The Potential Impact of Recession on the Healthcare Industry

Ben H.

Hatched by Ben H.

Aug 17, 2023

3 min read


The Potential Impact of Recession on the Healthcare Industry


Recession fears have been looming, and while they may have subsided for 2023, experts predict a 71% chance of a recession by May 2024. While recessions typically bring economic challenges, there is a possibility that the healthcare industry could find a silver lining amidst the turmoil. This article explores how a recession could affect the healthcare sector, both positively and negatively, and the potential implications for healthcare providers and employees.

Impact on Wage Increases and Employment:

One potential outcome of a recession is a slowdown in exorbitant wage increases within the healthcare industry. As the demand for expensive contract labor decreases, healthcare providers may be compelled to rein in their wage expenses. Lower-skilled employees who may have previously found work in other industries, such as food service or housekeeping, could turn to healthcare for employment opportunities. This shift in the labor market could bring new talent to the industry, but it may also create challenges for those seeking more specialized roles.

Challenges Faced by Healthcare Providers:

While a recession may bring benefits to struggling healthcare providers, not all organizations will experience a silver lining. Over the past year, many healthcare organizations have been forced to restructure their operations, cut costs, and adapt to new care delivery models. Layoffs have become commonplace as providers seek to navigate these financial challenges. For instance, Allina Health recently announced plans to lay off fewer than 350 employees, primarily in leadership and non-direct caregiving roles. Similarly, Prisma Health in Greenville, South Carolina, will be letting go of nearly 700 employees as part of their partnership with Compass One Healthcare.

The Walgreens-Option Care Health Deal:

In recent news, Walgreens Boots Alliance sold its remaining shares of Option Care Health for over $330 million. This move marks the end of Walgreens' stake in the company and aims to reduce the drugstore chain's debt. Walgreens had been gradually selling off its Option Care stock, with a previous sale of 15.5 million shares in March. This decision comes amidst Option Care's plans to acquire Amedisys for $3.6 billion, with UnitedHealth Group's Optum also expressing interest in the company.

Potential Insights and Unique Perspectives:

While the content provided above offers a comprehensive overview of the potential impact of a recession on the healthcare industry, it's important to consider additional insights and unique perspectives. For example, a recession may create an opportunity for healthcare providers to focus on cost-containment measures, innovation, and streamlining processes. It could push organizations to find new ways to deliver quality care while maintaining financial stability. Furthermore, a recession might highlight the importance of preventive care and wellness initiatives, as individuals become more conscious of their healthcare spending.

Actionable Advice:

  • 1. Diversify Revenue Streams: Healthcare providers should explore ways to diversify their revenue streams to mitigate the impact of a potential recession. This could involve expanding services, partnering with other organizations, or exploring telehealth options to reach a broader patient population.
  • 2. Focus on Efficiency and Cost-Containment: In preparation for a recession, healthcare providers should prioritize efficiency and cost-containment measures. Streamlining processes, optimizing supply chain management, and implementing technology solutions can help organizations operate more efficiently and reduce unnecessary expenses.
  • 3. Invest in Workforce Development: With potential shifts in the labor market during a recession, healthcare providers should invest in workforce development initiatives. This includes training and upskilling existing employees to meet evolving demands and attracting new talent to the industry through targeted recruitment efforts.


While a recession may bring challenges to the healthcare industry, it could also present opportunities for growth, innovation, and cost-containment. By diversifying revenue streams, focusing on efficiency, and investing in workforce development, healthcare providers can navigate the potential impact of a recession and emerge stronger. The key lies in adapting to the changing landscape while maintaining a commitment to delivering high-quality care to patients.

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