Healthcare Market Trends Q2 2025

by Hamilton Espinosa and Sean Ashcroft 3 minute read

Finding solid footing in a shifting landscape

People working at desks and in a treatment room in a healthcare setting

Healthcare providers are navigating an increasingly volatile landscape underscored by disruptions, real and potential, stemming from uncertainty around future Medicaid cuts, threats to $340B program revenue and NIH funding, rising costs from tariff policies, and broader regulatory unpredictability.

According to a 2025 Oliver Wyman analysis, policy proposals on the table could result in up to a 3.2% negative margin impact on health systems. Supplementing these findings, a January survey of 200 healthcare industry experts found that 82% expect tariff-related import expenses to drive up hospital and health system costs by 15% within the next six months. Meanwhile, though hospital average operating margins remain above 2024 averages, financial performance variability between the top and bottom performers is stark with over 40% of hospitals still operating in the red and 31% of rural hospitals at risk of closing.

Economists project a rising risk of recession this year, with projections showing a 15% increase in consumer goods costs and inflation nearing 3.5%. Unemployment could rise to 4.5% by the end of 2025. In the healthcare sector, this uncertainty is layered on top of long-existing challenges like workforce shortages, rising operational costs, and capital market constraints.

And yet, healthcare continues to show signs of strength. The Labor Department reported 228,000 new jobs in March, with healthcare employment leading that growth. Capital investment across health systems is still moving forward, with sharper scrutiny on timing, cost control, and return on investment. And as healthcare finances are under pressure, health systems are leaning into technologies like artificial intelligence and telehealth to adapt and innovate.

Predictability Where It Matters Most

Today’s healthcare leaders are balancing more than just project timelines and budgets; they are managing evolving patient needs, regulatory requirements, workforce challenges, and long-term operational resilience. In a market full of uncertainty—the question isn’t if your capital strategy will be tested—it’s how you will respond.

Data-Driven Planning to Drive Certainty: DPR invests in real-time market intelligence. We monitor everything from equipment lead times and permit delays to labor trends and regional escalation. These insights power our quarterly market updates and inform strategic planning sessions with our healthcare clients, so you can make data-driven decisions with confidence that align with your broader mission and financial goals.

Early Alignment to Deliver Value at Every Phase of Planning: We leverage Integrated Project Delivery (IPD) and Lean behaviors to bring early alignment between design, construction, and clinical operations—so critical decisions happen upstream, and stakeholder voices are heard from day one. Lean methodologies help ensure we deliver value at every phase, improve workflows, and eliminate waste in the construction process and the built environment.

Prefabrication to Reduce Risk: Prefabrication is a powerful tool in the healthcare space, where quality, safety, and infection control are non-negotiable. Realizing the maximum benefits afforded by prefabrication strategies requires a collaborative effort from designers, contractors and the owner. In a recent healthcare project, DPR used prefabricated MEP racks, headwalls, and wall panels to streamline installation, reduce on-site disruption, and accelerate the schedule while maintaining the strict quality standards that healthcare demands.

Proactive Strategies to Weather Elevated Uncertainty: Health systems must prepare for scenarios that model shifts in payer mix and anticipated higher costs due to tariff policies. Even in a turbulent market, we’re helping clients respond, not just react, to protect their budgets and schedules. “In a time when our clients are being asked to make complex decisions with limited visibility, our job is to bring certainty wherever we can,” says Deb Sheehan, healthcare strategy leader at DPR. “Whether it’s forecasting impacts on cost and schedule or helping guide strategic facility planning, we’re here to be the calm in the chaos.”

DPR is committed to helping healthcare providers navigate today’s evolving landscape by rethinking procurement, refining cost models, and prioritizing project scope through real-time planning. From strategic assessments to real-time pull planning, our approach accelerates capital decision-making—advancing value and empowering clients to align real estate and technology investments with long-term organizational goals.

Read and Listen!

Healthcare Insights is a series from DPR Construction’s healthcare core market team designed to consider how new pressures on the market will transform the delivery of care.

Focusing on rapidly addressing today’s environment, our teams advance value to health care providers through strategic assessment, program and cost validation, and informing capital investments in real estate and technology—enabling strategic decisions much earlier in the delivery cycle.

Image of three pages of DPR's Q2 2025 Market Conditions Report

Looking for more general market insights? Take a look at our full market conditions report of Q2 2025. Or take the full report with you by downloading the PDF.