DEI in Healthcare: Striking a Balance Between Compliance and Equity

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By Trisha L. Coady, BSN
Executive Vice President, Workforce Development Solutions

Hospitals and other healthcare provider organizations have been navigating a complex situation as it relates to the president’s executive orders on diversity, equity, and inclusion (DEI).

I know that healthcare facilities want to maintain their commitment to DEI as a core component of their mission to advance the health of individuals and communities and provide equitable and compassionate patient/resident care. Still, the executive orders have raised concerns for healthcare organizations about compliance requirements and potential restrictions on longstanding programs.

Furthermore, some healthcare facilities are trying to understand how scaling back on DEI initiatives could impact employees’ sense of belonging and how much that will affect employee retention.

That’s why we created a guide to give our customers an overview of the policy as well as provide practical steps to ensure they remain compliant and provide equitable care. In this article, we will outline key facts and provide guidance on how healthcare organizations can respond:

Overview of the Executive Orders on DEI

In January, the president signed multiple executive orders aimed at eliminating DEI programs in the federal government and DEI programs led by private companies that contract with the government.

Executive Order 14173 states that federal agencies are directed to enforce “long-standing civil rights laws and ‘to combat illegal private-sector DEI preferences, mandates, policies, programs and activities,’” to restore “merit-based” opportunities. Each federal agency is required “to identify up to nine potential civil compliance investigations of publicly traded corporations, large non-profit corporations or associations, foundations, state and local bar and medical associations, and institutions of higher education with endowments over $1 billion” as part of a strategic enforcement plan. The order also rescinds Executive Order 11246, which was signed in 1965, prohibiting discrimination in employment by federal contractors and subcontractors. EO 11146 mandated that contractors take affirmative action to ensure equal employment opportunities for all, including underrepresented minority groups and women. The Office of Federal Contract Compliance Programs (OFCCP) was ordered to stop enforcement of EO 11246, including all active litigation and audits related to affirmative policies.
Executive Order 14151 instructs agencies to remove DEI offices and programs and terminate all DEI positions across the federal government; halt celebrations of certain demographic groups; and prohibit the use of preferred pronouns in government email addresses.
Executive Order 14168 directs federal agencies to recognize only two sexes, male and female, and rescinds documents or portions of documents that are inconsistent with this policy.

Key Challenges Healthcare Organizations Face

By now, many healthcare facilities have already either removed or drastically changed their DEI initiatives to stay in compliance with the executive orders. Healthcare organizations still face these challenges:

Mitigating compliance risks
Healthcare organizations must remain prepared for increased scrutiny around affirmative action, hiring practices, and workforce programs. This includes reducing risks tied to False Claims Act (FCA) violations or allegations of unlawful DEI practices.
Addressing health equity concerns
The elimination or scaling back of initiatives designed to address healthcare disparities risks undermining efforts to improve access and outcomes, particularly among underserved communities.
Balancing diversity and merit
Maintaining a diverse workforce while adhering to a strictly merit-based framework has become more challenging. Efforts to ensure representation across race, sex, and ethnicity should continue to be reexamined to align with federal mandates.
Navigating legal gray areas
The executive orders have introduced evolving definitions of discrimination and merit-based opportunity, which complicate compliance efforts. Organizations must tread carefully to avoid potential legal liabilities stemming from unclear policies.
Maintaining effectiveness of restructured programs
Many healthcare organizations have already reassessed and restructured existing DEI initiatives to ensure compliance with revised regulations. The challenge will be to ensure that new programs still equip leaders with the right education and tools to create an inclusive environment for patients, residents, and employees.

Legal Considerations for Healthcare Organizations

Compliance is one of the most significant hurdles related to the DEI executive orders. Healthcare organizations should account for the following:

Civil rights compliance: Ensure adherence to laws prohibiting discrimination based on race, color, religion, sex, or national origin.
Scrutiny of recruitment practices: Avoid policies that involve preferences based on protected characteristics like race or sex, as those may be viewed with increased scrutiny.
Grant funding restrictions: Confirm compliance with federal restrictions placed on funds connected to DEI or gender ideology.
False certification risks: Healthcare organizations must certify their compliance with laws when engaging in federal contracts, with potential FCA penalties for false statements.
Revised definitions: Adjust to policies defining "sex" narrowly as biological classification while considering implications for gender identity programs.

Strategic Steps for Moving Forward

Many healthcare organizations have revised or evolved their DEI initiatives, training programs, and policies. Here’s a checklist for healthcare facilities to consider as they continue to modify their DEI strategy:

Conduct DEI compliance audits
Confirm you have done a thorough review of DEI programs to identify potential risks and ensure continued alignment with the executive orders. These audits should address recruitment, hiring, employee training, and management practices.
Reevaluate DEI implementation
Evaluate program goals and activities to focus on compliance and merit-based principles without compromising inclusion.
Develop legal safeguards
Build and maintain comprehensive policies to document adherence to updated federal guidelines and ensure legal teams remain prepared for FCA-related investigations.
Maintain patient-centered care
While complying with federal mandates, prioritize health equity initiatives that support vulnerable demographics without crossing regulatory boundaries.
Equip staff and leadership
Provide tailored training to managers and HR teams so they can effectively address potential conflicts and oversee lawful compliance.
Regularly monitor industry litigation
Stay informed of legal challenges to the executive orders and adjust policies based on court decisions or new federal directives.

How Do the Executive Orders Impact Healthcare Organizations?

The executive orders will impact healthcare organizations by potentially affecting recruitment, training, and compliance with anti-discrimination laws as well as affect the structure and existence of DEI programs. The orders have led to changes in how organizations approach DEI initiatives, especially those that receive federal funding through programs like Medicare and Medicaid, and for services such as patient/resident care, research, or workforce training.

Organizations whose DEI programs are seen as a violation of any of the executive orders or relevant anti-discrimination laws could potentially face legal challenges or regulatory investigations. Among some of the facilities that have been impacted are healthcare facilities and clinics, healthcare research institutions, medical schools, and non-profit healthcare organizations.

Here’s an Overview of the Impact:

Workforce representation: Observe changes in the demographic makeup of leadership roles and the broader health care workforce over time.
Healthcare access and outcomes: Evaluate disparities in care quality and access among different demographic groups.
Employee satisfaction and retention: Track engagement levels, satisfaction, and retention rates with particular attention to diverse populations and demographics.
Discrimination complaints: Monitor the frequency and nature of complaints filed by employees or patients/residents.
DEI resource allocation: Assess financial and personnel investments in DEI programs to determine trends post-implementation.
Legal actions: Keep track of any legal challenges or compliance investigations stemming from changes to DEI policies.

Why Is DEI Still Important in Healthcare?

DEI in healthcare remains a necessity. The framework still exists, but it is evolving, and it will look different in the future. The principles of DEI will continue to be crucial for improving patient/resident outcomes, having a more diverse and inclusive workforce, and addressing health disparities. 

A diverse workforce can lead to better communication, culturally competent care, and more effective treatment plans, which ultimately benefit patients and residents. Workplace diversity also influences job performance – a Forrester report says that when employees feel a sense of belonging at work, it leads to a 56% increase in job performance. Furthermore, DEI initiatives can improve staff retention and create a more positive work environment for all employees. Employee retention drops in the absence of DEI initiatives, according to a Press Ganey survey.

Meanwhile, most C-suite leaders believe there is a positive correlation between their DEI programs and employee attraction and retention, according to a recent survey from the Meltzer Center for Diversity, Inclusion and Belonging at the NYU School of Law and workplace gender equity firm, Catalyst. The same survey revealed that most C-suite executives believe DEI initiatives result in better business performance and higher customer loyalty.

What is HealthStream’s Response?

At HealthStream, we believe in providing resources and tools to healthcare providers that help them improve patient/resident outcomes, reduce health disparities, and foster an engaged and productive workforce.

With regard to our solutions, we will continue to offer our Health Equity and Belonging library to ensure ongoing compliance for our customers. We have also revised or removed several courses from our Safety Q and Comply Q libraries as well as our CE Unlimited subscription service.

As our customers navigate the changing regulatory landscape because of the executive orders, we recommend they do the following to maintain compliance and to continue their commitment to fostering an inclusive workplace environment.

Program restructuring: Healthcare leaders who continue to view DEI programs as a priority are finding creative ways to position them around the executive orders.
DEI program language and terminology: Some organizations have opted to replace DEI with terms such as belonging, allyship, inclusion, or health equity. Other terminology that is being used more often are global inclusion, success and opportunity, talent management and engagement, MEI (merit, excellence, intelligence), and pluralism. The focus is shifting from using language that address specific identify groups to a broader “culture of belonging.”
Hiring and recruitment: Efforts to ensure representation across race, sex, and ethnicity will need to be continually reexamined to align with federal mandates.
DEI training and policies: Some curricula have shifted away from identity-based approaches and now focus more on inclusive communication, unconscious bias awareness, and compliance with evolving federal guidelines.
Patient or resident care and outcomes: DEI efforts have been linked to improved patient/resident trust and outcomes, especially in underserved communities. New compliance pressures may influence how healthcare professionals deliver culturally competent medical care, potentially widening disparities if not carefully managed.
Employee retention and morale: Patients or residents, partners, and potential hires are paying attention. A perceived retreat from DEI commitments could harm reputation and competitive standing in a values-driven marketplace. Research from Press Ganey says if healthcare workers are offered another job, they are four and a half times more likely to leave an organization if they believe different backgrounds are not valued, or if the organization is not committed to workforce diversity, versus workers who do.
Compliance risk and legal gray areas: Healthcare organizations must prepare for increased scrutiny around affirmative action, hiring practices, and workforce programs. Furthermore, the executive orders have introduced evolving definitions of discrimination and merit-based opportunity, which complicate compliance efforts. Organizations must tread carefully to avoid potential legal liabilities stemming from unclear policies.

6 Metrics to Measure the Impact of DEI Changes</h2>

To monitor the effects of changes to DEI policies and programs, organizations can track specific metrics, including:

Foster a culture of belonging
- For staff: Healthcare organizations can foster belonging through inclusive leadership, transparent communication, and supporting Employee Resource Groups. Creating a psychologically safe environment where staff feel comfortable speaking up is also important, as it encourages innovation. Supportive policies, professional development opportunities, unconscious bias training, and mentorship programs also play a role in fostering belonging.
- For patients or residents: To foster belonging for patients or residents, healthcare facilities can provide personalized care that considers individual needs and cultural sensitivities. Healthcare facilities can also ensure the physical environment is welcoming and accessible to all patients or residents; encourage family involvement; ensure that the staff uses clear and respectful communication and that the staff has proper training on empathy and cultural competence.
Consider new workplace models
- Pluralism: According to the Cambridge dictionary, pluralism is the existence of different types of people, who have different beliefs and opinions, within the same society. In the workplace, pluralism is emerging as a new model that favors diverse views and dialogue from people of different backgrounds.
- MEI: The concept of MEI, or merit, excellence and intelligence, emphasizes individual merit. Hiring employees based on merit means selecting candidates based on skills, experience, qualifications, and accomplishments. Excellence can be defined as high-performing employees who exceed expectations and who are committed to professional growth. Intelligence, of course, refers to things such as problem-solving ability, emotional intelligence, and cognitive skills.
Reframe training content
- Healthcare facilities can shift their emphasis from traditional DEI training to promoting psychological safety, inclusive leadership, and effective communication, which contribute to a more collaborative and belonging environment while ensuring compliance with new regulations.
- Organizations can emphasize skills-based training by revising training programs to focus on practical skills like cross-cultural communication and cultural awareness, which enables providers to communicate effectively with diverse patients/residents.

The Road Ahead: Balancing Compliance and Equity in Healthcare

Although these executive orders have created challenges, they do not mandate an end to lawful DEI activities. Organizations must maintain a calculated approach to refine policies and sustain equitable patient or resident care and workforce practices. Maintaining robust documentation, emphasizing data-driven decisions, and adopting a compliance-first mindset can help mitigate risks.

Healthcare remains a sector where diversity in the workforce is linked directly to better patient/resident outcomes. Organizations should aim to protect these values within the constraints of evolving legal frameworks. If your organization needs tailored support navigating these changes, contact HealthStream today.

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