43% of Health Systems Expect to Draw on Reserves in 2026: A GP Playbook for Pitching Hospital and Health-System LPs

A survey of 77 hospitals and health systems, covering nearly 200 investment portfolios and published in October 2026, found that 43% expect to draw on their reserves in 2026, up from 37% a year earlier. For a GP, that is the number that changes the pitch. Health systems are a growing source of private markets capital, and the survey says interest in private markets remains strong, but they are also organisations whose operating pools may be called on for cash. This playbook sets out how to adjust terms, reporting and timing when you approach them.

What the survey found

Median operating margin rose to 2.0%, the highest since 2021, which the survey still describes as thin. Alongside the 43% expecting to draw on reserves, 40% plan to issue debt this year, up from 31% in 2025, and 33% plan to draw on a line of credit. By our arithmetic, 43% of 77 respondents is roughly 33 organisations, and 40% is roughly 31. Nearly half have changed operations in response to Medicare and Medicaid reforms. On the investment side, the top concern for 2026 is market dynamics, including concentration, valuations and bubble risk, and there are limited plans to reduce private markets allocations, with secondaries and co-investment activity continuing. Strategic healthcare and innovation investment programmes have grown from 25% adoption in 2022 to 42% in 2026, and about 76% of pension pools are overfunded. The survey reflects responses as of 31 December 2025 and notes that its sample may not represent all healthcare organisations.

Advisers say the pattern is visible in their client work. David Moore, who leads the healthcare team at consultant NEPC, said clients increasingly rely on operating pools as a source of liquidity. Mark Cagwin, Vice President of Treasury and Chief Investment Officer at SSM Health, noted considerable dispersion in operating performance by region and credit rating, so one health system's appetite tells you little about the next.

Why liquidity changes the pitch

The dispersion in the survey is wide. Ask each prospect what its reserves policy is, how it measures days of cash on hand, and which pool has first call on funds if margins slip. A system with strong free cash flow may be looking for places to deploy money, while one drawing on reserves will want shorter commitments and cleaner reporting. Treat each conversation as a separate case, and avoid quoting the survey average back to a prospect as if it described them.

A health system usually holds several pools: an operating pool that can be tapped, a long-term pool, and a pension plan. The operating pool is where liquidity matters most, and the pension plan is where long-duration illiquid assets fit best, which is a useful reason to know which pool you are pitching. This section is our advice, not the survey's.

A playbook in six steps

First, identify the pool. Ask early whether the commitment would come from the operating pool, the long-term pool or the pension plan, and size the conversation accordingly. Second, lead with distributions. Health systems drawing on reserves care about when cash comes back, so put your realised DPI and your distribution history ahead of the headline return. Our playbook on raising a fund while LPs wait for distributions covers how to present it.

Third, offer a liquidity story you can defend. Be clear about what you can and cannot offer, and set gates and windows that stand up when investors ask for money back, as set out in our liquidity terms playbook. Fourth, give them cash-flow visibility: a forecast of capital calls and distributions that a treasury team can plug into its plan, and a plain account of how you use any subscription line. Fifth, be ready for the secondary transaction conversation. If secondary activity is continuing, expect questions about transfer rights and how you would handle a stake sale. Sixth, match the mission. With innovation programmes now at 42% adoption, a manager that can show healthcare knowledge, and not just a healthcare label, has an advantage.

Where to start

The warmest routes usually run through a person who has moved between institutions or a shared co-investor. We showed how that works in our article on mapping warm paths into health systems, insurers and pensions. Start with the treasury or investment lead, and ask what they need from a manager this year, not what they want to hear about yours. Prepare a diligence pack in advance, using our LP diligence pack guide, since consultants take a larger role in implementation and will ask for it.

What to watch next

Watch for the next survey wave, for health systems' fiscal year-end results, and for any change in Medicare and Medicaid policy that moves operating margins. Managers should also track whether reserve drawdowns slow, because that is the clearest sign of renewed appetite for new commitments. FundLinx members can see which health systems are active in private markets.

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