2025 Sg2 Impact of Change® Release: Service Line Insights to Differentiate and Innovate

The recent release of Sg2’s 2025 10-year Impact of Change® National Demand Forecast is a culmination of analysis encompassing numerous factors affecting health care utilization. These factors range from the epidemiological impacts driving chronic disease prevalence to policy changes influencing access and reimbursement to the latest innovations in AI, medical devices and pharmacy. Sg2 anticipates modest inpatient discharge growth at 5% in 10 years, while aging population and rising complexity of patients contributes to a 10% growth in total days during that time. In fact, the population aged 65 years or older is expected to grow 32% over the next decade, challenging providers to offer services that are tailored to the unique and complex needs of this patient cohort.

We expect 18% growth overall across the System of CARE, with outpatient surgery estimated to rise 20%. At a high level, these projections suggest opportunities for smart growth for savvy hospitals and health systems across the US—but the devil is always in the details, and specific opportunities are best evaluated and won at the service line level.

High-profile drivers of change, such as GLP-1s, AI, gene therapies and robotics, require health systems to consider anew how, where and for whom care is being delivered. Service line leaders must see beyond and through popular trends and find the strategies that offer a balanced approach to embracing and enduring change. Successful programs are moving away from one-size-fits-all program design; instead, they are looking to tailor programs to meet the unique needs of different population groups in their market and making cross–service line connections for those patients to improve care delivery and outcomes.

Surgery

Innovation and care redesign continue to evolve clinical areas within surgery as medical, demographic, environmental and technological forces reshape future demand. Expanded use of GLP-1 drugs will reduce surgical volumes for conditions with obesity-related risk factors, such as hernia and wound care, while increasing demand for procedures like cholecystectomy due to the medication’s side effects. Meanwhile, medical management is gaining traction for conditions such as appendicitis, placing additional downward pressure on some surgical volumes. The outpatient shift for this service line is quite mature, particularly for key procedures like hernia repair and cholecystectomy. Ongoing growth is expected across ophthalmology, ENT (ear, nose and throat) and urology, driven by an aging population and, in the case of ophthalmology, by climate-related shifts in disease burden. Robotic- assisted surgery will further redefine how and where surgery is performed, fueling strategic competition for surgical volume, workforce and market share.

Note: Analysis excludes 0–17 age group. Surgery overall forecast reflects all service lines included in the surgery service line group. Sources: Impact of Change®, 2025; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP) 2021. Agency for Healthcare Research and Quality, Rockville, MD; Proprietary Sg2 All-Payer Claims Data Set, 2023; The following 2023 CMS Limited Data Sets (LDS): Carrier, Denominator, Home Health Agency, Hospice, Outpatient, Skilled Nursing Facility; Claritas Pop-Facts®, 2025; Sg2 Analysis, 2025.

Behavioral Health

Strong demand for behavioral health (BH) services continues across the care continuum, especially among the patient population aged 65 or older. As demand, acuity and complexity increase within this population, pressure is mounting to manage patient care more effectively across the continuum and driving greater use of intensive services such as intensive outpatient programs, partial hospitalization and TMS as well as psychotherapy and E&M visits. This demand can also be found across the hospital and health system as the prevalence of patients with comorbid behavioral health conditions also increases. Health systems must take an integrated approach to providing care, leveraging team-based care models and digital solutions like AI to expand access for behavioral health patients and combat workforce shortages. The currently uncertain regulatory and reimbursement landscape will further highlight the need for such an approach.

Note: Analysis excludes 0–17 age group. Behavioral health includes behavioral health service line and Poisonings—Commonly Abused Drugs CARE Family. Sources: Impact of Change®, 2025; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP) 2021. Agency for Healthcare Research and Quality, Rockville, MD; Proprietary Sg2 All-Payer Claims Data Set, 2023; The following 2023 CMS Limited Data Sets (LDS): Carrier, Denominator, Home Health Agency, Hospice, Outpatient, Skilled Nursing Facility; Claritas Pop-Facts®, 2025; Sg2 Analysis, 2025.

Orthopedics and Spine

The shift of orthopedics procedures to outpatient status and ambulatory sites has advanced quickly in many areas across the country, amplifying the tussle between hospital-based and ambulatory services. Market-specific dynamics and innovation adoption (eg, ortho robotics) further complicate site-of-care shift and growth in orthopedics; their influence is being seen in the form of workforce constraints, evolving physician alignment, inflation, payer restrictions, Certificate of Need and, most recently, CMS’s new Transforming Episode Accountability Model. Recognizing the programmatic importance of preprocedure and postprocedure services through PT or OT will help identify growth opportunities and point to a vital access point that drives patient loyalty. To remain relevant, programs will need to strengthen their value propositions with physicians, payers, employers and consumers.

Spine services are experiencing an increase in demand, even as they manage the outpatient and ambulatory shift for key procedures. Adoption of innovations such as computer assisted surgery and motion preservation techniques will enable program differentiation but will require significant financial investment and provider training.

Sources: Impact of Change®, 2025; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP) 2021. Agency for Healthcare Research and Quality, Rockville, MD; Proprietary Sg2 All-Payer Claims Data Set, 2023; The following 2023 CMS Limited Data Sets (LDS): Carrier, Denominator, Home Health Agency, Hospice, Outpatient, Skilled Nursing Facility; Claritas Pop-Facts®, 2025; Sg2 Analysis, 2025.

Contact Us for More Service Line Insights

Sg2’s service line teams and thought leaders can work with you to bring these updated projections to life for your organization and your market. Contact us to learn more.