What U.S. Healthcare Will Look Like in 2035

Executive Summary

Richard E. Anderson, MD, FACP, Chairman and Chief Executive Officer, The Doctors Company and TDC Group

Across the U.S., healthcare systems are beset by limited resources and widening care gaps. Patients are frustrated by long wait times, fragmented care, inaccessible services, and extraordinary costs. These challenges are forcing leaders to pursue new solutions, including artificial intelligence (AI) tools, expanded roles for advanced practice clinicians (APCs), and innovative business models.

Frontline clinicians contend with worsening physician shortages, nuclear verdicts driving up professional liability costs, and an alarming expansion of medical care deserts, especially for maternity care. For patients, these issues translate into unmet needs, eroding trust, and a growing sense that the system is not working for them.

Evolving technologies powered by AI offer opportunities for U.S. healthcare organizations, but they also raise pressing questions about patient safety, privacy, and practitioner liability. Meanwhile, retail giants like CVS, reeling from unsustainable experiments in healthcare delivery, are pivoting to newer strategies, while pharmaceutical companies are expanding into telehealth and direct care services. These shifts complicate efforts to provide seamless, patient-centered care and maintain accurate, comprehensive medical records.

Each year, TDC Group predicts emerging healthcare trends over the next decade, focusing on the challenges, risks, and opportunities that shape the industry.

What Will Healthcare Look Like in a Decade?

Here are our current predictions for how U.S. healthcare will change over the next 10 years:

Prediction One: Nuclear malpractice verdicts will continue to cause ripple effects that threaten physicians and patients.

The rise in nuclear medical malpractice verdicts, highlighted by a record-breaking $412 million award in New Mexico, is an escalating crisis. Nuclear verdicts have grown in both frequency and severity over the last decade and have far-reaching implications for the U.S. healthcare system. In 2013, there were 34 verdicts above $10 million; in 2023, there were 57 such verdicts, and more than half of those were greater than $25 million.

Nuclear verdicts are a result of social inflation, which occurs when the average cost to resolve a medical malpractice claim rises faster than general inflation. To keep up with elevated loss costs, insurers must raise rates, thus increasing overhead for healthcare practitioners and institutions—which results in higher costs of healthcare for patients.

“Skyrocketing dollar amounts give an observer the idea that the pace of medical malpractice litigation is increasing, yet the opposite is true,” says Robert E. White Jr., President of The Doctors Company and TDC Group. “Claim frequency is flat to decreasing nationwide, but these spikes in nuclear verdicts are very alarming.”

Because nuclear verdicts are unpredictable, their presence influences negotiations in every allegation of malpractice. They exert upward pressure even on settlements that never go to court.

As a society, we have grown numb to large figures, whether it’s professional athletes earning tens of millions of dollars annually or lottery jackpots surpassing a billion dollars. This “number numbness,” a cognitive phenomenon observed by researchers, makes it challenging for most people to grasp the real implications of these figures.

This is compounded by the heightened emotions surrounding allegations of malpractice. Plaintiffs’ attorneys often exploit this environment using strategies like “reptile theory,” framing defendants as threats to evoke primal fear and drive jurors toward punitive, multimillion-dollar verdicts.

“These awards, intended to protect future patients, often exceed what’s necessary to make the injured party whole and increase the cost of patient care overall by promoting defensive medicine,” Mr. White adds.

“The exact amount of spending increase is unknown, but many estimates would concur that defensive medicine adds at least $55 billion per year to U.S. healthcare costs,” notes Richard Soulsby, FCAS, MAAA, Senior Vice President and Chief Actuary at TDC Group. “These massive verdicts primarily benefit attorneys and investors, rather than plaintiffs. Up to 40 percent of a settlement or award can go to the plaintiff’s attorney, while third-party litigation funders—such as hedge funds financing lawsuits in exchange for a cut of the payout—also profit.”

Jurors, driven by empathy and a desire to ensure justice, may be unaware that their decisions can enrich these external parties while inflating costs across the healthcare system.

Social inflation and rising verdicts also provide momentum to efforts by the plaintiff’s bar to overturn long-standing medical liability reforms and eliminate or significantly increase caps on damages. Tort reform measures, including caps on noneconomic damages, can help mitigate these added costs.

Prediction Two: Healthcare consolidation will continue, but concerns over how consolidation increases costs and cybersecurity risks will push policymakers into further regulation.

Healthcare consolidation is expected to persist, but mounting concerns over its impact on costs, clinical autonomy, and cybersecurity vulnerabilities are likely to prompt policymakers to implement stricter regulations. In a transition away from independent practice, approximately 77 percent of physicians now work in employed models, where they frequently experience diminished autonomy and constraints in the delivery of optimal clinical care.

Contrary to hope that consolidation would reduce costs through economies of scale, evidence indicates it usually drives medical charges higher. Hospital mergers and acquisitions have left nearly half of all metropolitan areas in the U.S. with just one or two health systems controlling all inpatient care, according to a 2024 study from KFF, raising concerns about limited competition and inflated pricing without improvement in patient care.

Research from Brown University’s School of Public Health reinforces this concern. Vertical integration, such as hospitals acquiring physician practices, often raises prices without corresponding improvements in care quality. These findings have intensified attention from Congress and antitrust regulators, who see hospital consolidation as a significant driver of rising healthcare expenses, with hospital care alone accounting for a third of all health spending.

Private equity investments have further accelerated consolidation, also attracting legislative scrutiny due to instances where investor profits coincide with hospital closures, reducing community access to care. Lawmakers are increasingly critical of investor-driven decisions undermining the availability and affordability of essential services.

In addition to economic concerns, consolidation significantly heightens cybersecurity risks. Larger healthcare organizations become more appealing targets for cybercriminals, exposing critical infrastructure to attack. This was starkly demonstrated in February 2024 when Change Healthcare—a payment processing company handling nearly 40 percent of U.S. medical claims annually—suffered a crippling cyberattack that disrupted operations nationwide. The incident underscored the fragility of a system increasingly concentrated among a few dominant players and the potential for cascading effects on patient safety and access to care.

“Healthcare-related organizations are notoriously attractive to cybercriminals,” explains Paul Romano, President of TDC Specialty Underwriters, part of TDC Group. “They are by nature more motivated than those of almost any other industry to avoid any stall or shutdown of their operations. With increased scrutiny from policymakers following the Change Healthcare attack, the scales might finally tip toward more constraints on consolidation.”

As concerns about rising costs, declining quality, market concentration, and security vulnerabilities mount, the push for robust oversight of healthcare consolidation is intensifying. Policymakers and stakeholders face a critical moment to balance economic efficiencies while safeguarding competition, accessibility, and the integrity of the U.S. healthcare system.

Prediction Three: Nurse practitioners, physician assistants, and alternative care models like hospital-at-home programs will be key to alleviating the continuing primary care crisis.

The U.S. is facing a severe shortage of primary care physicians, projected to reach 48,000 primary care physicians by 2034. This gap is worsened by an aging population, the increasing prevalence of chronic disease, and a growing demand for primary care services. By 2036, the overall physician shortage could reach 86,000. Addressing this shortage requires shifts in how care is delivered, including expanding the roles of APCs like nurse practitioners (NPs) and physician assistants (PAs).

Large healthcare systems are increasingly looking to APCs to fill open practitioner roles. By 2031, the number of NPs is projected to grow by 80 percent relative to their 2019 total. The number of PAs will grow by 50 percent over the same period. The number of physicians, in contrast, will only increase approximately 5 percent over the next decade.

In response, universities are ramping up their pre-health programs for undergraduates, especially those for APCs. More than half of PAs surveyed by a major professional society described themselves as interested in working in a rural area, medically underserved area, or health professional shortage area. That said, like physicians, APCs face barriers to enacting such choices, including career options for spouses, as well as other practical and financial concerns.

“With our various national care shortages and gaps, we need healthcare systems and care team leaders to continue their vital work of defining roles and solidifying best practices for teamwork within a patient safety culture,” emphasizes Laura Kline, MBA, CPCU, Senior Vice President of Business Development at The Doctors Company and TDC Group. “Collaboration between physicians and APCs can lay the foundation for continuity of care, delivering significant benefits for both patients and practitioners.”

As APCs take on growing responsibility in the evolving healthcare landscape, they will also face increasing liability risks. Employed APCs practice under malpractice insurance coverage provided by their employer or supervising physician, but that coverage often features shared limits that can be inadequate protection for an APC and may not cover key risks like nursing board investigations. As their roles expand, these practitioners will need to examine their exposure and risk and adjust coverage accordingly—and insurers must be sure this coverage is available.

At the same time, more patient care is headed to the home. Patients who are able to participate in hospital-at-home programs experience lower readmission rates and report much higher rates of satisfaction with their care.

Advocates for hospital-at-home programs can also make a strong business case in terms of preserving capacity. The largest hospital-at-home program in the country, Mass General Brigham, treats 50 to 60 patients per day in their homes in lieu of the hospital. The program treats patients experiencing COPD flareups, acute infections, and other targeted conditions. Support from organizational leaders and positive feedback from clinicians, in addition to tech partnerships, have been key to the program’s success.

Prediction Four: Healthcare will face a two-headed crisis, with patients increasingly mistrusting medical organizations and practitioners losing confidence in the systems meant to support them.

Trust in healthcare overall has declined dramatically, with patients and practitioners alike grappling with a system that feels disconnected from their needs. Patients increasingly doubt the priorities of healthcare organizations, citing financial motivations, perceived bias, and insurance costs, including denied claims.

At the same time, practitioners are losing faith in healthcare systems, struggling with inadequate resources, burnout, administrative burdens, and safety concerns. Violence against healthcare workers continues to escalate, with healthcare workers five times more likely to experience workplace violence than employees in other industries.

Practitioners are stretched to the limits, tasked with addressing patient skepticism while battling system frustrations. Online platforms are full of medical misinformation, negative patient experiences, and insurance denials, further eroding trust. TDC Group website analytics highlight the challenges practitioners face in navigating contentious patient interactions: “How to safely end a patient relationship” was the most-searched topic on our site throughout 2024.

Despite these hurdles, the clinician-patient relationship is still the cornerstone of healthcare. Patient engagement contributes to both patient safety and professional satisfaction, and beleaguered clinicians may be heartened to hear that their guidance still makes a difference: Concerns like vaccine hesitancy can often be successfully addressed through one-on-one conversation with a healthcare practitioner. One study illustrated how pediatricians do influence parents’ vaccine behavior.

Rebuilding trust requires systemic change and a commitment to supporting those on the front lines. “Strengthening communication strategies to combat medical misinformation, embracing collaborative care models, and leveraging technology for accurate and timely information sharing will be critical,” explains Julie Ritzman, MBA, CPHRM, Vice President of Patient Safety at The Doctors Company, part of TDC Group.

Collaboration among healthcare practitioners is equally essential. “Effective communication between clinicians ensures patients receive the best possible care, reduces safety risks, and mitigates liability for practitioners,” adds Daniel Kent Cassavar, MD, MBA, Medical Director for The Doctors Company and TDC Group. “Collaborative care models that emphasize teamwork and respectful dialogue can help rebuild trust across the system.”

Patient safety research consistently shows that stronger teamwork and open communication improve both care outcomes and clinician satisfaction. To address the intertwined crises of patient mistrust and overburdened practitioners, the healthcare system must adopt strategies that prioritize transparency, engagement, and the well-being of those who deliver care. Only then can trust be restored—both in the eyes of patients and with practitioners.

Prediction Five: Magnified obstetric safety risks post-Dobbs will continue to cause physical trauma to patients, inflict moral injury on practitioners, and create maternity care deserts, producing disastrous effects in healthcare for years to come.

In the U.S. healthcare landscape after the Dobbs decision, which overturned Roe v. Wade, every pregnancy is potentially hazardous for patients and practitioners. When patients develop infections that turn septic due to state-restriction-imposed care delays, practitioners face a variety of potential liability pitfalls because they are prohibited from meeting the standard of care. In addition to direct physical dangers, patients face life disruptions and costs that are far larger than they had been previously. The healthcare system overall is strained by the costs and drains on resources of these artificially amplified, preventable complications.

“State laws that make it unclear if, when, and how medical practitioners can provide treatment without risking criminal penalties or civil litigation place clinicians in an untenable position,” Ms. Healy explains.

Practitioners find themselves pinned between their risk of violating the Emergency Medical Treatment and Labor Act (EMTALA) and their risk from providing treatment that may or may not be allowed in their state.

The effects of post-Dobbs disruptions to care will be felt for years to come by patients, their families, practitioners, and healthcare organizations. Direct effects are felt even by many non-ob/gyn clinicians, like those in emergency departments. Ongoing moral distress has some practitioners considering relocating. More than 20 percent of the obstetricians in Idaho have already left the state. Post-Dobbs restrictions are also influencing where students apply to school and residency.

Dobbs is reshaping the entire map of where medical professionals choose to train and live.

Prediction Six: AI clinical decision support tools will bring benefit and risk, but it will take advancements in legislation to clarify who is liable when an AI tool errs.

The American Medical Association prefers the term “augmented intelligence” to “artificial intelligence,” because medical professionals cannot and should not rely entirely on AI-powered tools.

At the same time, practitioners and researchers have cautioned that keeping a human in the loop is not in itself a sufficient safeguard. Recognizing workflow realities and the vulnerabilities of human cognition, physician leaders must remain vigilant and plan around potential risk.

“AI tools have incredible potential in healthcare, and for that potential to be fully realized, they need to be used extensively. Yet, to ensure they are safe and effective, many must undergo exhaustive testing before they can be trusted in clinical practice,” says Deepika Srivastava, Chief Operating Officer of The Doctors Company, part of TDC Group.

Legal experts have emphasized that while decision making surrounding AI for healthcare is steeped in ethical issues, actual liability risks to clinicians may currently be limited by existing case law, court doctrines related to product liability, and the difficulties for plaintiffs that are imposed by the nature of AI-based applications themselves.

“While we’re not seeing many AI-related lawsuits just yet, the risk continues to grow,” Ms. Srivastava continues. “The legal system will need to adapt to address the role of AI in healthcare. Traditional medical malpractice law does require re-evaluation, because the rapid pace of AI development has outpaced the efforts to integrate it into the legal system.”

In the event of medical malpractice litigation, documentation will be key. "Medical record documentation of the AI tool used and the human judgment in response to AI guidance will be essential to patient safety and mitigating the risk of allegations of negligence,” says Peter Kolbert, JD, Senior Vice President for Claim and Litigation Services for Healthcare Risk Advisors (HRA), part of TDC Group.

In February 2024, the Congressional Digital Health Caucus was formed with the goal of educating policymakers about digital advancements and their potential benefits and risks for American patients, hopefully eventually clarifying liability questions surrounding AI use in healthcare.

Prediction Seven: Ambient listening tools to record patient-clinician interactions will face implementation challenges, liability risks, and uncertain outcomes.

“The goal of ambient scribe technologies is to help doctors, nurses, and APCs focus on their patients instead of their computers, while still capturing the information needed to create reliable clinical documentation,” Ms. Srivastava explains.

Ambient scribe technologies are being tested and implemented around the country at large university health systems, and some studies of ambient scribe technologies have recorded significant reductions in “pajama time.” Others have observed less substantial improvements in time spent with the EHR, but more substantial improvements in clinician satisfaction.

Implementation of an ambient scribe technology requires that the practitioner review and edit the draft note. Researchers have emphasized that the pace of technological change also requires a robust institutional framework for ongoing assessment of technologies for clinical documentation.

Critics of AI-powered documentation tools argue that leaning on large language models risks the “degradation of the medical record.” A large language model that continues consuming its own productions for fuel can eventually get stuck in a “self-reinforcing feedback loop,” making it markedly less useful (if it functions at all).

Further, critics argue that leaning on AI for documentation is a habit that can “undermine clinical reasoning.” Far from being a mere administrative chore, the authors argue, clinical notetaking is a vital part of diagnostic thinking.

According to Richard Cahill, JD, Vice President and Associate General Counsel at The Doctors Company, part of TDC Group: “It is essential that hospital systems exercise due diligence in selecting the software that best matches their functional needs, helps to ensure compliance with federal and state statutory requirements, and promotes regular reevaluation to maintain accuracy in content while aligning with community standards.”

Informed consent is also vital for use of ambient listening tools and should include information about how long recordings are stored, who can access the recording or AI summary, whether and how the physician will review it, whether the material collected is being used to train generative AI, and the risk of re-identifiability of the patient.

“The law traditionally places responsibility for patient record accuracy on the provider,” Mr. Cahill continues. “If the ambient listening device incorrectly transcribes something and the physician does not catch the error in reviewing the transcript, then the physician will be held professionally liable if the mistake is not identified before reaching the patient.”

Debate continues among healthcare leaders and policymakers about patient privacy and the potential for bias to creep in at various points along the way to implementation of AI-based technology.

Prediction Eight: Cybersecurity and HIPAA risks will be heightened by the implementation of AI.

Despite some promising uses and enthusiasm, AI opens potential cybersecurity vulnerabilities for patients and practitioners:

• Just as AI can help healthcare professionals, AI can help cybercriminals detect weaknesses in healthcare systems’ defenses, making it easier to load ransomware or steal data.
• Cybercriminals can use AI to create a convincing mimic of a leader’s voice or likeness. This can be deployed in a message directing employees to send patient data somewhere for a plausible reason, such as a merger.
• Cybercriminals could use AI to misrepresent patients’ records in order to do patients harm.

Because forewarned is forearmed, healthcare organizations can turn the tables and use AI for cyber protection:

• Real-time threat detection: AI tools are helping organizations detect intrusions and breaches of protected health information (PHI)—or better yet, prevent them.
• AI-driven encryption: By obscuring PHI, institutions protect patients’ safety and privacy while protecting themselves from fines for HIPAA violations, which can easily total tens or hundreds of thousands of dollars.

“Cybercriminals target healthcare because personal patient information is particularly valuable to exploit, and large systems contain a wealth of that data,” says Veronique Grenon, FCAS, Vice President of Data Strategy at HRA, part of TDC Group. “Large data breaches are often associated with expensive litigation and settlements, and a growing number of attorneys are now prospecting for well-publicized breaches.”

Cyber protection is vital, because ransom demands on one hospital can create a crisis—not just for that institution, but for a region. The Biden White House emphasized security needs in AI-related executive orders and partnerships. It remains to be seen what approach will be taken by the Trump administration.

Organizations should also increase focus on HIPAA compliance as AI tools are integrated into care. “Proactively develop written protocols around AI and patient information to promote compliance with rules governing access, storage, use, and destruction of protected health information,” Ms. Grenon suggests.

Prediction Nine: Retail giants, facing serious setbacks with their healthcare clinics, will shift to partnerships and subscription models.

“Large companies that have placed big bets on their entries into the healthcare space are finding the retail model is challenging to integrate in the complex landscape of highly regulated healthcare delivery,” Dr. Anderson notes.

A conspicuous example is CVS, which has invested billions of dollars into expanding its network of urgent care clinics and pharmacies. CVS is now considering separating its retail pharmacy, urgent care, and insurance segments.

Other retail giants who have entered the healthcare market—including Walmart Health, Rite Aid, and Walgreens—have encountered similar problems building sustainable financial models for clinical care, despite many patients’ preference for the speedy access to some routine and urgent care services that retail clinics could provide.

Amazon’s One Medical is pivoting to a subscription-based business. It is collaborating with the Cleveland Clinic to open its first primary care clinic in Ohio, with more to follow. The clinic will offer same-day and next-day appointments, as well as an onsite lab and some telemedicine services. This partnership model may be a structure that will appeal to other retail companies as well.

As these companies adjust in the healthcare space, clinicians will face continued tension bridging the gap between medicine’s notion of “patient-centered care” and retail’s perspective on “customer service.”

“Despite the profession’s emphasis on patient-centered care for several decades, we haven’t fully achieved it,” Dr. Anderson emphasizes. “This moment when retail medicine is in flux is an important time for healthcare organizations of all sizes to evaluate the ease of access and cost of care they provide for patients. We need to stop requiring outpatients to see multiple doctors, labs, and imaging centers in different locations at different times, and then hoping that someone thoughtfully acts on the results. That is not how we access services anywhere else in the economy. Retail medicine’s focus on providing rapid access at convenient locations at lower cost highlights the pressing need for improved healthcare access, healthcare equity, and healthcare literacy.”

Prediction Ten: Life sciences companies’ entrance to the direct-to-patient space with medications, devices, and telehealth services will raise liability risks.

The life sciences industry is entering the direct-to-patient space. By offering medications, medical devices, telehealth services, and more, these initiatives promise improved accessibility and convenience for patients. However, this shift also introduces heightened risks for all stakeholders.

“The life sciences industry continues to experience unprecedented growth, driven by advancements in technology, AI integration, and direct-to-patient models,” Mr. Romano says. “From specialty pharmaceuticals to medical devices to clinical trials, these industries are transforming how they innovate and deliver value to patients. For life sciences companies to remain competitive, they must be able to push boundaries while also managing risks.”

Pfizer is leading the charge in the direct-to-consumer initiative with PfizerForAll, which offers patients same-day telehealth appointments and access to savings on Pfizer’s own medications, including those for migraine, COVID-19, and flu. They can also schedule certain vaccines. Pfizer says that PfizerForAll will fill gaps in care access in the nation’s patchworked and splintered healthcare system.

Pfizer is not alone. Other pharmaceutical companies are also taking a direct-to-consumer approach.

“Healthcare is used to challenges with medication reconciliation, given our famously fragmented EHRs and other complicating factors,” notes Jeff McDonald, CPCU, ARM, Executive Vice President at TDC Specialty Underwriters, part of TDC Group. “Still, this direct-to-consumer urgency from pharmaceutical companies does raise concern about increased risk—safety risks for patients and liability risks for healthcare professionals and life sciences companies alike.”

To mitigate these challenges, healthcare systems and practitioners need to adopt proactive strategies, including enhanced communication protocols, patient education on the importance of sharing all health-related activities, and leveraging technology to integrate data from various sources into a unified and accessible patient record.

Pharmaceutical companies should also prioritize transparency and collaboration with healthcare providers to ensure that their direct-to-consumer models enhance rather than hinder patient safety. As the healthcare landscape evolves, collaboration among pharmaceutical companies, telehealth providers, and practitioners will be critical to safeguarding patient care while navigating the complex liability landscape.

“Only by working together can stakeholders protect patient care while navigating the complexities of this new healthcare paradigm,” Mr. Romano emphasizes.

After all, the opposite of integrated healthcare is disintegrated healthcare.

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The guidelines suggested here are not rules, do not constitute legal advice, and do not ensure a successful outcome. The ultimate decision regarding the appropriateness of any treatment must be made by each healthcare provider considering the circumstances of the individual situation and in accordance with the laws of the jurisdiction in which the care is rendered.

10/24