Vizient Forecast Highlights Aging Population and AI Investment Pressures on Hospital Economics

A new forecast from Vizient, the nation’s largest provider-driven performance improvement company, has outlined mounting structural pressures reshaping the U.S. healthcare financial model. The report, New Margin Math: The Trends Resetting Healthcare’s Financial Foundation, concludes that traditional growth strategies are losing effectiveness as demographic change, cost inflation, and payer mix shifts converge.

Vizient described the current environment as a “structural pressure” moment, where improved clinical outcomes coexist with deteriorating margins. Since 2019, patient mortality has declined by 33% and hospital-acquired infections have dropped by 20%, yet hospitals continue to face financial strain from labor, drug, and supply expenses that outpace reimbursement. “The current moment requires leadership that can deliberately guide their organizations through critical choices,” said Byron Jobe, President and CEO of Vizient. He added that the focus has shifted away from expansion toward “redesigning operating models” to maintain sustainability.

Demographics are a central driver of the reset. A joint Vizient and Sg2 analysis projects that individuals aged 65 and older will account for the majority of hospital-based utilization growth by 2035. The forecast anticipates a 20% increase in inpatient discharges and a 34% rise in observation stays. While demand increases, it is expected to skew toward government payers, particularly Medicare, placing additional pressure on margins as utilization grows in lower-reimbursement settings.

The report also points to a fundamental change in hospital mergers and acquisitions. Data from Kaufman Hall, a Vizient company, indicate that transactions exceeding $1 billion have declined by more than 60%, marking the end of the “Megadeal” era. Instead, recent activity has focused on distressed asset acquisitions and capital-light vertical partnerships, with overall deal revenue falling nearly 50% year over year.

Against this backdrop, Vizient identifies artificial intelligence as a primary remaining opportunity to address inefficiency. U.S. healthcare AI investment is projected to increase from $20 billion in 2025 to nearly $100 billion by 2030, driven by the potential to reduce administrative complexity and address an estimated $300 billion in annual waste. The report cautions, however, that “Realizing value depends on redesigning workflows and operating models, not simply deploying tools”.

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