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Inflation could lead to $370 billion increase in NHE by 2027, report says

“Although profit pools are at risk, health care leaders who adjust their business models accordingly can expect bright prospects for their organizations in the years ahead.”

By Willa Hart | September 22, 2022 at 07:55 AM
 

By 2027, inflation could have a major impact on national health expenditures (NHE). According to a new report from McKinsey & Company, NHE could rise by as much as $370 billion over baseline levels by 2027 due to inflation, and COVID could further add as much as $222 billion in NHE. Over time, this could cause a crisis of affordability for consumers and limit profitability for providers, according to the report.

Previously, national health expenditures were expected to grow 5.5% through 2027. Now, that number has risen to an estimated 6.8%, which is 2.5% over estimated GDP growth. Among the causes for the increase include higher labor costs, the biggest contributor to increasing prices. 

But COVID and a persistent shortage of qualified medical professionals will challenge the industry, too, per the report. By 2025, the United States may be short as many as 450,000 registered nurses and 80,000 physicians, according to McKinsey’s data.

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