New margin math

State of the healthcare industry 2026

Healthcare enters 2026 at a pivotal inflection point as rising healthcare costs, demographic shifts and rapid innovation reshape how hospitals and health systems operate. Financial performance has largely stabilized since 2023, and quality outcomes continue to improve despite higher patient acuity. At the same time, AI-driven automation, new care models, clinical innovation and strategic partnerships are expanding how organizations support clinicians, improve access and drive productivity.

Yet structural pressures are intensifying. Affordability challenges, workforce shortages, capacity constraints and shifting payer dynamics are converging with policy and macroeconomic uncertainty. Long-term demographic trends will further alter demand and utilization, requiring leaders to balance near-term financial stability with sustained investment in innovation and growth.

This report examines the market forces redefining the healthcare industry in 2026 and how they are resetting its foundation. Together with Get ready for a reset: A playbook for running resilient health systems, this report offers an integrated view of the challenges ahead and the meaningful opportunities to build a more resilient, effective and efficient healthcare system.

Vizient’s perspective on the state of the healthcare industry in 2026 can be summarized by five key findings:

FINDING 1

Multiple forces are reshaping the landscape. Utilization continues to rise as aging populations, chronic disease and higher patient acuity push spending growth beyond GDP without commensurate outcome gains. Inflation, capital constraints, workforce shortages and limited labor participation are straining capacity and margins. While advances in therapeutics and diagnostics add clinical value, they also increase cost and operational complexity. At the same time, uneven care transformation, declining consumer trust and affordability concerns heighten expectations for access, convenience and experience. These forces point to the need for scalable, resilient and consumer-centered healthcare operating models.

FINDING 2

Healthcare financial sustainability is under growing pressure as demographic shifts, policy changes and innovation-driven cost growth converge. Hospital margins have stabilized but remain fragile, with wider performance variation, heavier reliance on commercial reimbursement and increased Medicare exposure as populations age. Payers are seeing profitability decline amid utilization surges and regulatory disruption, while employers face rising premiums and limited cost-control options. Rapid pharmaceutical and MedTech innovation is improving outcomes but creating affordability and infrastructure challenges. Policy developments, including OBBB, site-neutral payments and expiration of enhanced premium tax credits, could raise uninsured rates and worsen payer mix. These forces point to a more volatile financial environment requiring diversified revenue strategies and cross-ecosystem partnerships.

FINDING 3

Health system cost pressures are being driven by a new structural reality in healthcare. Labor expenses have stabilized but at a permanently higher baseline, while workforce shortages in primary care, nursing and critical specialties continue to intensify, constraining capacity and accelerating care model redesign. At the same time, costs for specialty drugs, supplies and purchased services are rising faster than reimbursement and outpacing traditional cost-containment approaches. To protect margins and sustain performance, health systems will need advanced analytics, scale-enabled efficiencies and disciplined, systemwide spend management to manage persistent cost growth and build more resilient operating models.

FINDING 4

Healthcare market behavior is shifting as large-scale M&A gives way to more flexible partnership and integration strategies. Economic uncertainty, limited capital, regulatory scrutiny and political headwinds have slowed hospital megadeals and increased distressed transactions. Providers, payers, retailers and life sciences companies are pursuing partnerships to expand sites of care, improve access and build capabilities. Vertical integration is reshaping competition as distributors move upstream, MedTech and pharma deepen clinical collaboration, and private equity targets outpatient specialties. With some disruptors retrenching, and platforms like HATCo and Risant scaling value-based models, growth is increasingly driven by agile, capability-focused partnerships rather than consolidation alone.

FINDING 5

AI is a critical lever for improving healthcare efficiency and performance, but its impact depends on disciplined integration, governance and workflow redesign. Administrative automation is delivering near-term ROI, while clinical AI remains early-stage and requires stronger validation and alignment with care delivery. The greatest long-term value lies in clinical innovation. Payers and life sciences organizations are rapidly adopting AI to enhance utilization management, accelerate drug development and optimize operations, which is increasing the demand for high-quality data and cross-ecosystem collaboration. A divide is emerging between organizations building system-level AI capabilities and those relying on isolated pilots. Future advantage will favor health systems that embed AI as a foundational operating capability.