McKinsey on Healthcare
Dr. Rupal Malani on the way forward for clinical-care organizations
10 Jul 2025
Chapter 1: What are the current challenges facing clinical-care organizations?
I think we can all agree that the degree of uncertainty and the pace of change at this moment is truly unprecedented. Moreover, the cross-functional nature of addressing those fronts also feels meaningfully different.
Welcome. You're listening to the McKinsey on Healthcare podcast. If you're looking for insights into the issues that matter most to healthcare right now, you're in the right place. Explore wide-ranging conversations with leaders, changemakers, innovators, and professionals who are at the heart of healthcare today. I'm Corita Anderson, Senior Editor for Healthcare at McKinsey, based in New York.
Let's get started. Today I'm here with Rupal Malani, a senior partner in McKinsey's Cleveland office. Rupal leads McKinsey's work with health systems in the healthcare practice in North America. She serves national, regional, and academic medical providers across a broad range of strategic, operational, and organizational topics.
Rupal has extensive experience supporting health systems in achieving improvements in workforce productivity, external spending and clinical operations. Hi, Rupa. Great to have you on the podcast today. Hi, Karida. So good to see you and talk to you as always. So, Rupa, let's talk about some specifics for the year ahead and the next few years.
What has been top of mind for you and your clients as you start out 2025? It's a great question.
You know, perennially, when I talk to my clients, I would say quality and access are absolutely top of mind. And that's been the case for, you know, 15 plus years that I've been doing this role in the firm and the nearly 20 that I've been in health care. This year, I think there are a few topics where the emerging thinking is coalescing around the near-term impacts.
And those are around site neutrality, tariffs and their impact on the supply chain, acceleration in value-based care, and drug pricing. Agnostic of that, though, I think if I just kind of reflect on the last 18 months of conversations, providers, CEOs, really what's been their main focus has been growth and expanding access.
The key, though, there is to do it in a margin accretive way so that they can enable investment in patient care and for academic medical centers also in training and research.
As you know, Corita, but maybe for some listeners of the podcast that may not be as aware, health system economics are marked by cross-subsidization, meaning the business relies on segments that generate higher margins to ensure they can continue providing care for the segments that don't.
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Chapter 2: How are M&A and AI being utilized to improve healthcare operations?
And frankly, health systems are eyeing pre-acute segments as well as a way to capture and engage patients earlier in their care journeys at lower cost, more easily accessible sites of care. The EBITDA margins in these segments, on average, again, it varies by segment, but on average is roughly 10% to 12%.
Now, a little bit to your question, the space has challenges, to be sure, and those challenges vary certainly by segment. There are labor shortages that are similar to those faced by health systems more broadly, and certainly caregiver churn and turnover rates in some spots can be as high as 65%.
It's, you know, there are challenges to be sure in this space, but an area of interest for stakeholders across the board within health care, I would say.
How would you advise health systems go about accelerating their pre and post acute care initiatives?
My clients and providers that we see across the health system landscape that are most successful are incredibly focused in both their strategy as well as in execution.
They're focused in strategy, meaning they're very specific about the segments that they want to play in and exactly what they want to deliver, meaning whether that's number of ASCs and types of specialties, whether that's the amount of kind of margin headroom that they want to create, again, for investment back into core patient care. They're also very focused then in execution.
There's really an increasing acknowledgement amongst health systems that the capabilities required to be successful are fundamentally different in the pre-acute space. And so those capabilities are some of the capabilities that I was talking about earlier with M&A that health systems are really needing to invest in to meet the expectations of their consumers.
And so oftentimes providers are recognizing that partnership is actually the fastest way to deliver these capabilities in the market. And partners can help them decide where to put the facility, how to lay it out, what specialty should go in it, and of course, how to run it efficiently and deliver those digital expectations that really allow them to put patients first.
And that, honestly, I would say is maybe something that's a little bit different than if I think back to 10 years ago, or maybe even pre-pandemic, that acknowledgement and self-reflection and willingness to partner on something that they would feel so close to patient care and their core competency is something that I've really seen as a pivot in the last handful of years.
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Chapter 3: What role does revenue diversification play in healthcare growth?
But sometimes we see that organizations are trying to completely perfect that foundation before they get going with use cases. We find that if you fix those data gaps in parallel to pursuing valuable use cases, then you start to get that flywheel of impact going. If you sequence, it's very hard to get going.
Maybe the last thing I'll just say is that building a scaling engine is both an operations and a funding problem, right? Because once you've shown value against a minimum unit and you have a change in implementation plan, you can roll it out. If this seems costly, it is because it is. Adoption and scaling takes about $1 to $2 for every dollar of development.
But without that investment in adoption and scaling, you'll never capture the full value. And so I think for executives knowing that upfront, right, that there's a development value and then there's kind of an adoption rollout change management value as well. And that's the full investment to compare to the return. I think that would help
mitigate some of the risks of stopping kind of midway through the journey.
And also help with just the strategy and plan overall, if you can have a fuller perspective on the investment needed. Absolutely. Rupal, you have covered a lot of ground today. Clearly, there are a lot of considerations at play. You know, some disparate, some are overlapping. Any final thoughts before we close out?
Yeah.
Yeah, there are indeed multiple fronts, as you point out, that executives need to effectively manage in healthcare. I think we can all agree that the degree of uncertainty and the pace of change at this moment is truly unprecedented. Moreover, the cross-functional nature of addressing those fronts also feels meaningfully different.
I just finished reading a book that I really enjoy and recommend you read, Karita. It's called From Strength to Strength. And I don't want to give away the punchline, but one of the key learnings is A bit in the vein of what got you here won't get you there.
And so I think as CEOs think about how they can get the right team together, the right set of capabilities, it's not simply anymore about getting the best talent in the seats, but how you get that team to work together and make decisions.
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