A crossroads for healthcare

Staff shortages and continued financial pressure have reached critical levels in the healthcare sector. As 2025 approaches, pressure from consumers, governments and payers increases for greater accountability and transparency in healthcare. The convergence of these forces has placed healthcare organizations at a crossroads, as we outline in our recently published Numerof & Associates Healthcare outlook for 2025.

2025 is a crucial year for healthcare. Dissatisfaction at all levels of the system – from healthcare providers to patients to government officials – has created a unique opportunity to rethink outdated models that have failed to deliver value for decades. By taking a new, holistic approach that ties payment to outcomes that matter to patients, healthcare organizations can finally create value for patients while controlling costs.

Dissatisfaction among individual providers is at historic levels. In recent years, workforce shortages have become endemic, from nurses to doctors to hospital staff, leading to widespread labor disputes and providers looking for alternative employment.

A report found that, compared to 27 other industries surveyed, healthcare ranked last in employee satisfaction with pay, and healthcare employees scored lower than employees from other industries on intent to stay, commitment, and experience compared to their expectations.

Organizations are also having a hard time. As I discussed in a recent column, lawmakers and regulators have responded to widespread discontent in health care with new laws and mandates. Small independent physician practices are overwhelmed by regulatory and reporting burdens and lack the infrastructure and technology available to larger, more complex organizations.

Yet even large healthcare systems face strong headwinds. Wages and general inflation have dramatically increased operating costs for suppliers and weakened balance sheets; Industry consolidation continues as healthcare systems attempt to integrate recently acquired providers into their networks, workflows and care delivery models. Mergers and acquisitions ensure that fewer and larger conventional provider organizations are created.

Rather than fundamentally rethinking their business models to address inefficiencies and focus on outcomes, healthcare systems have addressed growing reporting requirements by scaling up, increasing in size while reducing market competition.

Ordinary Americans are also dissatisfied and feel the consequences of rising costs. Employers and consumers continue to see their incomes eroded by the costs of healthcare and insurance. Insurance premiums are expected to rise increase 7% in 2025, similar to the 6% premium increase that occurred in 2024, an issue I wrote about in an earlier column. For the first time in Gallup’s two-decade survey, fewer than half of Americans do free about the quality of American health care, and more 70% of American adults feel the health care system is not meeting their needs.

All corners of the healthcare ecosystem—physicians, nurses, healthcare systems, government officials, and everyday American consumers—are beginning to realize that the current model is broken. Small changes cannot fix a fundamentally broken model. But adversity brings opportunity: the time is ripe for integrated, systemic change.

As I said in my book Adding value to healthcareWhat is needed is to change the underlying business model. To achieve better health outcomes at a lower total cost of care, we must prioritize transparency in costs and quality, link payments to outcomes that matter, and demand accountability for care across the continuum. Patient-consumers should be able to find providers and health care plans that fit their needs, with relevant data to make informed decisions easily accessible.

This is the market model, and it can only work if industry stakeholders compete to provide the highest quality care at a lower total cost. Fortunately, there are some signs pointing in this direction, both in government and in the private sector.

In 2025, the federal government will take a hard look at bureaucracy and reporting requirements that drive up costs without delivering value to consumers. While the new administration may not yet have an integrated plan to restore the healthcare ecosystem, it understands that the current regulatory environment is distorting the market and driving up the cost of healthcare. A core pillar of the Trump’s Republican platform for the U.S. economy means “removing the regulations that stifle jobs, freedom, and innovation and make everything more expensive.”

At the same time, government-mandated transparency will accelerate the development of tools to facilitate comparison shopping for non-emergency care. During his first term, President Trump pushed for price transparency requirements for hospitals, that was maintained by the Supreme Court in 2020, despite significant resistance from healthcare providers. In the recent vice presidential debate, Trump’s future vice president JD Vance did the same marked the importance of this issue.

In 2025, the federal government’s push for regulatory reform and price transparency will create both pressure and opportunity for providers. Providers must respond by fundamentally rethinking their business models. Traditional cost savings will not be enough; Success requires a redesign of healthcare delivery that focuses on patient-centeredness, efficiency and measurable results.

Forward-thinking organizations will accelerate their participation in capitated models and pursue direct contracts with employers to stabilize revenues. They will continue to emphasize the total cost of care to strengthen integration across the care continuum, expand access through urgent care and home care solutions, and address healthcare equity through community partnerships. To succeed in 2025, providers must position themselves to thrive in an era of transparency and accountability.

Healthcare will be at a turning point in 2025. Growing dissatisfaction at all levels of the system has created the opportunity for productive change and a new urgency to do so. Innovative thinking will be needed at a systems level, from both the private and public sectors. The path to better outcomes at lower healthcare costs and a more sustainable, patient-centered model will require a willingness to rethink decades-old healthcare delivery and payment models.

Some promising developments suggest that the time has come to embrace this shift, as both government and private sector efforts begin to focus on greater accountability and transparency in healthcare delivery.