US healthcare expenditures are expected to top $6 trillion in 2026, a 6.3% increase over the prior year. From primary care to life-saving emergency treatment, healthcare provides essential services to people in need—and jobs that require a wide range of skills and expertise. Yet the industry also faces more than a fair share of challenges, including workforce shortages and burnout, relentless cyberattacks, rising costs, new competitors, and a constantly shifting regulatory landscape. How well organizations meet them has become inseparable from how effectively they manage their data and put advanced technologies to work.
This article breaks down 14 of the most pressing challenges facing healthcare today, along with five strategies for addressing them.
What Are Healthcare’s Top Industry Challenges?
Healthcare’s top industry challenges refer to the operational, financial, regulatory, and workforce pressures that make it harder for hospitals and health systems to deliver high-quality, affordable care. Challenges span internal issues, such as inefficient workflows and workforce shortages, as well as external forces, such as cybersecurity threats, new competitors, and shifting government regulations.
Key Takeaways
- Healthcare organizations face a broad set of challenges spanning rising costs, cybersecurity, competition, and constant regulatory change.
- A shrinking, burned-out workforce is pushing providers to rethink how they attract, retain, and support the people who deliver care.
- Technology, and AI in particular, is reshaping how organizations tackle everything from clinical documentation to billing.
- Much of healthcare’s inefficiency traces back to fragmented data and manual processes, making unified, well-managed information a foundation for real progress.
Healthcare Industry Challenges Explained
Healthcare comes with the highest stakes: people’s lives. Providers face open questions about disruptive competitors, the next cyberattack, the future of telehealth, and broader digital transformation. There’s also uncertainty about how to move to value-based care without creating a back-breaking administrative burden—just one of the many challenges that regulation itself creates.
These challenges are tightly connected. Clinician burnout deepens workforce shortages, which strain the patient experience and push up costs. Financial pressure limits the technology investments that could ease the administrative burden through automation. A single cyberattack can delay care and consume much of a year’s slim operating margin. Tackling any one challenge in isolation tends to fall short, but a common set of solutions, centered on unifying data and modernizing core systems, can address many challenges at once.
14 Healthcare Industry Challenges
Each of the following 14 challenges is significant on its own, but together they create a genuinely difficult operating environment for healthcare organizations. Failing to meet them can harm patient care, financial stability, and an organization’s reputation.
1. Workforce shortages and provider burnout: The healthcare industry faces an ongoing shortage of qualified professionals even as demand for care is increasing. By 2028 the federal Health Resources and Services Administration projects a shortage of 113,380 physicians and 267,330 nurses. Understaffing also extends to the administrative workforce, including schedulers, billers, and front-desk and revenue-cycle staff.
Two forces are at play. On the demand side, the US population ages 65 and older is projected to grow 34.1% by 2036, according to the Association of American Medical Colleges (AAMC). On the supply side, the workforce is aging out. Physicians 65 or older make up 20% of the clinical workforce, with another 22% aged 55 to 64, and there are not enough new graduates to replace those nearing retirement, the AAMC notes.
Compounding the issue, burnout has pushed many experienced clinicians and care workers to reduce their hours or leave the field. Although less than during the peak of COVID-19, nearly 42% of physicians still report at least one symptom of burnout, and roughly 43% continue to cite significant job stress stemming from ineffective electronic health record (EHR) systems, inadequate staffing, and excessive administrative tasks, the American Medical Association (AMA) reports.
2. Cybersecurity: The healthcare industry is particularly vulnerable to cyberattacks due to the volume of personally identifiable and protected health information that hospitals and health systems store. Healthcare was the most-targeted critical infrastructure sector in 2025, according to the FBI’s Internet Crime Report—the sector’s second straight year at the top—with 460 ransomware attacks (nearly double the number in 2024) and 182 data breaches. And for the 13th consecutive year, healthcare remains the costliest industry for data breaches, with a global average of $6.64 million per breach, according to IBM’s “Cost of a Data Breach Report 2026.” With hospital and health system operating margins at 2.5%, a single major breach can consume most or all of a year’s operating income.
But more than financial consequences are at stake. Patient outcomes can be affected and, sometimes, it’s literally a matter of life and death. In 2025, 72% of US healthcare organizations hit by cyberattacks reported disruption to patient care. Among affected organizations, 54% reported increased medical-procedure complications, 53% longer patient stays, and 29% higher mortality rates, according to a Ponemon Institute/Proofpoint survey. These disruptions also delay care when patients have to be diverted to other facilities.
3. Financial pressures and rising costs: National spending on healthcare keeps climbing. Last year the US spent an estimated $5.7 trillion on healthcare, a 7.3% increase over the prior year, according to the Centers for Medicare & Medicaid Services (CMS). Yet organizations delivering care are seeing their expenses exceed the payments they collect. Total hospital expenses grew 7.5% in 2025—more than twice the rate of growth for what hospitals were paid—with increases in every major category, according to the American Hospital Association’s “Cost of Caring” report. Labor remained the single largest expense, accounting for 56% of total hospital costs, and hospitals spent $43 billion in 2025 simply trying to collect payments owed to them, including nearly $18 billion spent overturning denied claims, the report also found.
For patients, cost has become the defining healthcare anxiety. Polling from KFF found that 44% of US adults say it is difficult to afford their healthcare costs, 36% report skipping or postponing needed care because of the expense, and 31% opted for an over-the-counter drug instead of filling a prescription because of cost concerns.
4. Competition: Brick-and-mortar health systems continue to be disrupted from competitors. The number of urgent care clinics in the US grew nearly 69% from 2016 to 2024, reaching 15,172 facilities, according to the Urgent Care Association. In 2025, these clinics generated $36.4 billion in revenue, which is forecast to more than double to $75 billion in 2033, per Grand View Research.
In addition, retail companies that have not traditionally provided care delivery services are joining the market, albeit with mixed results. It has been three years since both Amazon acquired primary care provider One Medical and CVS Health expanded into care delivery through its acquisition of Oak Street Health. Others, however, have retreated: Walmart closed all 51 of its Walmart Health centers in 2024, and both Walgreens and CVS have scaled back earlier primary care ambitions amid financial pressure. More recently, General Catalyst became the first venture capital firm to buy and operate a hospital with its 2025 purchase of Summa Health in Ohio.
The lesson emerging from this churn is that disrupting healthcare is harder than many outsiders anticipated—but the competitive pressure on traditional providers is real and growing.
5. Telehealth and digital transformation: The healthcare industry rapidly embraced telehealth in the early days of COVID-19; though utilization has since receded, virtual care is now a permanent fixture. The reimbursement uncertainty that long dogged it has largely eased with recent legislation (the Consolidated Appropriations Act of 2026) that extended most Medicare telehealth flexibilities through 2027. Coverage for behavioral telehealth was made permanent in 2021.
The current challenge is how to integrate virtual care and a wave of new digital tools into everyday care delivery. Health systems are adopting AI for clinical documentation, decision support, and administrative automation; moving to the cloud; and rushing to meet federal interoperability requirements that compel organizations to share patient data with patients and throughout care settings. Ultimately, successful digital transformation will depend on unified, normalized data—the foundation that allows AI and analytics tools to deliver real value, reduce administrative burden, and provide better information for decision-making.
6. Invoicing and payment processing: Getting paid for care is one of healthcare’s most complex and inefficient processes. The revenue cycle—verifying insurance, obtaining prior authorization, coding and submitting claims, checking their status, appealing denials, and collecting patient balances—still relies heavily on manual, error-prone workflows that can cause revenue leakage. Collections remain especially antiquated. According to J.P. Morgan’s “Trends in Healthcare Payments” report, 63% of providers still collect funds primarily through manual, paper-based processes, and 70% need two or more statements to collect a patient balance in full.
The cost is steep. An analysis of more than 2,300 hospitals found that final claim denials and uncollected patient balances cost providers more than $48 billion in 2025. Slow, denial-prone billing also delays payment, tying up cash and straining already-thin margins.
The industry’s response has been a steady shift away from those manual workflows. Health systems are increasingly adopting electronic invoicing and automated invoice processing, which tracks invoices from the time they are received. They’re also deploying AI tools, which catch errors before claims go out, predict likely denials, and handle routine coding and collections work. While adoption has been uneven, 69% of providers using AI say they have already seen a reduction in denials, according to Experian.
7. Price transparency: Two US regulations aim to help patients understand the cost of healthcare services and avoid unanticipated bills. The Hospital Price Transparency rule, effective since 2021, requires hospitals to provide both machine-readable and consumer-friendly lists of prices for common services and procedures. The No Surprises Act, which went into effect the following year, mandates that hospitals provide good-faith estimates of what services will cost and bans out-of-network charges for services provided at in-network facilities.
These rules continue to become more demanding. For example, earlier this year CMS upped the requirements for more exact pricing data in hospitals’ machine-readable files. While organizations such as the American Hospital Association support the goals of transparency, they note the strain compliance places on providers: It is difficult to state a single fixed price when organizations negotiate different rates with different insurers. Yet penalties for noncompliance can be high, forcing providers to devote scarce time and resources to stay compliant. Meanwhile, additional legislation, including the Lower Costs, More Transparency Act, has advanced in Congress with bipartisan support—a signal that expectations for clear, upfront pricing will continue to grow.
8. Big data: The average hospital system produces 137 terabytes of data every day. This data documents the care delivered, offers insight into a patient’s overall health and wellness, and provides an audit trail for compliance and legal purposes. But the healthcare industry struggles to manage it because as much as 80% of its data is unstructured, such as free-text physicians’ notes or medical images, and cannot easily be captured in the rows of a database. Normalizing unstructured data to look like structured data makes it more useful for clinical and business decision-making, but the manual normalization process is expensive and time-consuming.
That’s where data crunching—converting raw data into a consistent, machine-readable format—comes into play. And increasingly, that work falls to AI. Capabilities such as natural-language processing and machine learning can read free-text notes, extract discrete data points, recognize when different entries refer to the same patient, and map inconsistent inputs to standardized formats at a scale manual methods can’t match. But success still depends on the fundamentals—knowing the use case, understanding the data sources, and documenting the process.
9. Health equity: The negative impact that economic and social marginalization has on health outcomes has been well documented for decades, and the gaps remain persistent across race, income, geography, language, and other dimensions. Black women, for example, died from pregnancy-related causes at a rate of 44.8 per 100,000 live births in 2024—and while that marked an improvement over prior years, it remained roughly three times the rate for white women (14.2), according to the Centers for Disease Control and Prevention. Similar disparities appear in cancer mortality and the management of chronic conditions. Patients in rural areas often travel long distances to reach care and face a shrinking number of local hospitals, while patients with lower incomes or limited English proficiency encounter barriers ranging from cost and transportation to an inability to communicate clearly with their providers.
Closing these gaps starts with understanding them, and that depends on data. Providers often struggle to collect accurate, standardized information about the barriers their patients face because that data is inconsistently recorded or scattered across disconnected systems. Without a transparent view of who is being underserved and why, it is difficult to target resources, measure progress, or make care more accessible. For healthcare organizations, improving equity is as much an operational and data-management challenge as it is a clinical one—and one that requires sustained effort across the institution.
10. Slow clinical workflows: Ninety-one percent of physician offices and more than 99% of hospitals in the US use a certified EHR system. This is a significant increase from less than 20% of physicians in 2001, influenced largely by federal reimbursements allocated by the HITECH Act of 2009. In terms of clinical workflow, EHR have improved care delivery by simplifying note-taking, improving decision-making, and providing reminders and alerts to clinical staff. However, multiple EHR features have been linked to adverse impacts on clinical workflows, ranging from long load times to information overload, and the documentation often spills into clinicians’ personal time. In 2024, 22.5% of physicians reported spending more than eight hours a week on the EHR outside normal working hours, up from 20.9% the year before, according to the AMA.
A range of technology innovations has the potential to improve the clinical workflow within EHR systems. Increasingly, attention has turned to agentic AI. Rather than simply drafting a clinical note, for example, agentic AI can capture a patient visit, produce the documentation, and trigger downstream actions—such as entering orders or preparing billing codes—by pulling information from multiple systems and looping in a clinician for review when needed. Similar approaches are being applied to time-consuming tasks like prior authorization and scheduling. The challenge for healthcare organizations is determining the appropriate use cases for AI tools while keeping a human in the loop for clinical decisions.
11. Climate and environmental pressures: Hurricanes, floods, wildfires, and other forms of extreme weather threaten facility operations, energy and water systems, and the continuity of patient care—precisely when demand for care tends to spike. These events have surged over the past decade: The US recorded 27 separate billion-dollar weather and climate disasters in 2024, second only to the record 28 in 2023 and far above the annual totals common in earlier decades, according to the National Oceanic and Atmospheric Administration.
Leaders are taking notice, and for good reason: A single severe-weather event can force evacuations, knock out power and clinical systems, damage facilities, and drive costly emergency response—all while patient volumes surge. The challenge is to build resilience by hardening facilities and operations against disruptions, while planning for risks that can no longer be dismissed as rare, one-off emergencies.
At the same time, healthcare organizations face mounting pressure from regulators, patients, and investors to shrink their own sizable environmental footprint. Since cutting energy and waste often reduces healthcare costs, they also have a financial incentive to do so. Meaningful reduction relies on measuring energy and water use, waste, and supply-chain emissions that many organizations have never systematically tracked. For much of the industry, building the data infrastructure to measure, manage, and report environmental impact remains a substantial operational challenge.
12. Patient experience and patient expectations: Slow clinical workflows and provider shortages have contributed to declining patient satisfaction. Long wait times are another reason, considering it takes an average of 31 days to schedule a physician appointment across 15 major US metro areas—up 48% since 2004, when AMN Healthcare conducted its first survey about wait times. Cumbersome, manual processes for managing appointments, renewing medications, and sharing test results add friction and increase the likelihood that a patient will switch doctors.
At the same time, patients’ expectations have risen. Accustomed to the convenience of other consumer industries, they want the same ease from healthcare. Eighty percent of healthcare consumers said online scheduling influences their choice of provider, and 24% will look elsewhere if they can’t book an appointment as easily as a dinner reservation, according to a 2025 consumer insights report. That elevates experience to a competitive level because patient turnover means lost revenue and reputational damage. It also compounds the effects of disruption from retail and virtual-care competitors moving into the market.
In response, providers are investing in the conveniences patients now expect, such as online scheduling, digital check-in, and automated reminders. Adoption is well underway, but even among organizations that have embraced digital scheduling, only one-quarter of consumers rate the experience as excellent, according to the consumer report.
13. Move to value-based care: CMS has set ambitious goals for transitioning the healthcare industry to value-based care, which reimburses providers based on the clinical outcomes they achieve rather than the volume of services they deliver. Central to this shift is the “accountable care relationship,” in which a provider is responsible for both the quality and the total cost of a patient’s care. CMS wants all traditional Medicare beneficiaries and most Medicaid beneficiaries in this type of relationship by 2030. As of January 2025, 53.4% of traditional Medicare beneficiaries were in one, according to CMS.
Healthcare providers face two main challenges in this transition. One is the sheer volume and constant churn of the value-based care models that CMS runs. The most common model is the accountable care organization—a group of doctors, hospitals, and other providers who coordinate care for a defined set of patients and share responsibility for their outcomes and costs. Other models target narrower slices of care, paying a single fixed price for a specific procedure, for example, or tying reimbursement to how well a chronic condition is managed. The lineup keeps shifting as CMS launches, ends, and replaces these models, and a single patient could be part of several at once, making it difficult to document where, when, and from whom they receive care.
The second challenge is all the documentation required to demonstrate value. Quality care has many components—safety, equity, timeliness, and cost, among them—and organizations must report their performance on these and many other metrics to show both CMS and commercial insurers that they are delivering high-value care. That reporting creates a significant administrative burden, which can leave hospitals and health systems with fewer resources to devote to patient care.
14. Regulatory and compliance changes: Healthcare, of course, is heavily regulated, and the rules keep evolving. Medicare’s pandemic-era telehealth flexibilities, for example, spent years lurching from one short-term extension to the next; they have since been extended through 2027, with some provisions—such as coverage for behavioral health visits—made permanent. Transparent pricing and value-based care, both discussed above, are subject to the same constant change. The result is a moving compliance target that organizations must track across governing bodies.
Regulatory scrutiny is intensifying as well. For example, in 2025 the Department of Health and Human Services announced a crackdown on noncompliance with the information blocking provisions of the ONC Cures Act Final Rule. These provisions require healthcare organizations to give patients access to their records and prohibit practices that interfere with the access, exchange, or use of health information. Health IT developers, information exchanges, and health information networks face civil penalties of up to $1 million per violation, while providers face financial disincentives through other federal programs.
Organizations must also meet detailed requirements for accurately documenting evaluation and management care encounters. Keeping pace demands that staff stay educated on new rules and that legal and compliance teams continually review and update policies—often sorting through multiple regulations that apply to the same process.
5 Strategies for Addressing Healthcare Challenges
Most healthcare challenges trace back to the same root causes—fragmented data, manual work, financial strain, and an exhausted workforce. So the most effective responses don’t tackle them one at a time; they address several at once.
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Shift to Cloud-Based Platforms
Much of the dysfunction in healthcare stems from siloed, on-premises systems that don’t communicate. Cloud-based platforms address this at the foundation, uniting previously disconnected administrative, financial, and operational data in a single view that improves cost visibility, strengthens healthcare data security by reducing vulnerable transfers, and scales far more easily than on-premises infrastructure. The healthcare ERP market reflects this shift, projected to grow from $9 billion in 2026 to $15.1 billion by 2033, according to Grand View Research.
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Expand Employee Retention and Engagement Initiatives
The most effective employee retention strategies target the systemic drivers clinicians actually cite—administrative burden, inadequate staffing, and burdensome technology—and they don’t treat burnout as a personal failing. Reducing avoidable clerical work, supporting employees’ well-being and autonomy, and strengthening the work culture all help organizations hold onto the people who deliver care, which, in turn, protects both patient experience and financial stability.
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Automate Manual Processes
Manual administrative work is one of the largest and most addressable drains in healthcare. Industry analysis indicates that electronic transactions already save the sector hundreds of billions of dollars annually, with roughly $21 billion more available by automating the transactions that remain manual. Automating healthcare tasks, including eligibility checks, claims, prior authorization, billing, and inventory replenishment, reduces errors, speeds payment, and gives clinical staff time back, directly easing the financial, workflow, and workforce challenges at once.
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Adopt Workforce Resilience Models
Resilience is about redesigning how care is delivered so the system can absorb pressure and change. That means treating workforce planning as an executive function and aligning staffing models, technology, and care delivery around long-term strategy. The path forward includes cross-training, flexible and virtual roles, expanded roles for advanced practice providers, and local pipelines built through apprenticeships and community partnerships. These models extend capacity without one-for-one hiring and help close the access gaps that hit rural communities hardest.
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Invest in Advanced Technologies
AI, analytics, and integrated systems underpin the other four strategies. AI-assisted documentation reduces the clerical load that fuels burnout, predictive analytics improve patient flow and forecasting, AI-powered security tools measurably lower breach costs—by an average of $1.93 million per breach, according to IBM—and connected data makes value-based care’s measurement demands manageable. The opportunity is real, but so is the risk of a widening divide between well-resourced systems and the smaller, rural, and independent providers still working to catch up.
How ERP Can Help Solve Healthcare Challenges
Manual workflows for submitting claims, departmental data silos, time-consuming processes for data normalization, and outdated patient engagement practices all contribute to healthcare providers operating less efficiently than they could. This inefficiency also makes it harder to provide high-quality care, meet compliance requirements, and adapt to competitive pressures.
Unifying data and automating manual processes is where ERP systems shine. An ERP system integrates previously siloed healthcare data across the organization, giving executives greater oversight of administrative and clinical operations. Hospital leaders also have faster access to the information they need to make informed decisions. The result? Greater healthcare efficiency that supports high-quality care, reduces costs, and sets the stage for growth.
That unified data foundation also makes AI useful. AI tools are only as good as the data they can access, and much of AI’s promise in healthcare depends on the clean, connected information an ERP system provides. Increasingly, cloud-based ERP platforms embed AI and analytics directly, turning raw data into forecasts, anomaly detection, and automated workflows. In other words, ERP supplies the foundation, and AI puts it to work.
Adapt to the Ever-Changing Healthcare Landscape With NetSuite
Healthcare organizations operate in a complex, dynamic environment where it’s imperative to provide quality care to patients and support the staff who perform this meaningful work. At the same time, they must respond to changing market conditions, industry regulations, and competitive pressures. Meeting those demands starts with gaining control of your data. NetSuite Healthcare ERP—the healthcare-tailored edition of NetSuite ERP—unifies financial management, supply chain and inventory, procurement, and planning and budgeting on a single, cloud-based platform. Manual workflows and disconnected systems are replaced with automation, real-time reporting, and a single, trusted view of the organization.
That connected foundation also makes AI genuinely useful. Built-in capabilities include Bill Capture, which uses AI to read and enter vendor invoices automatically, and anomaly detection, which continuously scans financial and operational data for unusual patterns. In an industry defined by uncertainty, pairing a solid data foundation with the intelligence to act on it lets health and hospital systems adapt quickly, protect margins, and stay focused on patient care.
The reality is that many of these healthcare challenges have been around for a very long time, and they’re not likely to go away. Workforce shortages, cyber threats, financial strain, and shifting regulations will keep evolving, and new pressures will emerge that have yet to be imagined. For healthcare organizations, the goal is to continually adapt to stay financially steady, meet regulatory demands, and, above all, keep patients and the people who care for them at the center.
Healthcare Industry Challenges FAQs
What is the biggest challenge in the healthcare industry?
Healthcare organizations’ greatest operational challenge is adapting to pressure from a wide range of external stakeholders, including government regulators, competitors in adjacent vertical markets, and cyberattackers seeking valuable financial and personal information. It’s an especially difficult and expensive challenge for organizations that must maintain 24/7 operations while providing high-quality patient care.
What are the biggest issues in healthcare 2026?
The healthcare industry maintains many inefficient workflows. Even those that have been automated remain challenging due to requirements for clinical and administrative documentation. And because much of the industry’s data is in unstructured formats, normalization for interpretation and analysis can be difficult and time-consuming.
What are three common barriers to growth in the healthcare industry?
Healthcare organizations struggle to grow due to inefficient workflows that make it difficult to see more patients or pay bills on time. In addition, new documentation required for the transition to value-based care and other regulatory requirements have pushed the healthcare industry to add administrative personnel, leaving fewer resources available to hire physicians and nurses. Finally, the healthcare industry must continue to address inequity in access to care, which contributes to poorer outcomes in marginalized and underrepresented communities.
What is a major disruptor facing healthcare currently?
Traditional providers of healthcare services, such as hospitals, health systems, and physicians’ offices, face increased competition from retailers, urgent-care providers, and direct-to-consumer telehealth providers. These competitors aim to provide more convenient care at a lower cost than a trip to the doctor’s office or emergency room.
How is technology impacting the challenges in healthcare today?
Technology is the common thread in how healthcare organizations are tackling their toughest challenges. Its clearest impact today is on the administrative and documentation burden that drives much of the industry’s inefficiency and clinician burnout. For example, AI tools that draft clinical notes from a patient conversation are already cutting documentation time. The technology is expanding from generating text to taking action, with agentic systems that schedule appointments, verify eligibility, and process claims with limited human intervention. Realizing that potential depends on connected, well-governed data provided by a cloud-based ERP system.
