// . //  Insights //  Key Markets That Will Drive Transformation In Healthcare

This article is part of the Designing for 2035 report.

Today’s healthcare system has evolved to serve broad cross sections of communities. One primary goal has been to deliver similar care offerings and experiences across diverse populations. As new roles, technologies, and business models drive innovation, we see varying ways of serving targeted populations emerging. With that, we expect different value propositions, offerings, assets, and expertise to better align with medical, social, and financial needs of specific groups of consumers.

Across the broad landscape, at least three specific segments will emerge as drivers of the new healthcare landscape: seniors, digitally savvy consumers, and families. Each of these will be impacted in different ways between now and 2035.

Exhibit 1: Markets of the future driving healthcare transformation

Silver surfers navigating health challenges

By 2035, seniors will account for one in every four Americans, up from one in six today. The aging population will result in a growing prevalence of chronic conditions — 80% of older adults have at least two chronic conditions — and larger segment of the population that is overall less healthy than the rest — 20% of seniors are in fair or poor health and 9.4% have difficulty with self-care. As a society, we must develop new care models and capabilities to account for the added complexity and expense of these more varied cases.

Opportunities to improve outcomes for the senior cohort will broaden over the coming years. Easy-to-use medical supplies, remote patient monitoring devices, and life-saving equipment will be increasingly ubiquitous, making care outside the hospital a more viable option. Organizations and technologies that can aid in reconfiguring physical assets and workforces to focus on last-mile care delivery will gain momentum. Amazon Pharmacy is already doing some of this on the drug delivery side but we project examples to spring up, including on the care delivery side through partnerships between corporations and clinicians.

For formal and informal caregivers, new tools and incentive models will spring up, rewarding them for the work they do taking care of older family members. New care models and training programs will emerge on the clinician side, tailored towards teaching providers how to work more efficiently with informal caregivers. On the monetary side, initiatives such as Medicare’s family caregiver funding plan and retooled insurance products ease families’ financial burdens. Funding for these programs will come from a variety of sources, including employers, who, through evolved health plan products and benefit packages, will end up covering a large chunk of these advances. One such example of an innovation here is a technology platform that offers on-demand, personalized home care booking services and partners with employee benefits plans to provide subsidized elder care benefits to employees. This, in turn, helps to create and retain a more productive workforce.

Finally, alternative care models and sites that are more suited for seniors’ distinct needs will spring up, shifting from today’s focus on physical conditions to a mix of both physical and cognitive decline. Nearly two-thirds of dementia cases go undetected by primary care physicians. Efforts to improve the situation are already underway. CMS rolled out a Medicare pilot program aimed at improving the quality of life for seniors experiencing cognitive decline. The Guiding an Improved Dementia Experience model will offer 24/7 access to a support line, caregiver training and support services, and pay participants to fund home health aides to give unpaid caregivers a temporary break from their duties. Programs like these will scale and become the norm by 2035.

As these programs proliferate, aging at home will increasingly become the favored alternative. It is already popular today — 90% of older adults prefer to age at home — but our current infrastructure is not set up in a way that makes this a viable option for many. Only 10% of US housing stock is aging-ready, and falls are the leading cause of injury for adults aged 65 and over. Our nursing home stock is also not well-equipped to handle this age wave either. There are only about three million nursing home beds to accommodate the 70 million baby boomers in the US. Seniors will more easily be able to feel safe in their own homes and age where they would like to due to infrastructure improvements and digital solutions increasing the safety and viability of aging in place — remote monitoring will be crucial for this cohort, especially considering that 42% of seniors live alone.

Healthcare adapts to digitally savvy consumers

While the needs of the senior population will grow relentlessly, the industry must also respond to younger generations that are typically healthier, more technology savvy, and more prone towards self-care. In fact, coming out of the COVID-19 pandemic, 71% of Americans are more observant of their health. While standard healthcare solutions may continue to hold the highest demand, alternative options will gradually gain popularity, including different therapeutic options or care delivery preferences like doula assistance. This cohort prefers solutions that produce real and immediate results, both physically and cognitively, and they don’t mind paying for it: 56% of Americans would spend more than $100 per month on weight loss medication.

By 2035, we expect the quantified self to become more actionable, making the shift from simply tracking behavior to influencing decisions daily. Greater connectivity among players in the ecosystem will emerge. Greater connectivity in healthcare data will afford users a single view of their wellbeing. Advances in clinical models will make the data actionable, driving daily decisions on diet, exercise, mindfulness, and sleep. Greater connectivity with the broader ecosystem will enable connections with the traditional healthcare ecosystem and connectivity between physical and virtual care. New businesses — focused on connecting health records, insurance, patient-generated data, and loop in clinicians — will see growth.

Trust will be paramount as healthcare becomes more personalized. Consumers will seek out the information from the sources they trust, and it won’t necessarily be big healthcare institutions. Peer-to-peer solutions that feel more organic than current experiences will continue to grow in popularity. Harvard’s T.H. Chan School of Public Health has already begun to partner with mental health influencers on TikTok to reach and connect with this group of savvy content consumers in ways traditional providers do not. As Austin Chiang, MD, described during the 2023 Oliver Wyman Health Innovation Summit, healthcare organizations must grow and support influencers to counter misinformation that spreads across social platforms. Chiang, who serves as chief medical officer of Medtronic’s gastrointestinal business and chief medical social media officer at Jefferson Health, has more than 750,000 followers across his social media platforms. He uses his accounts to drive evidence-based medicine to consumers. Traditional provider groups also have to drive trust through greater community engagement. If they invest in building an infrastructure that facilitates real-time communication among stakeholders in a care journey, consumers will respond favorably.

Behavioral health will become more holistic and increasingly intertwined with primary care as these innovations take shape. Behavioral health providers will increasingly become closer to the first point of contact with patients, and we’ll need a lot more of them. As they take on more tasks closer to what we consider primary care, the training needed for behavioral health providers will evolve into much more of a broad set of skills. By 2035, the gap between primary care and behavioral health quality and availability will be harshly cut.

Flexible health plans for families

The current unit of in our healthcare system is the individual receiving care. But for many, healthcare decisions are made on behalf of an entire family. Mothers make 80% of healthcare decisions for their families. Furthermore, the health of parents translates to the health of children. Consider obesity, where a child with one obese parent has a 50% chance of being obese. That climbs to 80% when both parents are obese. Similar statistics exist for diabetes and mental health conditions. It is imperative that we rethink how the entire family unit experiences healthcare.

Health plan products that accommodate families by offering greater flexibility and tailored solutions will emerge by 2035. Regulatory and market pressures to boost price transparency will bear more fruit, arming consumers with more information when making healthcare decisions. An easier-to-use benefits marketplace, perhaps with the ability to toggle specific benefits on and off, will allow families to curate a plan that works for their family. We also foresee situations where employers offer new ways for families to finance healthcare for family members. A model borrowing from 529 college savings plans, for instance, would allow a family member to contribute towards a beneficiary’s healthcare expenses long after they stop being a dependent. Additionally, the demand from payers for alternative pricing models and support programs like providing transportation to and from appointments will expand.

On the care delivery side, models that treat the family as a unit to accommodate their shared history, needs, and preferences will emerge. Families will increasingly rely on biomarker tests that can impact the whole unit. Correspondingly, providers will develop care plans for the whole family, not just the individual. We’ll also see the continued growth of multispecialty clinics, particularly in suburban areas, with visit templates that accommodate a family. Increased investment in navigation solutions from providers will also make it easy for busy parents to know what their dependents need, when they need it.

Similar to the savvy consumer cohort, transparency and trust building will greatly influence this segment. We especially forecast retailers playing an increased role. These retailers will continue to grow their reach and service a larger portion of care needs. National chains like CVS Health, Kroger, and Walgreens have expanded into chronic care management, for instance. We expect them to also increase their footprints, whether it be with in-location clinics at local superstores or increased remote supply provided through mail-order logistics. Upfront costs will also be more transparent as we approach 2035, and families will increasingly make decisions based on such data.

We’ll see models and health plan products that embrace the flexibility required when seeking healthcare for an entire family unit emerge by 2035, and meet families where they’re at, whether it be their favorite retail location or directly at their home.

Rural healthcare — challenges and changes

Beyond the specific needs outlined above, a combination of geography, demographics, economic conditions, and broader societal challenges will impact how markets evolve nationally. Innovations, new market structures, and increased societal commitment will be especially important in two key markets that incorporate people from all the cohorts described above — rural America and urban working poor.

While rural communities all differ demographically, they generally skew older and with lower employment and income figures. One thing that is consistent among them is the financial challenges they face related to healthcare. Roughly one out of 12 rural hospitals have closed since 2010, and one out of three remaining rural hospitals are in danger of closing. This has led to adverse health outcomes: rural life expectancy is roughly three years shorter than it is for people in urban areas.

By 2035, and buoyed by new state payment models, we’ll see rural hospital models that allow for longer-term sustainability. We expect an increased focus on preventive and outpatient care, largely stemming from a greater amount of predictable, capitated funding from state governments. Pennsylvania has already instituted a similar program here that received $25 million of federal funding. We forecast more states adopting scope of license flexibility to allow for greater dependence of third-party specialists and virtual treatment and management. This will also ease the impact of physician shortages as nurses and other practitioners will be able to handle more direct patient care. Finally, there will be more intentional training and career paths for prospective clinicians to work in rural hospitals versus alternatives, leading to increased staffing flexibility.

Greater at-home, virtual, retail, and mobile care will emerge, empowering consumers to get the care they need without taking days off to travel to more urban sites. Remote specialists that work with local advanced practice practitioners will become a popular option, along with care models built around common incidents in rural communities. The greater presence of telehealth will facilitate lower acuity interactions, with a hybrid model developing for episodes that require a bit more in-person interaction. At-home resources for everyday healthcare management will be more popular and facilitated by more widespread internet access and devices that don’t require intensive amounts of bandwidth to function. Retailers such as dollar stores or grocers will continue to extend services to more healthcare applications.

For all of the above to work, we need greater trust and community engagement among providers. Existing physical spaces like community centers and faith-based locations will increasingly function as care delivery sites. For traditional healthcare providers like hospitals, targeted cultural models that resonate with the specific nuances of a particular rural population will surface. In some rural markets where a large employer already plays an outsized role, their influence over health will only intensify.

Addressing health disparities in urban environments

Low-income adults are five times as likely as those with incomes above 400% of the federal poverty level to report being in poor or fair health. Addressing these needs is not merely about shifting resources. It also requires new types of care, new structures that address underlying determinants in new ways, and the creation of new models that are tailored to unique local needs.

Overall, care will be reconfigured and better integrated into the broader urban ecosystem. Community-based organizations will become central pillars of care delivery, aiding in identifying patients with social determinant of health needs. These organizations will be more actively integrated into benefit structure and engage with social workers to assist with transitions out of formal care and act as a liaison between patient and provider. Specialized sites of care tailored around behavioral health, substance abuse, chronic disease management, and other common problems for this cohort will develop in and outside of the hospital. The government will be increasingly involved here as well, such as through best practice requirements and direct delivery and production of materials, like California producing insulin.

Additionally, this cohort will get the flexibility they deserve through integrated benefits across government healthcare programs. We predict that Medicaid, CHIP, and ACA plans will expand transition resources, such as common income standard and one application process. States and insurers will build off the expertise they honed as Medicaid redeterminations ramped up post COVID.

Greater Medicaid funding will expand investment horizons and we’ll see increased spending on social and economic programs that take the individual’s needs, lifestyle, and history into account. Increased funding will encourage engagement between stakeholders and propel innovation for both high and low acuity members. High-acuity Medicaid will attract venture capital dollars and act as a bedrock for innovation. States will continue to leverage Medicaid innovation waivers to organize tailored support for the community — 16 states have already approved such waivers and we project more by 2035.

As community-based organizations and more-integrated benefits across government lines of business emerge, the working urban market will see a much-needed improvement in care access and outcomes.

The shifting landscape of healthcare cohorts by 2035 presents both opportunities and challenges for the US healthcare system. While seniors, digitally-savvy consumers, and families are poised to benefit from evolving healthcare technologies and services, we must also prioritize addressing the unique needs of historically underserved populations such as rural and low-income urban worker communities. By recognizing these disparities and implementing targeted strategies, we can strive for a more equitable and inclusive healthcare system that meets the diverse needs of all individuals, fostering a healthier and more resilient society for years to come.

Exhibit 2: Markets of the future in action