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DELIVERING ACTIONABLE INSIGHTS ON THE DAY’S NEWS Brought to you by Alex Panas, global leader of industries, & Axel Karlsson, global leader of functional practices and growth platforms Welcome to the latest edition of Only McKinsey Perspectives. We hope you find our insights useful. Let us know what you think at Alex_Panas@McKinsey.com and Axel_Karlsson@McKinsey.com. —Alex and Axel A checkup for US healthcare In the news • Rising costs. In 2023, higher demand for medical services and the end of pandemic-era subsidies pushed US healthcare spending to nearly $4.9 trillion—about $14,600 per individual and a 7.5% increase over the prior year. As The Wall Street Journal reports, Americans now spend roughly 8% of their total budgets on healthcare, outstripping their expenditures on apparel, entertainment, and schooling. One reason for the increase are the rising labor costs that hospitals and clinics face, due to staff shortages, higher salaries, and significant attrition. [WSJ] • Primary care shortfall. Research finds that better access to primary care enhances people’s health outcomes, including reduced hospital visits and chronic disease. Yet as KFF Health News notes, the US is contending with a significant shortage of primary care doctors—American Medical Colleges estimates that by 2036, the nation could need up to 40,400 additional primary care physicians. Enticed by higher salaries, many medical-school students opt for more lucrative specialties, such as dermatology and orthopedics. [KFF Health News] Health services and technology is projected to remain the fastest-growing sector in healthcare, with EBITDA estimated to reach $100 billion by 2028. On McKinsey.com • Healthcare under pressure. In recent years, the US healthcare industry has seen its financial performance drop. Since 2019, industry EBITDA as a proportion of the National Health Expenditure has declined by an estimated 150 basis points, based on research from McKinsey Senior Partner Shubham Singhal and Partner Neha Patel and their coauthor. The decline is especially acute for payers and providers, with payers’ estimated 2024 margins potentially the lowest in a decade. • Quickly growing sectors. Amid challenges such as lower utilization rates, which remain below their prepandemic levels, many healthcare segments are likely to recover in the coming years—and some will even experience accelerated growth. For instance, McKinsey analysis suggests that revenues for health services and technology (HST), as well as specialty pharmacy, could increase at an 8% CAGR from 2023 to 2028. Learn how the industry’s recent challenges are affecting payers, health systems, HST, and pharmacy services, and where future opportunities lie. Understand US healthcare trends —Edited by Belinda Yu, editor, Atlanta Was this forwarded to you? Sign up here. Or send us feedback—we’d love to hear from you. Follow our thinking McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android. Copyright © 2025 | McKinsey & Company, 3 World Trade Center, 175 Greenwich Street, New York, NY 10007