Even when COVID-19 becomes endemic, as is likely to be the case, healthcare delivery in the United States will continue to transform rapidly. Stakeholders must prepare as policy direction, reimbursement, and investor appetite move care delivery in distinct directions. McKinsey’s 14th annual healthcare conference, held in September 2021 in Chicago, explored the next wave of industry evolution and how healthcare organizations must innovate to thrive.
To help healthcare leaders as they work to spur innovation, they have collected insights and highlights from featured conference speakers, as well as our own research and experience. The results show that the future of care delivery is fundamentally evolving to become patient-centric, virtual, ambulatory, in the home, value based and risk bearing, driven by data and analytics, transparent and interoperable, enabled by new medical technologies, funded by private investors, and integrated yet fragmented.
THE FUTURE OF CARE DELIVERY IS FUNDAMENTALLY EVOLVING TO BECOME:
As a healthcare experience, patient centricity is meant to be convenient, transparent, and personalized, where consumers expect to be treated as whole people with individualized needs, not as problems to be solved. Indeed, US consumers already take proactive steps to manage their own health and well-being, spending between $300 billion and $400 billion out of pocket on health expenses every year. (1) US consumer spending on wellness categories, including fitness, nutrition, appearance, sleep, and mindfulness, is increasing, as about 40 percent of US consumers consider these categories to be a high priority. (2)
More than 60 percent of consumers expect to be able to change or schedule a healthcare appointment online.
The adoption of virtual health has increased dramatically since March 2020. Virtual health visits grew by more than 3,000 percent early on in the COVID-19 pandemic, with 150 million telehealth claims in less than two years (Exhibit 2).(5)
The growing segment of ambulatory care comprises one-third of provider revenues in the United States, representing about $750 billion dollars.(7)A number of different services are embedded within ambulatory care, including physician practices, outpatient behavioral-health centers, ambulatory-surgery centers, and urgent-care centers, among many others. Studies have shown that ambulatory-care settings can provide advantages for patients, such as shorter average visit length—25 percent shorter for ambulatory-care services than comparable hospital outpatient visits—and lower complication rates, such as 1.1 percent total hip arthroplasty complication rates in ambulatory-care services versus 5.2 percent in hospital outpatient departments. (8)
Opportunities for in-home care are expanding to additional patient profiles and types of care. More commoditized services, such as traditional post-acute home health and personal-care services, still make up about two-thirds of market revenues ($75 billion to $85 billion in 2019).(11) However, emerging home care segments—such as home infusions, home-based dialysis, primary home care, and hospital-at-home models—are growing rapidly. These quickly expanding segments of the home care market are more complex and technology enabled, and, in many cases, the capabilities to scale them are still being developed.
Value-based models are continuing to grow, and we expect the proportion of the insured population in “at risk” contracts to continue to rise significantly: 10 percent annually from 2021 to 2025 as compared with the 1 percent growth of the overall insured population over the same period. The shift to value-based care can be seen across various care model segments and payer types.
Generally, new technologies in healthcare have added costs, not removed them. But as technologies improve and become more useful for helping healthcare innovations to scale, that trend may change. If the healthcare delivery industry could rely more heavily on labor productivity gains rather than workforce expansion to meet demand growth, by 2028 healthcare spending could potentially be about $280 billion to $550 billion less than current national health expenditure (NHE) projections suggest.15 Continued improvements to care delivery technologies will no doubt play a significant role in capturing these productivity gains.
As recent regulatory changes take effect, we are beginning to see the first wave of data and industry responses. Three primary themes are emerging: price transparency, data interoperability, and data access.
Medical technologies are enabling innovations in patient care in three primary ways. New products and services are creating self-service opportunities. Products such as wearables that can track blood sugar (for patients who don’t have diabetes) are still not prevalent but could soon facilitate a number of opportunities for self-service, such as continuous care for management of chronic conditions.
Private investment in healthcare has evolved thematically over the past decade. For much of the 2010s, investments were focused on consolidation of fragmented assets and optimization of back-end functions.(21) Beginning around 2018, investments in business model expansion became more popular, as seen in bets on platform models or the integration of ancillary offerings.(22) Looking forward from today, we see significant investment going into care delivery innovations, including redesigning the patient journey through digital enablement, shifting care delivery into ambulatory and home settings, and value-based care models.
To support greater patient centricity and on-demand accessibility, care delivery in the United States is evolving from its highly fragmented state. We can see this already in the emergence of “one-stop shop” innovators in care management and care coordination. These players partner with payers, providers, and, in some cases, employers to ease consumers’ navigation of complex care journeys, such as prenatal care or kidney disease management.
1 “National Health Expenditure Data,” Centers for Medicare & Medicaid Services, 2020.
2 Shaun Callaghan, Martin Lösch, Anna Pione, and Warren Teichner, “Feeling good: The future of the $1.5 trillion wellness market,” McKinsey,
April 8, 2021.
7 Compile Health database, accessed March 9, 2022.
8 Oleg Bestsennyy, Greg Gilbert, Alex Harris, and Jennifer Rost, “Telehealth: A quarter-trillion-dollar post-COVID-19 reality?,” McKinsey,
July 9, 2021.
11 Jenny Cordina, Jennifer Fowkes, Rupal Malani, and Laura Medford-Davis, “Patients love telehealth—physicians are not so sure,” McKinsey, February 22, 2022.
21 Eric Wicklund, “CMS expands remote patient monitoring coverage in proposed 2022 PFS,” mHealth Intelligence, July 19, 2021.
22 “Medicare telemedicine health care provider fact sheet,” Centers for Medicare & Medicaid Services, March 17, 2020.