The 2023 HIDA Hospitals and Health Systems Market Report

The 2023 HIDA Hospitals and Health Systems Market Report

Market-At-A-Glance
Spending on U.S. hospital services is projected to reach $1.52 trillion by the end of 2023 and is estimated to increase 54% to $2.34 trillion by 2031. Hospitals persist in leading U.S. healthcare expenditures, accounting for 31% of total U.S. healthcare spending.

U.S. hospitals and health systems have continued to cope with intense financial pressure following the COVID-19 pandemic. An estimated 53% of hospitals had negative operating margins in 2022. In the second quarter of 2023, operating margins began to increase with a median operating margin of 0.3% in May 2022.

Inpatient Volumes Predicted To Increase By 2024
Over half of surveyed hospital and health system executives predict that inpatient volumes will increase through 2023 and into 2024. As of March 2023, hospital inpatient volumes remain 18% below pre-pandemic levels. Staff shortages are the driving factor in the inpatient volume decrease.

Technology Is Leading Hospital And Supply Chain Investments
One-third of hospitals and health systems have invested in digital health tools since 2020 with telehealth and virtual care tools as the top investments. Labor shortages and inflation concerns are driving hospitals’ new technology investments. Seventy percent of supply chain leaders are accelerating digital transformation in response to the COVID-19 pandemic and plan to automate advanced planning and forecasting solutions by 2025.

Staffing Shortages Remain The Top Challenge For Hospitals And Health Systems
In 2023, over 90% of surveyed registered nurses in hospitals indicated that hospitals are short-staffed. For the second year in a row, community hospital CEOs identified personnel shortages as their top concern. The top three reported workforce-related challenges are registered nurse shortages, technician shortages, and burnout among non-physician staff.

Hospitals Dedicate Resources To Identify Social Factors Impacting Health
Hospitals are investing in programs that address social determinants of health (SDOH) and health equity in their communities in 2023. Nearly 75% of surveyed hospitals report having at least one program or strategy addressing SDOH and 84% report screening patients for their social needs. The top three areas of hospital focus include health behaviors, transportation, and food insecurity.

Mergers And Acquisitions Regain Momentum
In 2022, hospital merger and acquisition activity resulted in more than $45 billion in transaction volume. The 2022 transactions included four “cross-market transactions” that connect health systems located in different geographies. In the first and second quarters of 2023, the number of announced mergers and acquisitions have rebounded to pre-pandemic levels following a historic low in 2021.