Three converging forces are creating a fundamentally new system of healthcare delivery in the U.S. 

Demographic shifts are rapidly increasing demand for care and straining healthcare economics; emerging technology- and AI-driven clinical innovations are changing where, when, and how care is accessed delivered; and unprecedented levels of private capital investments are funding the cost of change and thereby accelerating the adoption of these innovations at scale. 

The new model of care that is emerging – what Chartis calls HealthCare360 – will provide more personalized, seamless care and continuous health management, while preserving the trusted human relationships at the heart of healthcare. 

Table of contents

1. US demographics are poised to overwhelm the nation’s strained healthcare system

Without a fundamental change to how healthcare is delivered across the US, the aging of America will place more stress on an already strained healthcare workforce and further constrain capacity, potentially impacting timely access to care for patients.  

By 2035, the population age 65+ will represent 1 in 5 Americans.3 Of particular note, the age 85+ population is expected to increase disproportionately by nearly 60%, increasing from 6.8 million lives to 10.8 million. These older Americans have significantly more clinical care needs. 83% of those age 85+ have more than two chronic conditions compared to 53% of those age 45 to 64.4  

The rapidly growing older adult population will drive the vast majority of care utilization increases over the next decade

The strain on clinical capacity  

Assuming no change to how care is delivered and the rate of individuals entering the physician and nursing professions remains the same, the majority of US states are expected to experience physician and nursing shortages by 2030. These shortages are much worse for certain specialties and underserved communities.  

Clinician shortages will affect most states by 2030 

  • 42 states will experience physician shortages by 2030.10 
    21 states will experience shortages greater than 20%.10
  • 25 of 30 specialties will experience a shortage.10
  • Physician shortages would be 3–6 times more significant if underserved populations had the same access to care as those facing fewer barriers.11
  • Nearly 30% of Americans already live in a designated healthcare professional shortage area.12
  • The total gap in 2030 is estimated to be 319,000 nurses.13

  • 32 states will experience nursing shortages by 2030.13 
    Five states will experience shortages greater than 20%.
     

Impact on health system financial stability

The expected rises in utilization and workforce shortages noted above are not new. However, layering these stressors on top of already tenuous health system financials will make navigating this next decade more challenging. In 2025, the median US not-for-profit health system’s operating margin was only 1.5%. In comparison, the median US not-for-profit health system’s operating margin in 2015 was 3.4%, allowing them to weather the first wave of the silver tsunami on more stable footing.  

As the first set of Baby Boomers aged into Medicare and demand for care rose significantly over the last decade, nursing and physician wages also rose by more than 50%, on average. In comparison, other professions requiring a graduate degree, such as lawyers and engineers, rose by 30% to 35% during the same period.14  

Rising wages, along with other inflationary factors (e.g., supplies, drugs); demographic shifts; increased competition; and regulatory changes are making sustaining healthy margins challenging for health systems.  

We modeled the potential financial impact of the continued growth of the 65+ population over the next decade. A “business as usual” scenario with some annual increases for reimbursement rates would result in an operating margin decline from positive 1.5% to negative 9.6%—an effective 11.1ppt loss—for a median health system.15  

As our model shows, even with significant mitigating actions—such as increasing market share by 5ppt, securing better commercial rates (3% annually instead of 2.5%) and reducing expenses by 5%—a median health system would struggle to achieve a sustainable margin. This implies that health systems will need to take more drastic measures in this coming decade than they did over the last decade to achieve financial sustainability.  

Projected rise in commercial rates as a percentage of Medicare to maintain system break-even

Impact on commercial rates, employers, and individuals

One of the levers health systems could pull is to negotiate even higher commercial rates. Assuming commercial rates were the only lever health systems pulled to achieve break-even, commercial rates as a percentage of Medicare would need to increase by 35% over the next decade: from today’s 254% of Medicare to 342% of Medicare, on average.  

Commercial rates would need to rise sharply 

  • Medicare pays hospitals 83 cents per dollar of the cost of care.21
  • Hospitals make up for their losses in Medicare (as well as Medicaid and uncompensated care) through negotiated commercial rates.
  • As the commercially insured population shrinks, offsetting Medicare losses with commercial volumes will be challenging.

The downstream impact of commensurate increase in commercial rates over the next decade would be dramatic:  

  • Premiums would grow by 82% for employers, compared to wage growth of 48% (assuming 4% annual growth rate).  
  • For households, 17 cents on every dollar earned would be spent on healthcare as their share of healthcare costs is expected to more than double (assuming no additional cost shifting).  

Employers and households would experience dramatic rate increases 

Impact on broader economy 

As the ratio of working-age adults to Medicare beneficiaries declines and Medicare spending increases, the toll on the broader US economy will be significant. By 2033, half of Medicare funding will need to come from general revenues, equating to 24% of federal income tax revenue going toward Medicare.

The percentage of federal income tax revenue funding Medicare would multiply

 

Medicare Spending Trajectory

Medicare spending trajectory24

% of GDP
2.2%
2000
→
3.8%
2024
→
5.2%
2033*
Medicare spending will double over the next decade, exceeding $2 trillion, or 5% of GDP, by 2033
Uncovered portion
~22%
2000
→
44%
2024
→
50%
2033*
An increasing portion of Medicare spending is not covered by dedicated financing sources
Requiring tax increases
~5%
2000
→
16%
2024
→
24%
2033*
Requiring a higher portion of federal personal and corporate taxes to fund Medicare Part B/D
*Projected
Source: Chartis analysis based on Esri data based on US Census Estimates and US Census Projections (for 2015-2035) and Population Reference Bureau (for 1960-2010); MedPAC March 2026 Report; 2025 Medicare Trustees Report.

2. Agentic AI-driven clinical innovations are coming together to form a new model of care

Many of the earliest and most visible adoptions of AI-enabled solutions in healthcare have focused on supporting administrative functions, including functional support for physicians, such as ambient scribes.  

AI-enabled solutions are also beginning to change care processes. These technology-enabled clinical innovations have largely fallen into four categories: 

  1. Clinical triage and navigation: Clinical advice is available for patients and their families to manage symptoms at home (synchronously or asynchronously). When needed, they also get clear guidance and assistance navigating to the right clinician and optimal care setting, based on clinical need and personal preferences. 
  2. Care management: Proactive support helps patients and their families adhere to care plans between episodes of care, providing 24/7 support and elevation to human clinicians when needed. 
  3. Clinical diagnostics: AI-enabled clinical diagnostic reviews improve the speed and precision of medical assessments (e.g., imaging, pathology), enabling prioritization of the most urgent patients.  
  4. Care anywhere: Technological advancements such as remote patient monitoring devices and AI-powered monitoring that predicts and elevates potential adverse events are increasing the scope of care that can be provided outside of an acute care facility (e.g., at home or virtually). 

AI-enabled clinical innovations are beginning to come together to form a fundamentally new model of care. The potential not yet realized is in how these technology-driven clinical innovations come together and foundationally change how, when, and where care is delivered. These capabilities will only become more transformational as these disparate solutions work together as integrated models across the care and health journey.  

These four areas are being fueled by relevant, timely data. Increasingly, options to integrate data from disparate sources (e.g., clinical, consumer health, genomics, claims) are also starting to provide a more complete picture of an individual’s health.  

We expect the next wave of innovations to come faster than the last, as the pace of AI innovation and adoption accelerates.  

The pace of AI advancements and sophistication is accelerating 

3. Unprecedented capital infusion is fueling accelerated adoption of tech-driven clinical innovations

Growth capital and hyperscaler investments are fueling accelerated adoption cycles of emerging AI-driven clinical innovations and funding the cost of change.  

In fact, healthcare is becoming one of the leading industries for specialized AI investment and deployment. For example, healthcare accounted for 43% of enterprise spending on vertical-AI applications in 2025—more than the next four verticals combined.25

AI investment stack

Healthcare AI investment landscape 2025-2026
AI investment stack
Example players
Key priorities & Focus areas
Estimated capital
Hyperscalers and AI Platforms
Microsoft, Amazon, Google, Meta
Set the technical and economic foundation for cross-industry AI deployment
Focus on: Compute infrastructure and data centers, foundational models and AI platforms, and developer ecosystems and enterprise capabilities
2026:
~$450–$600B+27 2025:
~$350B capex
Private markets: venture and growth
OpenAI, Anthropic, Abridge, Tempus, Insilico
Driving rapid innovation and new use cases
Focus on: New AI-native applications, vertical-specific solutions (e.g., clinical AI, diagnostics), and tooling and infrastructure layers
2025: $210–$226B28
Pharma and biotech
Roche, Novartis, Pfizer, Moderna
Driving AI-led innovation in therapeutics and clinical science
Focus on: Drug discovery/development, clinical trial optimization, and data platforms
$$$$
Healthcare IT and enterprise platforms
Epic, Oracle/Cerner, Workday
Serving as the primary integration layer for AI into healthcare workflows
Focus on: Workflow integration, AI-enablement platforms, and data ​ standardization/interoperability
$$$$
Payers
UnitedHealth, CVS/Aetna, Elevance
Applying AI to cost control and drive population-level decisioning
Focus on: Claims automation, risk modeling/underwriting, and care management/utilization
$$$$
Health systems
Mayo Clinic, Kaiser Permanente, HCA
Applying AI to reduce friction points across operations and care delivery
Focus on: IT infrastructure, cybersecurity, administrative automation, and ​ clinical workflows/tools
$$$$
Public sector
NIH, ARPA-H
Enabling long-term innovation and system-level trust
Focus on: Research, datasets, infrastructure, and validation
$$$$
Note: Categories are not additive
*AI-related capital investment across healthcare incumbents is significant, but accurate numbers are unavailable.

This unprecedented level of capital infusion in healthcare is accelerating AI adoption by shifting the burden of risk, integration, and scaling away from payers and providers onto well-capitalized vendors and platforms. This shift enables faster enterprise deployment, supports outcome-based pricing models, and underwrites the development of full-stack clinical innovations.  

For example, OpenEvidence, founded in 2022, emerged as an AI copilot for doctors to turn the plethora of peer-reviewed research publications in medical journals into actionable insights. Just 4 years later, the company reports that the majority of US physicians use OpenEvidence daily.28 A handful of health systems (e.g., Mount Sinai Health System, Sutter Health) are integrating it directly into their electronic health record (EHR) workflows to reduce context switching. OpenEvidence also recently launched “DeepConsult” to provide agentic AI support for medical research.  

In fact, 80% of physicians report using AI in a professional context, and more than three-quarters are saying AI improves their ability to care for patients.29  For consumers, AI adoption has been fairly uniform across all age and insurance cohorts, according to a recent KFF study.30  

 

Next: Explore the interactive HealthCare360 model

The emerging model of care

The newly emerging model of care will create a more frictionless experience that’s better for individuals, clinicians, and the organizations that deliver care. We call this model HealthCare360 because it will manage health and care continuously, at scale and lower cost, with the human at the center.

Explore the new model’s core features and strategic questions for health systems

 
Learn more about the HealthCare360 advisory team

Related insights

Our services
Contact us

Get in touch

Let us know how we can help you advance healthcare.

Contact Our Team
About Us

About Chartis

We help clients navigate the future of care delivery.

About Us