This article was significantly expanded and updated on March 12, 2013.

The Healthcare segment has shown some of the strongest growth in the U.S. foodservice market over the past year and is poised to do the same in 2013, according to the annual market forecast released by Technomic, the leading, Chicago-based foodservice consulting firm.

2012's 5.4 percent and 2013's 5.5 percent growth are  “a result of retail sales, more outpatient services, ambulatory care centers and new facilities,” says Technomic Vice President Joe Pawlak, who notes that demographics also favor continued expansion of outpatient and employee services elements in the future.  “The first boomers turn 70 in 2015—that’s when healthcare needs start to increase.”

Technomic healthcare data

Longer term, even as Pawlak sees foodservice in nursing homes as flat or declining because of Medicaid budget cuts, he says senior living in CCRCs is also set for further expansion. “It’s a segment tied very closely to the general housing market," he says.  

"During the recession, many seniors who might have moved into these facilities couldn’t sell their homes and get their money out of them.” As the economy—and existing home sales—pick up, it should release some pent-up demand. The quality of food and foodservice's ability to contribute to the senior living atmosphere remains an important way these kinds of facilities compete with one another, he adds. 

Healthcare System Consolidation Continues

Meanwhile, consolidation continues, especially in the not-for-profit side of healthcare, as networks acquire community hospitals and larger networks merge for more leverage. 

Recent examples include the proposed “mega-merger” of Detroit-area Beaumont Health and Henry Ford Health in Michigan; that of Michigan-based Trinity Health and Catholic Health East (Michigan-based and Pennsylvania-based); and of Summa Health and Catholic Health Partners  (the largest hospital system in Ohio).

As an example of impact, the Trinity merger (if completed) will reportedly create the third largest not-for-profit health system in the country, comprised of 70 hospitals with 87,000 employees in 21 states.

The reasons for consolidation are well known and usually include strengthened fnancials and balance sheets in the new entities. Administrations are also looking for increased market share in the coming era of Accountable Care as they see a need for more negotiating clout in dealing with government and health insurance company regulations.

Some experts are predicting that this trend will eventually result in 100 or fewer regional healthcare systems (more on the implications of that for foodservice in a minute). Going even further in a recent presentation, Toby Cosgrove, CEO of the Cleveland Clinic, reportedly said he thought there might eventually be as few as 50.