Health Care Industry: Current State Analysis - May 2025
The health care sector continues to face significant challenges as we move through the second quarter of 2025. Labor shortages remain a critical concern, with projections indicating a 13% shortage of registered nurses in rural areas and a 5% shortage in metro areas by 2037. The physician shortage outlook is even more alarming, with expected shortages of 60% in rural areas and 10% in metro areas.
Recent developments have intensified these workforce challenges. The White House's proposed FY2026 budget would eliminate nearly all Title VIII Nursing Workforce Development Programs, which provided $305.5 million in funding supporting over 24,000 healthcare workers in FY2024. This move could worsen the projected national RN shortfall of 208,000 by 2037.
In response, healthcare organizations are increasingly turning to housing advocacy as a workforce strategy. In Michigan, organizations are addressing pipeline challenges through tuition support, loan repayment advocacy, and pushing for expanded access to affordable housing to attract workers.
The ambulatory care sector has emerged as the labor bellwether for the industry, now representing 48% of all health care hires.
Digital transformation is accelerating across the sector. According to a Deloitte survey of 121 C-suite executives conducted in late 2024, this was cited as the issue most likely to impact global health systems in 2025. Many health systems continue to rely on outdated technologies and processes, making them prime candidates for digital transformation.
For-profit providers are maintaining their 2025 outlooks despite facing threats to revenue streams and new operational headwinds in Q2 2025.
In product news, GE HealthCare recently unveiled an ultra-premium, high-performance gradient 1.5T MRI system, while HistoSonics earned regulatory approval for a new medical device.
Health system leaders worldwide are prioritizing operational efficiencies and productivity gains in 2025, with more than 70% of C-suite executives across five countries identifying these as key priorities as they operate under constrained budgets while addressing staff shortages and implementing new technologies.