.  
• Be transparent about safety protocols, service populations, and facility operations in rural communities to counter misinformation.   

Through these partnerships, states can help ensure that rural community members are informed of available resources and begin to destigmatize mental health. 

Create a centralized and accessible resource directory 

Developing an electronic directory of available behavioral health programs and services can help people in rural communities easily find the support they need and increase participation in behavioral health. To help people access the services they need, consider the following: 

• Develop a single, multilingual, and ADA-compliant directory of available programs and services, including crisis lines, outpatient clinics, telehealth options, peer support, and culturally-specific services.  
• Distribute the directory both online and as paper copies in accessible places such as libraries, clinics, hospitals, schools, churches, food banks, and community centers to reach a wider audience.  
• Include eligibility criteria, hours of operation, and contact information for each service to reduce confusion and increase follow-through. 
• Update the directory regularly and include a feedback mechanism, so users can report outdated information or suggest new resources. 
• Promote the directory through local media, social networks, and community events to raise awareness and encourage use. 
• Partner with local organizations and leaders to co-brand and distribute the directory, increasing trust and credibility within the community. 
• Aim to make the directory easy to navigate and accessible to all. 

At BerryDunn, our State Government Practice Group has a proven record of helping clients overcome these barriers. We combine robust data analysis, strategic assessment, and stakeholder engagement to deliver tailored, actionable recommendations that drive measurable improvements. Our experts have guided multiple states through the design and implementation of initiatives that help expand access and support improved outcomes. Contact our behavioral health consulting team to discover how we can partner with you to ensure healthier, more resilient rural communities.   

When you hear the word “policies,” does it fill you with exhilaration and joy? No? Well, if unbridled enthusiasm isn’t your initial response, then I hope you will benefit from an increased understanding of the purpose and value of well-crafted policies after reading this article.  

Compliance policy doesn’t have a great reputation. We often picture a thick policy and procedures manual in a dusty three-ring binder that might as well be buried in a time capsule given how infrequently they are referenced. But it doesn’t have to be this way! 

Your compliance policies should be living documents that guide daily activities for many staff members. To be effective, they must be clear, concise, and appropriately specific. 

Compliance policy: Find the right balance 

Formal policies and procedures can also vary greatly in how prescriptive they are and in how much actual guidance they provide.  While variety is fine, extremes can be problematic.  

Recently, I was researching a particular policy and looking for good examples. As I dove into the first one, the page numbers flew by—30 pages worth, including verbatim text of federal regulations. Bleary-eyed, I moved on to another example. 

This second one took me a few minutes—and a fair amount of zooming in—to find. Two brief paragraphs. Hmm, did I miss another section somewhere? Nope. This organization decided it wasn’t really necessary to say much of anything about how they would be managing millions of federal dollars. 

What’s the takeaway? While the minimalist approach is concerning, neither example really aligns policy with the actual necessary and compliant activities organizations must perform. 

Policies should NOT be written to cover every possible contingency in explicit long form. Why is that? Because few will read them, and unfortunately, that means even fewer will follow them. A policy manual is ACTUALLY supposed to be read, understood, followed, and frequently referenced. And when a provision should be changed, it can be modified to ensure it is both compliant and accurate. 

Practical guidelines for compliance policy 

1. Make sure your policy manual is accessible, searchable, and readable: Everyone in the organization needs to be able to understand it. 

2. Read your existing policy manuals: If that idea makes you cringe, strongly consider modifying your policy because chances are, few are reading it or using it as a reference tool. 

3. Perform random tests by observing or talking through key processes to determine if policy is being followed: Whether the result is yes or no, figure out the reason(s) behind the answers. It is difficult to improve the policy unless you find out the why. (And remember, just because a policy is being followed, that doesn’t mean it is the best way for the organization to operate.) 

4. Break up the typical annual policy review by performing a staggered review of individual sections on a rolling basis throughout the year: In this manner, there will be better focus, engagement, and consequently improved results. 

5. Do you have a policy on policies?: That may sound like an unserious question, but it isn’t. There should be a statement about how your organization writes, handles, and changes its policies. 

Bring pure exhilaration to your organization’s policy manual by continually matching policy to the needs of your organization, not only to stay compliant, but also to operate with the best efficiencies and outcomes. NOTE: Results may vary. You may not experience pure exhilaration, but syncing your policies with your organizational needs is its own reward. 

BerryDunn’s healthcare compliance team incorporates deep, hands-on knowledge with industry best practices to help your organization manage compliance and revenue integrity risks. Learn more about BerryDunn’s team and services. 

The FDIC's Quarterly Banking Profile for quarter two 2025 reports the performance for the 3,982 community banks evaluated. Here are the key highlights: 

Note: Graphs are for all FDIC-insured institutions unless the graph indicates it is only for FDIC-insured community banks. 

Financial Performance 

• Quarterly net income rose by $842.9 million (12.5%) from the previous quarter to $7.6 billion, with 73.4% of community banks reporting an increase. 

• Pretax return on assets increased to 1.33%, up 15 basis points quarter over quarter and 19 basis points year over year. 

• Net interest margin rose to 3.62%, up 16 basis points from the prior quarter and 32 basis points year over year.

Costs and Efficiency

• Noninterest expense increased by $612.7 million (3.5%) from the previous quarter and has increased 6.5% year over year. 

• Provision expenses increased by 29.2% quarter over quarter and have increased 47.7% year over year, signaling growing concern over potential credit losses. 

• Efficiency ratio declined to 62.95%, down 75 basis points from the prior quarter, indicating better cost control relative to revenue.

Loan and Deposit Trends 

• Loan and lease balances increased by $32.3 billion (1.7%) quarter over quarter and 4.9% year over year, led by nonfarm nonresidential CRE and 1–4 family residential loans. 

• Domestic deposits rose 0.1% quarter over quarter and 2.9% year over year, with stronger growth in noninterest-bearing than interest-bearing accounts. 

• Nearly three-fourths (73.4%) of community banks reported loan growth, and half reported deposit growth during the quarter. 

Asset Quality

• Past-due and nonaccrual loans (PDNA) decreased 6 basis points to 1.27%, mainly driven by 1–4 residential real estate, farm loans, and CRE loans. 

• Net charge-off ratio increased 3 basis points from the prior quarter to 0.19%, rising above the pre-pandemic average of 0.15%. 

• Reserve coverage ratio continued to decline to 163.4%, indicating that allowance growth lagged increases in noncurrent loan balances.

Capital and Structural Stability

• Capital ratios improved modestly across the board: CBLR rose to 14.10%, and the leverage capital ratio increased to 11%. 

• Unrealized losses on securities fell by $1.7 billion (3.8%) from the prior quarter to $41.3 billion total. 

• Community bank count declined by 38 during the quarter due to mergers, transitions, and one failure. 

Conclusion and Outlook 

The second quarter of 2025 showed continued momentum for community banks with higher net interest income increasing net income throughout the industry. Further, net interest margin increased 32 basis points from the previous year. However, challenges persist for the industry as non-interest and provision expenses increased during the quarter. Even with past-due and nonaccrual loans on the decline, net charge-off ratios increased slightly as well. With worsening economic conditions, financial institutions are starting to feel the pressure, and there is the expectation that ACL levels will increase. This is starting to be seen in ACL levels, as noted above, with provision expense increasing nearly 48% year over year. Although the magnitude of the increase and the need for an increase in reserve levels altogether can be significantly impacted by institution-specific circumstances, there is an expectation that these increases will continue for the time being. 

As we march through the second half of 2025, community banks should remain attentive to a shifting regulatory environment, particularly on the impacts of tariffs and the One Big Beautiful Bill Act (OBBBA) and how these changes will affect borrowers. The FDIC also proposed raising several key regulatory thresholds, including those that determine which institutions must comply with Part 363’s audit and internal control requirements. In this article, we provide additional information on the FDIC’s proposal. Furthermore, the United States took a historic step in digital finance on July 18, 2025, when President Donald Trump signed the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act into law. This legislation introduces the first comprehensive federal framework for payment stablecoins and could potentially have significant implications on the banking industry. In this article, we take a deeper dive into the GENIUS Act and its potential impacts on community banks.  

So, to say there are a lot of moving pieces currently would be an understatement. BerryDunn has a Federal Impacts page, where we are frequently posting updates on the federal landscape. Check out this page for timely information that may impact your institution or your institution’s borrowers.