Skip to content

Blog

Healthcare Sector Deep Dive: Bold Insights into Industry Challenges and Opportunities

Share on X (opens in a new window) Share on Facebook (opens in a new window) Share on LinkedIn (opens in a new window)

Summary 

The February 2025 “Healthcare Sector Deep Dive” webinar, hosted by Kyle Owusu (Senior Credit Analyst), Gaurav Sharma (Distressed Debt Reporter), and Anton Mozgovoi (Corporate Credit Analyst) of Octus, brings a sharp analysis of evolving dynamics in the healthcare industry. Covering hospitals, healthcare staffing, and revenue cycle management, the team frames the risks and opportunities emerging in a crucial sector impacted by rising costs, labor pressures, and reimbursement challenges. 

Here are the key takeaways: 

1. Healthcare Staffing Challenges:

  • Workforce pressures drove contract labor costs to peak in 2022. With 20% of healthcare workers leaving during the pandemic, travel nurse wages jumped 10%. However, retention-focused efforts by healthcare providers stabilized wages in 2024. 
  • Healthcare staffing companies like AMN Healthcare witnessed declining EBITDA as margins compressed. Despite 40% EBITDA drops in 2024, AMN appears structurally sound with a 3.1x net leverage ratio and adequate liquidity. 

2. Medicare Advantage Reimbursements:

  • CMS announced a 0.16% decline in 2025 reimbursement benchmarks, compounding pressure on healthcare providers. Lower risk adjustments and reduced star-rating payments further shrink financial margins.

3. Revenue Cycle Management Growth:

  • The administrative burden for healthcare providers, worsened by claim denials and complex documentation, has created significant market opportunities for revenue cycle management companies. High-tech, end-to-end integrated solutions are in demand, supported by increased private equity activity in the space.

4. Hospital Financial Distress:

  • Rising fixed costs, particularly lease and debt obligations, led to Chapter 11 filings for healthcare operators like Steward and Prospect. These cases highlight the vulnerability of operators reliant on Medicare/Medicaid reimbursements and overleveraged financial structures.

5. Emerging Opportunities:

  • Long-term prospects include improved margins through technology adoption, international nurse recruitment, and consolidation within the healthcare sector. Organic growth is likely fueled by patient volume increases, while M&A activity presents inorganic avenues to strengthen offerings.

This webinar delivers actionable insights into how financial strategies and structural adjustments shape both operational stability and future growth opportunities for industry players. Explore these bold, data-driven analyses to stay informed about the healthcare industry’s trajectory. 

Watch the full webinar recording.

This publication has been prepared by Octus, Inc. or one of its affiliates (collectively, "Octus") and is being provided to the recipient in connection with a subscription to one or more Octus products. Recipient’s use of the Octus platform is subject to Octus Terms of Use or the user agreement pursuant to which the recipient has access to the platform (the “Applicable Terms”). The recipient of this publication may not redistribute or republish any portion of the information contained herein other than with Octus express written consent or in accordance with the Applicable Terms. The information in this publication is for general informational purposes only and should not be construed as legal, investment, accounting or other professional advice on any subject matter or as a substitute for such advice. The recipient of this publication must comply with all applicable laws, including laws regarding the purchase and sale of securities. Octus obtains information from a wide variety of sources, which it believes to be reliable, but Octus does not make any representation, warranty, or certification as to the materiality or public availability of the information in this publication or that such information is accurate, complete, comprehensive or fit for a particular purpose. Recipients must make their own decisions about investment strategies or securities mentioned in this publication. Octus and its officers, directors, partners and employees expressly disclaim all liability relating to or arising from actions taken or not taken based on any or all of the information contained in this publication. © 2025 Octus. All rights reserved. Octus(TM) and the Octus logo are trademarks of Octus Intelligence, Inc.