Renovation of the atrium to enhance the visitor experience. Courtesy of Orcutt | Winslow
In 2025, construction and facility planning will face mounting pressures from several factors, including labor shortages, provider burnout, escalating administrative burdens, high operating costs, and anticipated regulatory changes. From AI-driven design and outpatient care expansion to mergers and acquisitions reshaping the sector, industry players must adapt quickly to remain competitive.
Healthcare leaders and facility planners are preparing for a dynamic year ahead. They should keep an eye on these 10 topics that we predict will shape healthcare construction decision-making and facility operations in 2025.
Prediction 1: The Integration of Machine Learning and AI Will Transform Healthcare into Innovative “Phygital” Facilities
Findings from Upvio’s survey on the Use of AI in Healthcare provided insight into patients’ and practitioners’ thoughts about AI and technology in healthcare, which will shape how facilities are built and operated:
- 94% of surveyed patients have used telehealth services
- 88% of patients expressed a preference for practitioners offering telehealth services
- 80% of practitioners believe technology is vital for their practice to thrive
- 53% of patients trust AI-powered tools and technologies in their healthcare
- 97% of patients believe AI has tremendous benefits
AI investment in healthcare is projected to grow from about $20 billion in 2024 to $150 billion over the next five years. In 2025, we expect to see an expansion of AI-supported clinical decision-making support and patient communication tools, machine learning to help analyze and identify data patterns, and innovative use cases to save providers time and strengthen healthcare facilities’ data analytics capabilities.
A McKinsey & Co. survey of healthcare organizations showed that 58% concluded that there would be a positive ROI, with only 7% determining that there would be a negative ROI to Generative AI investments.
Prediction 2: Healthcare Costs Will Reach New Heights
According to the Congressional Budget Office, healthcare spending is forecast to increase 5.6% per year for the next decade to 19.7% of the GDP—well above the average GDP growth of 4.3%. The aging demographic, inflation (drugs, technologies, and facilities), and rising labor costs will continue challenging efforts to contain healthcare costs.
Between 2022 and 2032, U.S. healthcare spending is expected to grow significantly. Home health services spending is expected to increase by 112.7%, and prescription drug spending will rise by 79.5%, outpacing hospital spending by 74.6%.
These trends indicate a shift towards personalized care, which may enhance patient outcomes but require greater resource investment. Meanwhile, rising prescription drug costs could restrict access to essential medications, highlighting the need for reforms in pricing and insurance. Overall, addressing these trends is crucial to managing costs and ensuring quality care.
Prediction 3: Scrutiny on Managing Medicare and Medicaid Spending Will Intensify
The incoming Trump administration is signaling its commitment to reducing government waste and regulations. We can expect to see the expansion of price transparency mandates for hospitals, insurers, physicians, and prescription drugs. We also expect to see Medicare payment cuts to certain hospitals via approval of site-neutral payments.
On the Medicaid front, temporary, enhanced subsidies that reduce premium costs for the ACA are set to expire at the end of next year without congressional action. Premiums would then double or more on average for subsidized consumers in 12 states who enrolled using the federal ACA exchange – Texas, North Carolina, Tennessee, West Virginia, Alaska, Wyoming, Utah, Montana, Mississippi, Louisiana, West Virginia, and South Dakota. That would mean fewer people could afford coverage on the ACA exchanges. And while the number of people covered by employer plans would likely increase, an additional 1.7 million uninsured individuals are projected each year from 2024 to 2033, according to federal estimates.
Prediction 4: M&A Activity Will Surge as Major Players Expand and Diversify
Many healthcare organizations have turned to mergers and acquisitions as a strategy to enhance competitive positioning and drive growth. Recently, M&A activity within the hospital sector reached $13.3 billion across 27 announced transactions as sizeable national healthcare systems work to balance their geographic portfolios and diversify service offerings.
While the momentum for mega-mergers has waned due to concerns over potential blockades from the FTC or the Department of Justice, the upcoming administration is expected to adopt a more favorable stance toward large-scale transactions. Keep an eye on large healthcare providers, as they are poised to pursue additional health system acquisitions.
NorthBay Health Medical Center Expansion. Courtesy of Sasha Moravec Photography
Prediction 5: Hospital Operating Margins Will Stabilize Despite Persistent High Expenses
The ongoing financial pressures on hospitals are escalating, driven by rising operational costs and stagnant patient volumes. According to a recent Kaufman Hall survey, hospital operating margins fell from 4.8% to 4.3% year-to-date in 2024. Daily expenses increased by 6% compared to 2023 and surged 19% compared to 2021, while the number of daily discharges remained flat. This indicates that hospitals are grappling with higher costs without corresponding increases in patient care revenue, straining financial sustainability and prompting a critical need for cost-control measures and operational efficiencies.
Prediction 6: Staffing Shortages Will Prompt Hospitals to Prioritize Labor Productivity Over Cost Reduction
Although staffing shortages aren’t a new trend, retirement looms for many Baby Boomer providers. A report by McKinsey & Company shows the U.S. could see a shortage of 200,000 to 450,000 registered nurses, or RNs, for direct patient care as soon as 2025, potentially resulting in a 10 to 20% gap in the RN workforce alone. This means that hospitals must rethink their design and operations to incorporate technology-driven efficiencies. Facility layouts will emphasize streamlined workflows, reduced walking distances, and flexible spaces that support interdisciplinary care teams. Automation, AI-powered patient monitoring, and remote-care infrastructure will play essential roles in mitigating labor gaps.
Prediction 7: Outpatient Service Revenue Set to Surpass Inpatient Revenue Growth
Over the past 25 years, inpatient admissions per 1,000 people have decreased from 120 to 95, while outpatient care has surged from 1,800 per 1,000 to 2,400. In the last three years, outpatient revenues have increased by 31%, compared to just a 13% growth in inpatient revenues, according to data from Kaufman Hall. The rise of virtual care models and enhanced telehealth capabilities have significantly contributed to this shift and the broader adoption of robust value-based care models that encourage care in outpatient settings.
As a result, healthcare facility planning will increasingly focus on developing ambulatory care centers, urgent care clinics, and telehealth-enabled facilities. Hospitals must prioritize designs that support both virtual and in-person care by integrating telehealth suites and outpatient surgery centers. This trend highlights the move toward decentralized care, with more services delivered outside traditional hospital environments.
City of Hope’s Hope Plaza outpatient clinic. Courtesy of Danny Sandler
Prediction 8: Interdisciplinary Collaboration Will Be Essential to Meet Smart Technology, Community Engagement, Wellness, and Sustainability Goals
Increased interdisciplinary collaboration will be driven by the greater integration of prefabrication and modular construction, a stronger focus on sustainability and technology, and a shift toward developing resilient and smart infrastructure. As the complexity of buildings grows and more trades become involved, we may also see the emergence of AI-driven ecosystems that engage all partners. Potentially, these ecosystems will create networks of AI-driven solutions, facilitating better knowledge sharing, resource management, collaboration, and coordination. This integrated approach will optimize resource allocation, reduce costs, and ensure that facilities meet evolving community health, technological, and sustainability requirements.
Prefabricated bridge being carefully lowered and placed onto the supporting columns for its final positioning. Courtesy of Scott Gibbs
Prediction 9: Mainstream Adoption of Prefab and Modular Solutions Will Drive Evolution in Building Technology
Hospital infrastructure is continually in danger of being outpaced by the pace of technological advancements. Currently, medical equipment and devices can be out-of-date within 5 to 10 years, while the concrete and gympsum infrastructure of clinical rooms needs to be updated. The use of modular and prefabricated construction in hospital projects offers a flexible solution that enables hospitals to adapt to changes while minimizing construction downtime. This approach allows facilities to start generating revenue as quickly as possible.
The next evolution in building technology will likely involve the increased integration of smart building systems, AI-driven modular design automated assembly lines, and potentially even 3-D printed building components. These innovations will allow for even faster assembly and onsite design flexibility with the benefits of factory-controlled production.
Prediction 10: Continuation of Supply Chain Disruptions will Force Innovative Solutions
Supply chain disruptions and potential new tariffs on imports from Mexico, Canada, and China could lead to higher costs for healthcare supplies and construction materials. To address these challenges, hospitals should diversify their suppliers, increase domestic production, and adopt modern purchasing tools to mitigate risks.
Medical Device Network reports that the proposed tariffs would impact 75% of medical devices, including hospital supplies, diagnostic imaging, anesthesia, and respiratory devices. Generic drug prices are also at risk, and this will likely affect generic medications and essential hospital items. To keep projects on schedule, hospitals must implement effective supply chain strategies. Using advanced purchasing technologies and predictive analytics will help manage risks and ensure projects remain on track despite fluctuations in global trade.
Supina Mapon
Supina Mapon is a Strategist and Design Integrator, National Healthcare Team with DPR Construction.
