At the May 2025 McDermott HealthEx conference in Nashville, TN, a clear message emerged: healthcare delivery is shifting fast—and structural reinvention is no longer optional.

With capital constraints, payer pressures, and demographic shifts mounting, health systems are being forced to adapt to a new economic reality. The dominant strategies? Move care to the home, double down on ambulatory access, and embrace operational excellence at every level.

Here are the most important takeaways from the event:

1. The Most Active Transaction Type? Ancillary Joint Ventures

A live poll conducted during the conference asked healthcare leaders what type of transactions they expect to dominate in the next 18 months:

This overwhelming preference reflects the urgency to reduce fixed costs, expand access, and shift volume to low-capital, high-efficiency outpatient models. Rather than buying hospitals, systems are partnering to scale ambulatory surgery centers (ASCs), urgent care, and freestanding EDs that can meet patients closer to home—without breaking the bank.

2. Home-Based Care Is No Longer a Niche—It’s the New Center

Multiple sessions reinforced that home health, home care, and remote monitoring are not emerging trends—they are central to health systems’ survival. CMS is actively scrutinizing outcomes and pushing for greater quality reporting, and home-based services are expanding due to:

• Technology-driven efficiency in nursing and remote support
• Fiscal intermediary models, where family members can be paid caregivers
• Post-pandemic consumer preference for receiving care at home

For health systems, this shift presents both a challenge and an opportunity: How do you scale home-based services while maintaining quality, compliance, and reimbursement?

3. Health Systems Must Do More With Less—Collaborate or Collapse

Mark Whelan captured it well during the conference:

From contract therapy companies to in-home care startups, partnerships are now the essential lever to unlock scale without heavy capital deployment.

Health systems must:

• Understand what’s core vs. non-core
• Break down internal silos that slow transformation
• Invest in partnerships that extend their care continuum, especially into ambulatory and home-based settings

4. MA Growth and the Risk vs. Tech Debate

Medicare Advantage continues to surge, driving more risk-based contracts, value-based care (VBC) experiments, and utilization shifts into ASCs and primary care. But leaders were quick to point out that risk alone isn’t the magic bullet.

Instead, there’s a growing recognition that tech-enabled models, with a focus on member engagement and integrated workflows, may be the true unlock for sustainable performance. While VBC results have been mixed, some organizations are showing strong performance when they blend data, integration, and trust-building into their care strategy.

5. What Is the #1 Competitive Advantage Today?

Another poll asked attendees what enables health systems to weather today’s challenges. The answers point to a mindset shift:

Partnerships and nimbleness are the top enablers. Talent, culture, and tech follow—but they depend on leadership’s ability to adapt quickly and build bridges across the ecosystem.

6. The Outpatient (and Post-Acute) Wave Is Accelerating

McKinsey’s broader market outlook supports what was discussed at McDermott:

In short:

• Volume is growing across all sites of care, but the highest growth is in ambulatory, outpatient, and home-based models.
• Outpatient settings (e.g., ASCs, urgent care, retail clinics) are gaining favor due to payer incentives and lower costs.
• Physician offices are expanding services by integrating diagnostics, therapy, and procedures.
• Demographic shifts are fueling utilization, especially among aging Medicare populations.

This macro shift requires real infrastructure: tech-enabled scheduling, mobile workforce ops, data capture, and revenue integrity in decentralized environments.

7. Operational Rigor Is the Margin Strategy

Fee-for-service isn’t going away overnight—but margins are under siege. Health systems need to pair innovation with operational excellence: process improvement, centralized services, scalable clinical support, and smart M&A to gain efficiencies.

Strategies that stood out:

• Standardize non-core services to reduce cost variability
• Automate where possible, especially in revenue cycle, documentation, and scheduling
• Use M&A as a margin play, not just a growth tactic

Final Word: Reinvent or Retreat

Health systems that continue to optimize legacy models may find themselves increasingly irrelevant. The leaders at the McDermott conference weren’t just suggesting tweaks—they were calling for a complete operating system reboot. Success over the next 18 months will require:

That’s not just a mission. It’s a margin strategy.