Healthcare leaders are often forced to concentrate on the near term or rush from one crisis to another, rarely being able to cast their view deep into the future. Our position in the industry affords us a unique opportunity. We work across the industry, supporting payers, providers, innovators, and biopharma companies as they solve pressing business challenges, capture near term opportunities, and lay the foundation for radical change. Our work balances helping healthcare leaders tackle challenges in the next quarter while preparing for the next decade. It is from this unique vantage point that we decided to undertake this Designing for 2035 effort – to take in account current trends, evaluate the undercurrents of socio-economic change that will influence those trends, and identify where there is significant potential for change over the next decade plus.
Looking 12 years into the future, we are confronted with concerning challenges — including an aging population, clinical shortages, increasing budget and cost pressures, and potential large scale business failure — and encouraged by new opportunities — rapidly evolving technologies and therapeutics, accelerating consumer-centricity, and improvements in diagnostics and care delivery. We’re seeing seeds of progress that signal moves that will set the stage for more structural shifts but also are stymied by the industry’s normal pace of adoption which isn’t conducive to achieving wholesale change.
As we anticipate what the healthcare environment in the US will look like in 2035, we pushed past the cynicism that comes with being in the industry for decades and we challenged the fundamentals behind every pipe dream. We sought to be ambitious and consider what the future of healthcare could be, while also considering typical pace of change and remaining realistic about what will exist at scale. For example, while we see that significant healthcare costs will drive transformation of healthcare stakeholders, we don’t expect a single-payer environment or large-scale dumping of employers from their role in healthcare. This executive summary lays out the foundation of our work. This website will be a laboratory for what’s to come in healthcare. The content will grow to include more detailed findings from our Designing for 2035 effort in the coming months.
The healthcare environment will be extremely different by 2035. Challenges facing the industry today will get bigger and major demographic shifts will force stakeholders to rethink their roles and approaches. Business models that operate effectively today are likely to be inadequate in the future as new technologies and therapeutics, as well as ever-tightening financials, spur stakeholders to pick up the pace of transformation.
The Silver Tsunami: We all know that the population is aging and the birth rate in the US is falling. In the US, the ratio of non-senior to senior population will hit 2 to 1, down from 4 to 1 in 2015. This shift will put increasing pressure on healthcare utilization, workforce dynamics, provider economics, federal spending, and tax collection.
Workforce Dynamics: A clinician retirement boom looms large. Wisconsin, for instance, could have a shortage of 16,000 nurses by 2035 due to retirements. The situation for physicians is dire, too. Nationally, retirements will contribute to an expected shortage of between 37,800 and 124,000 doctors by 2034. At the same time, the rise of the gig economy — set to impact over half of workers as soon as 2027 — and an increasingly fluid and competitive labor market will up the ante for healthcare employers across all sectors.
Social Justice and Equity: An increasingly diverse population, climate change, and other socioeconomic factors will continue to gain prominence. Companies will be held to higher standards and environmental, social, and governance (ESG) will be further elevated in the boardroom and C-suite. Unless there is a strong reversal of current economic conditions, we’ll continue to see a widening gap between the haves and have-nots, putting even more pressure on the health inequity traps that exist within the industry today.
Financial and Economic
Funding Crisis: The demographics described above will add to the financial burden facing healthcare financiers. US employers, who are already dealing with healthcare costs being one of their largest line items, will struggle to accommodate continued increases year over year. But the biggest impact will be felt in government programs. Medicare and Medicaid will serve larger and larger populations while depleting coffers due to fewer workers versus retirees will force federal and state governments to look for ways to cover more care at lower costs.
Economic Pressures: Challenging economics will accelerate the push to make care delivery more efficient and to improve outcomes. This will include continued adoption of value-based and preventive care but shifting of financial risk will not be enough without the accompanying operational and structural changes required to be successful in delivering higher quality outcomes at lower costs. Many aspects of our healthcare system need to go through a fundamental transformation in their business models to accommodate and survive the economic pressure cooker that will be the healthcare industry over the next decade.
Tech-enabled Care: Technology will improve efficiency and experience across the care delivery landscape. Consumer-facing technologies will continue to grow, with a focus on seamless integration across the entire care continuum. There will be more tech-enabled health and well-being offerings that allow consumers to more easily and successfully engage in their care. Increased data interoperability and rapid advancements in artificial intelligence perhaps too rapid will allow healthcare organizations to improve their insights, automate processes, and to drive down costs. Advancements in diagnostic technology, medical devices, and medical procedures hold huge promise over the next decade – making complex and acute conditions more treatable, more efficient, and with improved outcomes.
Advancing BioPharma Science: Pharmaceutical innovation, based on rapidly changing underlying technologies, will continue to transform care — and even leads to cures — in some disease areas. However, these advancements often come with a high price and contribute to the financial and inequality pressures described above.
Healthcare has been characterized by continuous change. Waves of innovation – though perhaps slower than expected and desired — have challenged traditional business models. New insights and methods are constantly being adopted across medical domains, and real healthcare problems are being solved in new ways by incumbents and net new innovators alike. Looking toward 2035, we’ve identified four key vectors where the necessity and opportunity to do things differently will converge and likely accelerate change.
1. A smarter, more efficient industry: Technology and innovation vectors will create step changes in healthcare processes and outcomes.
Necessity: Growing demand for healthcare that’s convenient and simple to manage. Socio-economic pressures that squeeze profit pools and accelerate the need to pursue business model evolution to achieve necessary increases in productivity, efficiency, and costs.
Opportunity: Technology can drive gains in efficiency and productivity and allow staff to focus on top of license activities. Adoption of advanced analytics and AI will introduce process automation and more actionable and timely insights, which in turn presents an opportunity to reimagine experiences for consumers and clinicians alike across the value chain. More data and better connectivity will lead to richer understanding of personalised next-best-actions, available when consumers and clinicians not only need them, but in the mode that they want to receive them.
2. Better interventions: New therapeutics and medical advancements in diagnostics and treatment regimens will drastically change optimal care pathways.
Necessity: A growing older population with more complex health needs. Fast paced research and development pipelines that will offer new breakthroughs. A need for aligned funding mechanisms across pharmaceutical companies, payers, and providers to ensure new curative therapies can reach as much of the population as possible at affordable costs.
Opportunity: The launch and rapid adoption of advancing scientific approaches will deliver novel cures, enhance the continuum of care, and improve chronic disease management. Oncology, immunology, endocrinology, and neurology are key areas where we will see the greatest changes in outcomes and spending. New clinical protocols and new structures and roles to deliver and to finance these therapies will emerge.
3. Realigning delivery: Utilization patterns will shift with care moving to more optimal settings.
Necessity: Technological improvements are redefining what constitutes a site of care. Traditional profit pools are being squeezed by low funding and increased competition; slumping business models are putting independent physicians, rural hospitals, and various service lines at risk.
Opportunity: Care will come through a wider variety of mechanisms, often in more cost-effective and convenient ways. The unit cost of many types of care will begin to drop as mix of care modes and sites of care shifts away from expensive hospital settings.
4. Innovative products: More affordable health plan options will expand in scope and offer more choices.
Necessity: Pressure from employers and government programs drive changes in benefit structures and markets to procure products. Calls for affordability from all types of funders — government, employer, consumer — conflict with demands for more robust and inclusive coverage.
Opportunity: Integration, coordination, and personalization will be the next frontier for healthcare products. Medicare and Medicaid programs will continue to sharpen the performance curve for payers and providers that deeply understand and align their approaches to serve government program enrolees. Seeking to cap their financial exposure, some employers will turn to fixed contributions supported by an evolved and more affordable direct-to-consumer private solution marketplace or through the Affordable Care Act. Other employers will find ways to provide more personalised benefits for various cohorts within their employees, with more importance on well-being, behavioral health, and focused solutions for conditions or health interest.
New technologies, business models, and processes must be adopted to ensure the needs of specific populations are being met. But it’s not a one-size-fits-all approach. Here are changes we anticipate happening in five critical markets. Each has different core medical needs, reflecting their unique demographics. Each will require a different combination of stakeholders to create new business models, make new investments, and create new economic arrangements.
Health in the heartland: Buoyed by new state payment models, rural hospitals will increasingly focus on preventive and outpatient care. Community-based organizations will play a larger role in care delivery by helping providers meet cultural needs of each rural population and consumers will have greater access to at-home, virtual, and mobile care, minimizing disruption in their daily lives and reducing travel to larger tertiary centers.
The silver surfers: Organizations will reconfigure physical assets and retool workforces to focus on last-mile care delivery for seniors. New tools and incentive models will reward formal and informal caregivers to address the necessary expansion of the clinical workforce to serve the burgeoning senior population. Alternative care sites will spring up, helping seniors avoid costly and unnecessary hospital stays.
Underserved urban population: Funded by government programs and integrated into the broader care infrastructure, community-based organizations will become central pillars of care delivery for beneficiaries. Benefits integrated across medical, behavioral and socio-economic supports will give members the solutions and access they deserve.
Savvy consumers: A low friction, on-demand model will become the norm. The quantified self becomes actionable, moving from tracking health to influencing decisions daily. A new robust infrastructure makes data — from consumers and healthcare entities — actionable for providers, allowing them to cut through the noise. Behavioral health providers become central to the care team, increasingly partnering and integrating with primary care. Building and retaining consumer trust becomes a corporate priority.
Healthy homes, thriving families: Employers will develop health plan products to accommodate families, extending coverage to include both children and aging parents, offering greater flexibility and tailored solutions that are integrated into their work and lifestyles. Care models that treat the family as a unit to accommodate the shared history, coordinated needs, and modality preferences will evolve. Price and quality transparency tools will empower families to become more discerning shoppers and activated consumers of healthcare services. A robust marketplace of direct-to-consumer solutions will exist, allowing consumers to curate their own set of solutions and services that matter the most to them.
We intentionally limited discussion of who will be involved in delivering and realizing the value described in each of the 2035 markets. The identity, scope, and strategic roles of different types of players will evolve and be varied – likely by geography since healthcare will remain intensely local. Big incumbents could take on the transformative ambition of delivering value in new ways. Or innovators and new entrants could grab the lead and take control. Consolidation could create real economies of scale and scope, or the pendulum could swing to favor the nimbleness and local intimacy of smaller players. Capital markets and industry regulators will shape, limit, or expand the possibilities. But for each major stakeholder, there are a set of no-regrets directions that should be on the table.
From: A model centered on episodes and transactions, not the overall longitudinal outcomes
To: Care focused on logistic efficiency, anticipation, integration, and personalization – bringing care to the patient where and how it makes most sense for them and for the effectiveness of the care delivery infrastructure
Government / Private Payers
From: A success model dependent on pricing actuarial risk and creating often bifurcated and one-size-fits-no-one-best benefit packages
To: Integration of whole person health medical, mental, and ancillary benefits delivered by closer integration of financing and care delivery assets — through acquisition or partnerships
From: Takers of ever-increasing costs and status quo outcomes for employee healthcare
To: Market shapers either by funding employees to curate D2C solutions or by actively creating their own portfolio of solutions or owned assets
From: A supplier entity that primarily researches and manufactures therapies
To: A partner entity that is involved throughout the care journey, facilitating delivery in novel ways
As we push forward in these directions, industry players will quickly run into norms, structures, and guardrails that have shaped the industry as it exists today. There are at least two primary areas that will significantly influence the pace of change. The first is developing the workforce that’s needed to meet the new demands. That means improved training capacity and focus for new roles, consistent and transferable credentialling, and rebalancing payment rates to create sustainability and stability, among other things. Additionally, we need to foster greater community investment and alignment for critical social programs in underserved and hard to reach cohorts that can both address major social determinants of health and extend the reach of care provision.