Notes on News: 2023 Healthcare Forecast

McKinsey & Company recently released a report detailing the healthcare industry outlook. With inflation rates and labor shortages, the expected growth for healthcare profits dropped from 6% in the 2021 report to 4%. While outlooks aren’t what they were just a couple of years ago, there are certain sectors that may see higher growth–in particular, Medicare Advantage with payers, which is forecasted to see greater than 10% growth in profits.

Why is Medicare expected to exceed the growth of other sectors? 

The over-65 population is on track to grow by 3% per year over the next five years. CMS enrollment shows growing popularity of Medicare Advantage plans, so much so that by 2026 estimated profit pools for government segments are expected to be 50% larger than commercial segments.

We’ve been talking about Medicare at length at the Business of Primary Care to help primary care leaders take advantage of revenue opportunities while providing the best quality care to their patients. 

While government segment profits are forecasted to increase, the provider segment of the industry is likely to see limited growth due to cost increases, with primary care physician profit forecasted to grow at 0-5%. 

So what can primary care providers do? 

Obviously catering to Medicare Advantage patients is a smart move, but it’s not the only one. Virtual care is forecasted to grow, making now a good time for providers to more deeply integrate this into their practices. Value-based care, too, is forecasted to see wider adoption, which can help with cost management. We’re working on a series specifically focused on value-based care, so be sure to keep an eye out for future articles!