The U.S. population is aging rapidly, and with this demographic shift comes an increased demand for healthcare services. A recent Journal of the American Medical Association (JAMA) study warns that hospital occupancy rates could hit a dangerous 85% threshold by 2032, highlighting the growing strain on the healthcare system.
This forecast reflects a healthcare system already struggling with rising demand, as hospitals currently operate at approximately75% capacity—an 11% increase from pre-pandemic levels. As the number of seniors requiring medical care grows, the strain will extend beyond hospitals and into the broader healthcare infrastructure, with one particularly impacted area being prior authorization (PA) processes.
The increase in healthcare utilization, expanding Medicare Advantage enrollment, and the growing reliance on high-cost specialty drugs is expected to drive a surge in PA requests. Without proactive measures, this could lead to administrative bottlenecks, delays in patient care, and increased provider frustration. This surge will make automation and AI-driven PA solutions more essential than ever.
About the Study
The study, conducted by University of California Los Angeles (UCLA) School of Medicine and published this week in JAMA Network Open, outlines steady growth trends in the average occupancy of the nation’s hospitals. On top of growing occupancy trends, the study also highlighted a 16% reduction in the number of staffed hospital beds, suggesting a growing workforce shortage as well.
The Rising Demand for Prior Authorization
One of the biggest drivers behind the expected growth in prior authorization requests is the increased healthcare utilization among older adults. As seniors account for a larger share of the population, they will require more frequent visits to specialists, advanced imaging, surgeries, and long-term care. Chronic diseases such as diabetes, cardiovascular conditions, and arthritis will become more prevalent, leading to a greater need for medical procedures and specialty medications that often require prior approval from payers.
The rapid expansion of Medicare Advantage (MA) plans is another contributing factor. Today, more than half of Medicare beneficiaries are enrolled in MA plans, and this number continues to grow. Unlike traditional Medicare, Medicare Advantage plans rely heavily on prior authorization for medical services and prescription drugs. As enrollment increases, so will the number of PA requests, placing additional administrative burdens on both payers and providers.
At the same time, the rise of specialty drugs is reshaping the landscape of prior authorization. Many new treatments, including biologics and gene therapies, offer life-changing benefits but come with high price tags. As a result, insurers apply stricter PA requirements to ensure these medications are used appropriately. With more seniors requiring these complex therapies, the volume of prior authorization requests for specialty drugs is expected to climb sharply.
Another challenge is the growing demand for post-acute care services. As hospitalization rates increase, more seniors will require skilled nursing facilities, home healthcare, and rehabilitation services—many of which require prior authorization. Insurers will continue scrutinizing these services to prevent unnecessary inpatient stays and promote cost-effective alternatives. Without efficient PA processes, delays in approval could lead to disruptions in care and extended hospital stays, further straining the healthcare system.
Preparing for the Future of Prior Authorization
The impact of an aging population on prior authorization is inevitable, but the healthcare industry has an opportunity to adapt proactively. As demand for medical services, specialty drugs, and post-acute care rises, payers that invest in AI-powered PA technology will be better positioned to manage this growth efficiently. Solutions like Banjo Health can streamline the approval process, reduce administrative burden, and ensure timely access to care—all while maintaining compliance with evolving regulations.
Banjo Health’s AI-driven prior authorization platform is designed to help payers efficiently manage the growing demand for approvals while staying compliant with evolving regulations. By leveraging proprietary AIand machine learning models, Banjo Health automates PA workflows and accelerates decision-making, ensuring faster approvals for providers and better access to care for patients. With seamless integrations, real-time data processing, and HITRUST r2-certified security, Banjo Health empowers payers to navigate the complexities of an aging population while improving efficiency, compliance, and patient outcomes.
The future of prior authorization will require a balance between cost management and patient-centered care. By embracing automation and regulatory compliance, payers can create a more efficient, transparent, and responsive PA system that meets the needs of an aging population without compromising quality of care. As the healthcare landscape shifts, those who modernize their PA processes today will lead the way in ensuring a smoother, more effective healthcare experience for both providers and patients.
