As healthcare costs continue to rise and innovation breaks new barriers through AI, robotics, 3D printing and other technologies, boards and C-suites use new approaches to govern risks, manage costs and improve outcomes.
What’s new in healthcare innovation?
The past year produced healthcare innovations that previously seemed unimaginable. For example:
- Personalized medicine: Baby KJ at Children’s Hospital of Philadelphia is the world’s first patient treated with a new form of personalized gene editing therapy that corrects disease-causing variants in the human genome. Simultaneously, healthcare systems are using digital twin virtual models of patients’ specific biology to test their response to drugs before they are prescribed
- Advances in biomedical engineering: Scientists have developed and tested a method to create universal kidneys to match any blood type, potentially resolving the critical shortage of donor kidneys
- Game-changing 3D printing: Leading-edge 3D-systems' multi-material printers enable rapid, often onsite production of medical supplies such as asthma inhalers, dental and brain models, prosthetics and everything in between. Several manufacturers are experimenting with 3D-printend pharmaceuticals, with U.S. clinical trials becoming a reality. Academic research institutions are developing 3D bioprinting of living tissues and organs, such as the University of Basel‘s human bone marrow model for cancer and drug research
- Agentic AI and care management: AI agents now provide autonomous care management for hospitals, asking triage questions, routing patients and adjusting staffing levels based on predictive analytics while tracking infections and disease trends, and managing follow-up care without human intervention. They also provide ambient intelligence for clinical notes, freeing clinicians to spend more time on patient interaction
- AI-enhanced diagnostics, screening, wearables and at-home testing: An AI-integrated stethoscope screens for heart failure, atrial fibrillation (aFib) and valve disease in just 15 seconds. AI platforms generate real-time 3D reconstructions for advanced stroke imaging. AI models detect early-stage cancers up to 18 months earlier than conventional methods. The first Food and Drug Administration-authorized at-home cervical cancer screening device allows women to self-collect samples and get results with 96% accuracy. New eye drops provide a non-invasive alternative to reading glasses and improve age-related farsightedness for up to 10 hours
- AI health data. Agentic AI and productivity stacks allow autonomous agents to handle tasks like medical billing, patient triage and care navigation. Multimodal data harmonization across genomics, imaging, clinical notes and wearables creates unified, high-quality data streams for personalized medicine. Quantum machine learning enables early identification of safety issues in drug candidates. Regulatory sandboxes use synthetic clinical data to allow startups and hospitals to test AI models and simulate trials without breaching privacy laws. The U.S. TEFCA network scaled from 10 million records in early 2025 to nearly 500 million by early 2026
What’s up with healthcare costs?
Healthcare costs continued to increase over the past year, driven by higher labor, technology and pharmaceutical (not only GLP-1 drug) expenses, as well as increased health system utilization. Healthcare remains around 18% to 20% of U.S. GDP, and our 2025 Best Practices in Healthcare Survey projects average employer health insurance premium increases of 9.1% in 2026.
Many employers expect double-digit annual increases in healthcare costs over the next three years. According to KFF, a typical U.S. family health insurance plan currently costs $26,993, of which employers generally pay about 80%. Aggregated deductibles have risen to $5,092. Increasing health insurance costs have eroded compensation increases and retirement savings.
Fifty-one percent of employers are exceeding healthcare budgets, leading to unprecedented financial strain. Seventy-three percent of companies feel more cost pressure today than at any point in the past decade. Major federal policy shifts in the U.S. could disrupt insurance markets and payer economics. The Centers for Medicare and Medicaid Services Office of the Actuary estimates that private health insurance will cost about $1.2 trillion in 2026 and is on track to cost $2.2 trillion in 2032. Still, 88% of employers expect to offer employer-sponsored health insurance in a decade, and 36% of employees report health benefits represent a top reason they stay at their current jobs.
What can management do?
Effective leaders engage in three sets of actions to address healthcare cost issues while improving patient outcomes:
- Balance healthcare spend. Shift annual healthcare investment to high-value, high-return employee-focused benefits. Use data-driven insights to optimize spend, reassess plan design and allocate investments
- De-risk healthcare plans. Identify key risks associated with plans and assess mitigation strategies, such as financing, clinical condition management, healthcare delivery and compliance. Adopt alternative plan designs, captives and other risk management strategies to control cost volatility. Implement risk mitigation and transfer strategies, including insurance, where feasible
- Optimize the healthcare experience. According to our U.S. 2026 Benefits Trends Survey, 63% of employers are focused on reallocating spend to get more value from current investments and 91% plan to further emphasize value-driven and employee-focused benefits strategies over compliance-based approaches
What can boards do?
Boards have become increasingly focused on corporate healthcare in recent years, given its material expense and strategic impact. Effective boards work with management to ensure that health plans support corporate strategy and fulfill the company’s fiduciary obligations.
Recent collaboration with WTW’s Dr. Jeff Levin-Scherz and Don Delves indicates boards can strengthen company competitiveness through diligent oversight:
- Educate directors about the impact of healthcare expenses on employees and the company
- Establish regular cadence of management team reporting on medical quality, costs and trends, as well as program utilization and engagement
- Review healthcare procurements to ensure the highest value and accountability from medical plans, pharmacy benefit managers and other vendors
- Insist on strategic plans to address the challenge of healthcare costs aligned with fiduciary responsibilities, business strategy, objectives and culture
- Ask questions such as: When was the last time the company conducted a procurement for a health plan carrier and pharmacy benefit manager? Are all intermediary fees clearly contractually outlined? Are they reported separately from medical claims? Are vendor-reported cost savings audited independently? Do contracts include performance guarantees and are these audited regularly? Is management regularly tracking plan member engagement and satisfaction with healthcare programs?
- Identify and track material healthcare metrics such as participation (e.g., portion of full-time employees covered; portion of spouses and dependents enrolled in company coverage; actuarial value of the plan, which is the portion of total medical claims costs covered by the plan), utilization (e.g., hospital days per thousand, emergency department visits per thousand, low-risk Cesarean section rate), and spending (e.g., medical-surgical spending, drug spending, high-cost claimant spending)
While technology and innovation can increase healthcare costs in the short run, effective governance can improve employee and company outcomes, helping mitigate future cost increases.
A version of this article originally appeared on Forbes on March 30, 2026.
