Distress Level in Health Care, Life Sciences Sectors High in New Survey

A total of 3 out of 4 health care and life sciences (HLS) executives reported a distress level of 7 or higher in the health care and life sciences sectors in a new survey focused on assessing stress felt by operators, investors, and advisors in the health care industry. The survey also highlighted the main priorities of organizations across the country, including the integration of artificial intelligence (AI).

The survey, which included 200 participants across the US, focused on what the top stressors were in the workforce. A top challenge was regulatory and policy uncertainty, with less than 40% of HLS operators reporting they would be prepared for a wide range of changes.

Other reported challenges included high labor costs (51%) and declining reimbursement rates (44%). Other distress drivers reported by respondents included interest rates and cost of capital (32%), high supply costs (23%), and competitive dynamics or increased competition (29%).

Health care respondents named solutions such as increased focus on service-line profitability, increased contract negotiations, reduced or restructured low-margin offerings, and expanded consumer and patient pricing options as ways to protect or improve profitability in the space. These can act as countermeasures for the perceived risks in health care.

A total of 98% of respondents wanted to increase investment in technology and automation, 89% wanted to invest in revenue cycle management, 70% wanted to invest in supply chain resilience, 68% in service line optimization, and 67% in quality and safety infrastructure over the next 12 months. Negotiating better rates with payers and investing in revenue cycle management were also popular responses for those surveyed.

Despite most respondents wanting to increase their investment in technology and AI, the return on investment (ROI) has not been realized in more than 60% of operators. A total of 35% of respondents found that AI solutions had an ROI for clinical documentation and coding. ROI was 31% in patient and customer relations, 24% in workforce productivity and scheduling, 22% in reimbursement optimization, and 8% in regulatory and risk management.

Strategic mergers and acquisitions are also appealing to the majority of those surveyed, with 95% prioritizing mergers in the future. However, only 27% of these respondents are prepared to go through with these mergers on an accelerated timeline. The top factors for not being prepared for these mergers included financing (71%), due diligence capacity (65%), and regulatory uncertainty (52%). This comes as mergers and acquisitions continue to happen across the country, with up to 30% of those involved in transactions reporting financial distress.²

Mergers and acquisitions activity could be accelerated due to regulatory and policy shifts (53%), rising operating costs (46%), the need to scale or expand the footprint of the organization (47%), and tariff volatility (21%), among other factors, according to the surveyed participants.¹

The life sciences industry is experiencing similar drivers of distress, with 46% citing regulatory and policy uncertainty, 31% citing competitive dynamics, 29% citing supply chain disruptions, and a tie for 26% citing interest rates or high supply costs as the primary drivers of distress. The Inflation Reduction Act of 2022 is a primary cause of concern, as 55% of respondents expect moderate or significant pricing pressure related to the law.

Global pricing dynamics (57%) was the most frequently cited factor in the ability to sustain pricing power. Competitive pressures (56%) were also a frequently cited constraint on sustaining pricing power. Other factors included increasing payer and pharmacy benefit manager negotiation leverage (35%), channel and distribution dynamics (34%), and Medicare price negotiation (30%).

AI solutions also saw lower ROI in the life sciences industry, with only 33% reporting an ROI in research and development, 31% in manufacturing or production operations, 31% in supply chain optimization, 27% in clinical development and trial execution, and 16% in workforce productivity and scheduling.

Overall, the survey demonstrates interest in mergers and acquisitions as well as investment in AI by those in the health care and life sciences sectors. These results inform shifting priorities of those in health care as well as the biggest challenges in achieving the goals moving forward, which can help readers understand the moves made by the health care sector in the future.

References

1. Dzwonczyk E, Eisenberg R, Fless A, et al. 2026 U.S. healthcare & life sciences survey: margin pressure, regulatory risk, and the readiness gap. AlixPartners. May 26, 2026. Accessed May 28, 2026. https://www.alixpartners.com/media/5yalljnj/2026-alixpartners-healthcare-and-life-sciences-survey.pdf
2. Hospital and health system M&A in review: uncertainty transitions to continued momentum in 2025. News release. KaufmanHall. January 15, 2026. Accessed May 28, 2026. https://www.kaufmanhall.com/insights/research-report/hospital-and-health-system-2025-ma-review-uncertainty-transitions-continue