The healthcare industry is facing a precarious financial situation in 2023, largely due to the ongoing impact of the COVID-19 pandemic. The pandemic caused a significant decline in demand for medical services in 2020, while simultaneously placing immense strain on various sectors of the industry. As the pandemic gradually subsided, the economy began to experience the worst inflation in over forty years, exacerbating the challenges faced by hospitals and other healthcare organizations. These factors, among others, have contributed to margin erosion in the industry. This article presents an overview of the current scenario, identifies key drivers behind this issue, and offers suggestions for what healthcare organizations can do in response.