A new report from the MarketsandMarkets research firm with the clunky, hyper-academic title of “US Healthcare/Hospital Food Services Market by Type (Patient Dining (Clinical Nutrition, Regular Diet), Retail Services, Vending, Shops), Settings (Acute Hospitals, ASC, Long-term Care, Nursing and Rehabilitation Centers, Non-acute)-Forecast to 2026" (available here) projects the U.S. Healthcare Food Services Market to reach $22.8 billion by 2026, up from the $13.2 billion it posted in 2021, which is a nearly 73% increase with a compounded annual growth rate of 11.5% during the forecast period. The report appears geared to commercial providers (i.e., management companies) operating in this market but does offer an insightful look at what can be expected in this major onsite dining market in the next half decade.
The report attributes the substantial expansion it expects to a number of factors, among them…
• the increasing prevalence of and awareness about chronic diseases,
• a growing focus on improved patient food experience,
• the availability of customized food options based on diet requirements,
• hospital restrictions for outside food items, and
• the cost-effectiveness of foodservice outsourcing.
Putting some constraints on even greater growth are factors like the reluctance among out-patients to pay for food services, pricing challenges and staff shortages, it adds.
Over the past two years, the report notes that the hospital food service industry has been negatively impacted by the pandemic due to a reduction in the patient pool caused by the postponement of elective surgeries in early 2020 and fewer outpatient visits for consultations. Meanwhile, the increasing requirements for cleanliness and disinfection to reduce the spread of the virus increased operational costs for hospitals, leading to the development of creative solutions such as the increased use of pre-packaged grab-and-go options, the taking of advance to-go orders to reduce long lines and bottlenecks during peak rush times and the transforming of self-serve stations to an assembly-line format where dining staff handle each step in the process to help consumers customize their meals while minimizing the risk for cross-contamination.
Also, due to the disruptions in the supply chain, many hospitals narrowed their food options and undertook a more need-based approach, something that helped hospital foodservice operations sustain retail sales while becoming more efficient in purchasing and inventory.
Other impacts of the pandemic on healthcare foodservice operations included…
• more stress on nursing staff as they had to deliver meals to patients when foodservice staff was barred from wards with COVID-19 patients;
• hospitals that had been using tablets to take patient meal orders were forced to change to paper menus that could be discarded after use to minimize the risk of spreading the virus, though some created meal-ordering applications for mobile devices or used phones to call patients for their meal orders without any face-to-face interactions;
• all COVID-19 hospitals were concerned about the safety of kitchen staff during the dishwashing process, and to overcome this, some replaced permanent ware with disposables, resulting in increased plastic waste.
Among other findings…
• The report forecasts that while patient dining accounted for the largest share of the healthcare foodservice market in 2020, it is the retail end that it expects to post the highest growth rate over the next five years, driven by the increasing availability of various healthier food options with improved quality and taste, ease of accessibility to nutritious meals for hospital staff and visitors, and the growing patient flow in healthcare facilities.
• On the patient dining side, regular diets in 2020 accounted for the largest share as opposed to special or restricted diets, but it is the latter that is expected to grow faster going forward, driven by increasing awareness of the benefits of customized nutrition, the growing availability of customized food products, the expanding prevalence of chronic and metabolic diseases and general increases in healthcare spending.
• The acute care (as opposed to post-acute care and non-acute care) segment will continue to hold the largest share in the U.S. healthcare food services market and post the highest growth rate, attributable to the high number of acute hospitals and their growing number of admissions, the treatment of a large patient pool in these facilities and the growing adoption of foodservice outsourcing by hospitals to improve patient experience and reduce costs.
• Among post-acute care facilities, the skilled nursing segment accounted for the largest share in 2020 due to the high number of such facilities and their increasing adoption of food outsourcing services. Other post-acute care segments include long-term acute facilities, in-patient rehabilitation hospitals and psychiatric hospitals.
• In the non-acute-care area, the physician offices/clinics segment accounted for the largest share in 2020 because of the increasing adoption of retail services in these settings.