Healthcare Trends and Challenges in 2024 (The Crystal Ball)
This article has been updated to reflect 2026 – Check out Healthcare Trends 2026
Healthcare Trends and Challenges to Follow in 2024
This article is based on Becker’s Article 12 healthcare trends , Mckinsey Healthcare Trends And Deloite 2024 Outlook for Health Care
The U.S. health care system bumpy ride will continue in 2024 as consolidation and reduced fragmentation continues. As leaders in healthcare are planning their strategy in 2024 and 2025, We assembled some key trends and issues that requires our attention in 2024 as we plan the year ahead . These patterns and shifts directly or indirectly influence how healthcare providers fare in 2024, and ultimately affect how Americans access, afford and receive care.
1. Talent Shortage
The estimated 30,000 physicians who join the U.S. workforce will not be enough to meet the growing demand for care and number of doctors retiring, reducing clinical hours, or planning to exit the field each year. Keep in mind that an estimated 71,309 physicians left the workforce from 2021 through 2022 alone. These supply disruptions unfold as the nation as a whole continues to grow and age, intensifying demand for physicians even amid a growing pipeline of advanced practice providers. It’s a fairly finite pool of doctors, APPs, nurses and all types therapists and techs to take care of a larger and older population. All in all, the U.S. faces an estimated shortage of between 37,800 and 124,000 primary care and specialist physicians by 2034.
2. Hospital Margin Challenges
The median hospital operating margin rose to 2% in November, with margins varying among institutions and markets. Greater labor and supply expenses and patient acuitywill continue to challenge hospitals in the year ahead, and certain types of hospitals face outsized risks. Hundreds of rural hospitals, for one, are at immediate risk of closure because of the severity of their financial problems. Trends impacting margin and cost include:
- Residual COVID-19 delayed utilization
- Ongoing inflation coupled with a tight labor market
- Higher drug pricing with sustained specialty utilization, now compounded with increase in demand for medications used to treat Type 2 Diabetes or weight loss
- Renewed efforts by the Centers for Medicare and Medicaid Services (CMS) to promote value-based care (VBC) and slow growth in the rate of provider reimbursements
(Source: PWC Healthcare trends)
3. Obesity Magic Pills
The year begins with steady interest on the long-term effects of GLP-1 agonist drugs, for which demand is high — 9 million prescriptions issued the final months of 2022 alone — and poised to increase. This raises questions for insurers, employers and the government related to spending and questions for healthcare providers’ services and surgeries if weight is lost at scale.
4. Value-based care (VBC)
In the fee-for-service reimbursement model, you see some challenges of overuse. Many value-based care models bring in the opposite: increased use of pre-authorization and efforts to avoid providing care. The right solution, as in most cases, is somewhere in between. We estimate that VBC lives will grow from 80 million to 100 million in 2022 to 130 million to 160 million in 2027.2 This would require health systems to upgrade their risk-bearing capabilities.
5. The Payers Continue to Become Massive
The largest payers are 10x the size of the largest health systems. The negotiating imbalance continues to grow in favor of the payers. One 2023 analysisfound the market-leading insurer in the least competitive insurance markets pays 15 percent less to hospitals than the market-leading insurer in the most competitive markets, for example. Negotiated rates are just one part of the problem hospitals face amid growing payer power, along with denials and reimbursement policies that make a growing portion of payment slow, costly and inconsistent. At the same time, payers are finding the world more difficult in terms of profitability than they were. The most advantageous payers are a mix of payers and providers.
6. Physician Employment by Payers
UnitedHealthCare with Optum has become the largest employer of doctors in the country. Optum added nearly 20,000 physicians in 2023, meaning it now has nearly 90,000 employed or affiliated physicians and another 40,000 advanced practice clinicians. Everyone else in the disruptor space is playing catch up and facing the same supply problems as legacy providers. There are not enough doctors and providers for each of the disruptors to be successful in providing and staffing clinics on a national level.
7. Election Year
In the year of a presidential election, Medicare has long been seen as the third rail of politics due to the voting power of those 65 and up. Medicaid can now fall in that same category, given that it has even more enrollees than Medicare.
8. Technology is Part of a Solution, but not the Entire Solution
Artificial intelligence, automation, EHR optimization, virtual care programs and remote patient monitoring are increasingly important in helping to close some of the care gaps in our country and in making administrative efforts and clinician efforts a little less burdensome. But technology solutions without more doctor and provider solutions will not solve the problem of supply and demand.
9. Medicare Advantage Now Covers More than Half of the Medicare Population
Until recently, this has been a huge boon for payers and largely a debacle for providers. Medicare Advantage is one example of the power of political lobbying. Big payers have a lot of influence here, even as CMS overpaid Medicare Advantage organizations an estimated $16.6 billion in fiscal year 2023.
10. Mental and behavioral health in the U.S. has reached a critical stage with a worsening imbalance of needs and demands versus supply
It is estimated that 1 in 5 Americans already lived with a mental illness before the COVID-19 pandemic, which only exacerbated demand for this type of healthcare. Rates of depression among adults hit a high in 2023, suicides hit an all-time high in 2022, and emergency department visits for children’s mental health conditions have surged over the past several years. At the same time, nearly half of the U.S. population resides in a mental health workforce shortage area. As it stands, the U.S. faces a shortage of 14,280 to 31,109 psychiatrists, and psychologists and social workers by 2050.
11. Affordability and Empowered Consumers
Medical inflation, combined with rising coverage costs, could leave consumers with higher out-of-pocket costs in 2024.5,6 Half of the health plan executives we surveyed cited “affordability issues” as most likely to impact their strategy in the year ahead. Moreover, a majority of finance leaders expect consumer health care expenses (e.g., premiums, out-of-pocket costs) will increase in 2024, according to our mid-year health care CFO survey. Consumers are at the heart of the transition from consolidation and fragmentation to convergence, and they tend to make many purchase decisions based on price and convenience. When consumers can receive an online order in a day or less, many are frustrated when they must wait weeks or months for a medical appointment. According to Deloitte’s research on trust, about half of focus group participants said they’d be willing to trade in-person visits and the convenience of a closer location for a provider who relates to them and understands their needs.
12. Outsourcing and Offshoring
Challenging margins—combined with rising labor costs and high interest rates—are putting financial pressure on health care organizations. Health care organizations should determine what they do well and consider ways to outsource functions that can be done more efficiently and at a lower cost. Some organizations are considering moving some back-office functions overseas where labor costs can be significantly lower (see Can offshoring help health systems bulk up thin margins?). Revenue cycle, billing, claims, finance, human resources, clinical administration, and supply chain are areas that could be entirely or partially outsourced. Assessing the cost, quality, and efficiency of outsourcing could make it easier for health systems and health plans to streamline operations, reduce costs, and improve efficiencies. Our sister company, Virtual Health Services specializes in outsourcing and offshoring services providing healthcare organizations and physicians services like Virtual Assistant, Virtual MA, Billing, Revenue Cycle, and more.
13. M&A, Consolidation, and Convergence
Hospital and health system merger-and-acquisition (M&A) activity dropped sharply during the COVID-19 pandemic, but it has rebounded in a big way. We expect this trend will continue in 2024 (several large mergers are in the works). Eighty-six percent of health system executives surveyed said M&A would have a “great impact” (33%) or a “moderate impact” (53%) on their 2024 strategy. As health systems consolidate, the question is how to successfully execute on the transactions to ensure that strategic goals are achieved. Health plan executives are less concerned about M&A than they were a year ago, according to our survey results. Only one-third of health plan respondents expect M&A will impact their 2024 strategy. Given the Health Plan sector’s strong financial position, large plans may be well positioned to drive transformative acquisitions in 2024.
14. Cost of Insurance Continues to Go Up
The annual premium for family coverage in 2022 averaged $22,463, with the worker contributing $6,106 annually — an increase of 20% over the previous five years and 43% over the previous 10 years.
15. Cost Plus Drug Pricing Trend
More large pharmacy chains are reacting to Cuban’s Cost Plus drug pricing model; Mr. Cuban co-founded Mark Cuban Cost Plus Drug Co. in May 2020 with Alex Oshmyansky, MD, PhD. The online pharmacy launched eight months later and today offers more than 2,000 of the most highly utilized and/or high-cost generic medications. The drugs are sold with a 15% markup for price, a $5 fee to pay the pharmacists it works with and a $5 fee for shipping. The prices are significantly less than what Americans typically pay through insurance.
16. Staff and Physician Burnout
Throughout 2023, physicians continued to experience job stress. Even as the impact of the pandemic lessened, 56% of physicians reported high levels of job stress.The primary stressor according to respondents is a need for better staffing ratios and more help from support staff, such as medical assistants to reduce physician workload. But physicians are spending 58.6 hours each week on work-related tasks such as direct patient care, indirect patient care, administrative tasks, teaching and research. This is higher than other health professionals surveyed. And it can contribute to adverse personal health outcomes, according to a recent study co-authored by the AMA.
17. Addressing Health care Disparities
The effects of racial gaps in health care are well-documented. African American communities are more vulnerable to severe weather and floods, and are at higher risk to experience asthma as a result of polluted air, than other communities. Black women suffer from three times the maternal mortality rate as white women. People of color face disproportionate barriers to accessing mental health services. Adapting solutions to address these and other sources of health disparities will take on greater priority as a means to reducing the long-term burden on practitioners who struggle to reach socioeconomically disadvantaged patients. A May 2023 study estimated the cost of increasing health care disparities on the U.S. economy at $451 billion.
18.Preventing Violence Against Healthcare Workers
More than one-third of healthcare workers experienced some form of workplace violence between Jan. 2020 and March 2022, according to a recent study. Health care workers are trained to “always do no harm.” But what happens when they are in the difficult position of being the target of abuse ― verbal or physical ― from the patients and families they serve? While rarely fatal, attacks against health care workers are five times more common than in other workplaces. Post-traumatic symptoms among victims are common. To maintain the quality of the work environment for providers and their patients, the American Association of Medical Colleges reports a trend of adopting new safety standards to prevent violent incidents before they arise.
19. Increased Competition from Non-Traditional Players
Increased competition from nontraditional players, including digital natives, that have more access to capital than incumbents do. These players are cherry-picking attractive patient segments and earning margin by reducing total cost of care, with a primary focus on inpatient utilization. This exacerbates continued pressure from payers on health systems to reduce inpatient utilization and reimbursement.
20. Clinical Workforce Shortages and Wage Growth
Workforce Shortages continue to weigh heavily on health systems. By 2025, we estimate the United States may face a shortage of 200,000 to 450,000 nurses available for direct patient care, equating to a 10 to 20 percent gap. Wage growth for nonclinical roles and inflation more generally are putting additional cost pressure on health systems.
21. More Demanding Consumers
Consumers are demanding new capabilities from health systems. For example, consumers’ experience with retailers is forcing health systems to deliver omnichannel experiences, including digital tools such as self-scheduling.
22. More Regulatory Pressure on Price Transparency
Health systems are also closely monitoring regulatory issues, including price transparency requirements and the direction of initiatives such as the US government’s 340B drug program.
23. Blockchain in Healthcare
Blockchain technology is being explored for secure and interoperable health data management, especially in areas like patient records and clinical trials.
24. Biotechnology and Gene Editing
Advances in biotechnology, including CRISPR-based gene editing, are changing the landscape of healthcare by potentially offering innovative treatment options for genetic diseases.
In conclusion, as dynamic and fast-paced as the healthcare industry is, healthcare leaders must increase their organization and team capabilities to be nimble and aggressive addressing the most needed scenarios with agility, leadership and innovative thinking and culture. The Healthcare Leadership Institute can help you and your team develop agile strategy, ensure alignment with line of Sight, and create a culture of experimentation and innovation.
Contact us today for a free consultation to see how we can help your organization with physician leadership training to overcome these healthcare challenges.
