From growing labor gaps to historic inflation rates, 2022 has been impacted by staggering statistics across the healthcare spectrum. These data points are more than just numbers on the page, however, and their ripple can be felt by both providers and patients.
Summarized below, we’ve compiled some of the more relevant numbers that have defined the year for the healthcare industry and will be key statistics to monitor heading into 2023.
“The healthcare sector, like many industries nationwide, is feeling pressure from labor gaps, economic instability and ongoing pandemic waves. However, the outlook remains optimistic as health companies continue to innovate new solutions, adopt new technology and collaborate with patients to deliver the best possible care.
Healthcare labor shortages mounting: employers will need to hire more than 1.1 million nurses by 2026.
Burnout from the pandemic has driven professionals into early retirement or to seek new careers, resulting in concerning levels of labor shortage and forecasted shortages for the coming years.
In addition to nurses, by 2026 the number of physicians of retirement age will grow from the current 12% to 21%, per this report from Mercer. The report also found that 29 states will not be able to keep up with demand for registered nurses in the next five years, as more than 900,000 are expected to permanently leave their roles, while demand for nurses will grow by at least 5% over the next five years.
In addition, demand for physician assistants, nurse aids, mental health practitioners and others is also being impacted by the shortages. Solving this labor challenge will remain a key focus heading into 2023 as health systems seek long-term strategies for attracting and retaining essential healthcare employees.
Impact of Inflation: US health expenditure is likely to be $370 billion higher by 2027
Inflation reached a 40-year high in February of this year and continued throughout 2022. The price of everyday items from groceries to gas strained American households nationwide and took a toll on the healthcare sector.
According to new research from McKinsey, the effect of inflation on the economy has significantly driven-up input costs in healthcare. Their latest analysis estimates that “the annual US national health expenditure is likely to be $370 billion higher by 2027 due to the impact of inflation, compared with pre-pandemic projections.”
Additionally, data shows that the overall healthcare price index (2.8%) rose above 2.5% for the fourth straight month, keeping pace with the average price in 2021.
Nursing home spending has increased 10.2% YOY, but occupancy is back
McKnight Senior Living reports in addition to nursing home increases, home healthcare costs have increased by 10.5%, which is nearly double the overall national spending rate.
GlobetSt.com reports that senior housing occupancy hit 81.4% in Q2 2022, up 3.4% from the pandemic low of 78% in Q2 2021. However, affordability remains a concern. Senior living rents increases by 4.7% YOY, the largest in more than a decade, raising fears that “affordability could impact occupancy levels.”
On the supply side, however, inventory increased by only 3,489 units due to construction slowdowns. This is the lowest of units under construction since 2015.
$19.2 Billion: Healthcare M&A hit a record high in Q2
According to Kaufman Hall, merger and acquisition activity in the second quarter of this year nearly doubled that of 2021 — 13 deals were closed for a record high $19.2 billion, averaging $1.5 billion per deal.
The low number of overall deals is in keeping with the recent megadeal trend of the past couple years. The record amount is a large increase when compared to Q2 of 2021, which had 14 deals closed for $8.5 billion. Keeping an eye on transaction volume in Q2 of 2023 will provide critical insight into M&A trendlines for the coming years.
The healthcare sector, like many industries nationwide, is feeling pressure from labor gaps, economic instability and ongoing pandemic waves. However, the outlook remains optimistic as health companies continue to innovate new solutions, adopt new technology and collaborate with patients to deliver the best possible care.