PNC Healthcare 2026 Outlook: Navigating Uncertainty and Opportunity

Economic and Policy Landscape

Healthcare leaders enter 2026 facing both opportunity and uncertainty from economic forces, including geopolitical and domestic policy shifts and technological advances, all promising to impact the nation’s largest industry. The effects of the One Big Beautiful Bill Act (“OBBBA”) and and H.R. 1 remain unclear but are expected to be significant, particularly for Medicaid-focused insurers facing tighter margins and declining membership due to redeterminations and federal funding reductions. Healthcare providers heavily reliant on Medicaid and with limited financial flexibility are expected to feel these pressures most acutely, with notable impacts likely beginning in 2027 and full effects arriving through 2028.¹

Open enrollment has been complicated by Affordable Care Act (ACA) subsidies that are set to expire at the end of 2025.

At the same time, the regulatory environment remains fluid, with new pilot programs such as the U.S. Department of Health and Human Services (HHS) 340B Rebate Model and ongoing litigation influencing drug pricing and reimbursement. The Trump administration, via the launch of TrumpRx, the president’s direct-to-consumer drug purchasing website, has also recently executed highly bespoke agreements with several large pharmaceutical companies to provide Most Favored Nation (MFN) pricing for certain Medicaid drug purchases.

States are advancing rural health strategies focused on workforce expansion, technology adoption and improved patient access. They are also vying for access to the newly approved, $50 billion-per-year Fund for Rural Hospitals, created as part of the OBBBA. The potential for changes in ACA subsidies adds to the uncertainty, requiring healthcare organizations to remain agile and proactive in their planning.

Recent research confirms an added influx of consumerism in healthcare, highlighting the rise of digital tools, social media and AI-powered solutions that enable consumers to access information, compare options and demand better experiences.²

^“The current economic environment is marked by uncertainty, with the future of healthcare shaped by ongoing discussions and differing perspectives regarding funding and solutions,” said Brian Kelly, head of PNC Healthcare.

Technology, Cybersecurity and Artificial Intelligence (AI)

The adoption of electronic health records (EHRs) and the black-market value of information therein have increased vulnerability to cyber threats. Nearly half of healthcare entities experienced a data breach between early spring 2024 and summer 2025, with 12 percent suffering losses well over $500,000 per entity.³ Senior management teams across the industry are evaluating their susceptibility to attacks and prioritizing cybersecurity investments.

AI investment is accelerating, with insurers and providers leveraging it to manage risk, improve care coordination and reduce costs. By 2033, healthcare AI spending is projected to surge to $419.6 billion, up from $25.7 billion in 2024, a 36.4 percent compound annual growth rate (CAGR).⁴Providers are relying on AI to ease prior authorization burdens, automate administrative tasks and enhance clinical decision-making. Managed care organizations are focused on forecasting healthcare utilization to more accurately price plans and schedules, while providers seek to incorporate AI to improve quality and reimbursement. Even the Centers for Medicare & Medicaid Services (CMS) is utilizing AI to reduce wasteful, low-value or potentially harmful services in Original Medicare as part of its recently introduced Wasteful and Inappropriate Service Reduction (WiSeR) model.⁵

“Artificial intelligence isn’t just a tool—it’s becoming a strategic imperative,” Kelly said. “healthcare organizations that integrate these technologies with a focus on strategic use cases and creating value for customers will be best positioned to thrive in a rapidly evolving landscape.”

Investment in technology, automation and digital resources remains a priority, especially as revenue streams shift with changing insurance coverage and delivery preferences. The revenue cycle management (RCM) market is expected to expand to $291 billion by 2033, led by cloud-based, AI-driven, integrated solutions.⁶

Continued Operational Headwinds

Labor affordability remains a pressing challenge as wage growth in healthcare trails other sectors, and job growth is slowing. While healthcare accounted for a high proportion of employment gains in the latter part of 2025, buoying broader employment figures for much of the year, workforce shortages and rising costs are pushing the pendulum back the other way.

Commercial insurers are also retreating from some of the Medicare Advantage (MA) plans for 2026, cutting both the number of plans offered and the benefits included, citing rising utilization and costs that outpace government payments. Further, several major payors have revised or withdrawn earnings guidance, reflecting industry-wide margin pressures as a result of declining MA membership and recent policy changes.

“The operational pressures we’re seeing, particularly around labor and utilization, are forcing organizations to rethink their models,” Kelly said. “Success in this environment will depend on balancing cost containment with strategic investments in workforce resilience and technology. Those who can adapt quickly will not only weather these headwinds but position themselves for long-term growth.”

Supply Chain and Capital Markets

Geopolitical tensions, trade war volatility and other environmental factors continue to threaten supply chain stability, particularly for pharmaceuticals and medical devices. Mitigating the impacts of potential tariffs is industry reshoring, both in response to those tariffs and as part of post-COVID efforts to bolster domestic supply chains. However, it remains to be seen how, when and if tariffs will have a material impact on the healthcare supply chain.

Managed care insurers have pursued significant transactions to diversify offerings, but capital levels have only just returned to year-end 2024 levels. Hospitals and health systems continue to focus on market share, expansion and patient access through ambulatory care centers (ASCs) and mergers and acquisitions, while prioritizing margin-producing service lines and outpatient care delivery settings.

Mergers and Acquisitions (M&A) and Private Equity Transactions

Healthcare consolidation is poised to ramp up in 2026 on the back of additional federal interest rate cuts, razor-thin credit spreads and a more merger-friendly Federal Trade Commission. Healthcare M&A activity will center on organizations seeking scale, expanded services and operational resilience. Large pharmaceutical and medical device companies will pursue acquisitions to strengthen portfolios ahead of patent expirations, while divestitures and spinoffs will continue as firms refocus on core activities and look to unlock value through more pure-play organizational structures.

Year-to-date financial performance of most pharmaceutical companies has been strong, despite the current uncertainty and headwinds, resulting in healthy balance sheets that have increased capacity to support meaningful M&A. This is needed to stay ahead of pending loss of exclusivity of key drugs.

Private equity remains active, targeting specialty sectors such as behavioral health, specialty providers, pharmaceuticals, medical devices, revenue cycle management and AI technologies to address inefficiencies. Disruption will persist, particularly in technology and patient engagement tools. Further, new entrants, including retailers and technology firms, are reshaping traditional care models, though many face headwinds from inflation, higher capital costs and regulatory pressures. Particularly hard-hit in recent years are retailers who sought expansion in healthcare through primary care providers, and further retrenchment among that cohort is expected.

Pharma Life Sciences

The generic drug market continues to experience price erosion but is projected to return to modest revenue growth. Biosimilars are expected to deliver substantial gains, though competitive pressures may temper profitability. The shift to complex, higher-margin drugs remains a key driver of sector performance.

Retail pharmacies are adapting to margin compression and evolving consumer behavior, with large chains recalibrating strategies amid falling reimbursement rates and a weaker consumer spending environment. Additionally, employers, who broadly expect about a 10 percent increase in healthcare benefits costs from specialty drugs and GLP-1 medications for weight loss heading into 2026, are signaling plans to scale back benefits, with over half intending to increase cost-sharing in 2026.

The 340B Drug Pricing Program is a significant profit source for pharmacies and pharmacy benefit managers (PBMs). In 2024, the list price value of 340B drug purchases surged to $140 billion, nearly triple the 2018 level. Discounted 340B purchases totaled nearly $80 billion, implying a staggering $68 billion gross-to-net spread.⁷ In an effort to improve transparency, HHS has announced a new rebate program that it will pilot with a select group of drugs in 2026.

Potential tariff policy changes initially drove uncertainty as the pharma industry depends on overseas drug manufacturing. In 2024, the U.S. imported about $213 billion of pharma products.⁸ Additionally, the Food and Drug Administration (FDA) estimates that more than 70 percent of active pharmaceutical ingredients used in the U.S. are manufactured abroad.⁹ Pharma breathed a sigh of relief after indications that sector-specific tariffs declined, and the administration signaled prioritization of commitments in increased U.S. manufacturing.

Small Business Healthcare

Small business healthcare practices continue to demonstrate resilience. Investment in technology, automation and cybersecurity remain priorities, especially as revenue streams shift with changing insurance coverage and delivery preferences.

Primary care is expected to grow at a modest rate of 3.2 percent CAGR through 2030, reaching $391.5 billion by the end of the period.¹⁰ Similarly, specialty practices are forecast to climb at a CAGR of 3.1 percent from 2025 through 2030, reaching $460.7 billion by the end of the period.¹¹ Given that revenues for both primary and specialty providers are expected to expand, taking proactive steps to efficiently capture that revenue growth and protect profit margins becomes a high priority.

Looking ahead, providers continue to face two primary business issues that need to be thoughtfully balanced. The first is mounting pressures from shifting demographics, increasing human resource pressures, the rising cost of both clinical and business supplies and growing technological demands. Second is the growing demand for care due to an aging population, while younger adults increasingly turn to alternatives such as telemedicine, urgent care and independent substitute providers (i.e., physician assistants and nurse practitioners; available in a growing number of states and rural communities). These two business issues are most often cited as reasons for healthcare consolidation into group practices or larger healthcare systems, as well as for joining group purchasing organizations and independent physician associations.

Given that patients can compare a broader range of providers for the same condition, small business healthcare providers must continue to differentiate their services, offering convenience (e.g., subscription-based services, where applicable), quality care, patient referral programs and better outcomes. Evolving regulations, shifting demographics, growing physician reticence to pursue private equity investment, the latest financial management and patient payment technologies, and evolving revenue streams will continue to shape the trajectory of small business healthcare.

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