Within health systems, outpatient care settings such as physician offices and ambulatory surgery centers, driven by site-of-care shifts.

Within payer, Medicare Advantage, spurred by the rapid increase in the duals population the group business, due to recovery of margins post-COVID-19 pandemic and individual.

Several segments can expect higher growth in profit pools: Profit pools continued under pressure in 2023 due to high inflation rates and labor shortages however, we expect a recovery beginning in 2024, spurred by margin and cost optimization and reimbursement-rate increases. We estimate that healthcare profit pools will grow at a 7 percent CAGR, from $583 billion in 2022 to $819 billion in 2027. The fastest growth in healthcare may occur in several segments Powered by adoption of technology, healthcare services and technology (HST) businesses, particularly those that offer measurable near-term improvements for their customers, will continue to grow, as will pharmacy services players, especially those with a focus on specialty pharmacy.īelow, we provide a perspective on how these changes have affected payers, health systems, healthcare services and technology, and pharmacy services, and what to expect in 2024 and beyond.

On the healthcare delivery side, financial performance will continue to rebound as transformation efforts, M&A, and revenue diversification bear fruit. But Medicare Advantage and individual segment economics have held up well for payers.Īs we look to 2027, the growth of the managed care duals population (individuals who qualify for both Medicaid and Medicare) presents one of the most substantial opportunities for payers. Eligibility redeterminations in a strong employment economy have hurt payers’ financial performance in the Medicaid segment. Skilled nursing and long-term-care profit pools continue to weaken. Even so, health-system margins are lagging behind their financial performance relative to prepandemic levels.

Much of the improvement is the result of transformation efforts undertaken over the last year or two by healthcare delivery players, with healthcare payers acting more recently.

The acute strain from labor shortages, inflation, and endemic COVID-19 on the healthcare industry’s financial health in 2022 is easing.

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