Is foreign expansion the answer for US hospitals?

As US growth slows, hospitals are looking to expand overseas, but success depends on adapting to local markets, cultures and care models.

In brief

• Overseas expansion can unlock growth and diversification for US hospitals as domestic growth slows and global demand rises.
• Brand alone will not travel. Providers need a strategy that fits the local culture, regulations, payer dynamics and patient expectations.
• Hospitals can win by picking a model that balances return, control and risk with organizational strengths and strong local partnerships.

When a major US hospital opened a new facility in London a few years ago, leaders were surprised to find that locals cared far more about ease of access than the brand name. The culprit was admissions paperwork that is common in the US but was a barrier for patients seeking private alternatives to England’s National Health Service. The officials quickly rewrote the procedures to fit the market better.

US healthcare providers expanding abroad in recent years have had to learn sometimes painful lessons like this across a range of experiences. In other cases:

US hospitals are increasingly looking to grow through overseas expansion, for good reason. Urged by a strong push from challenging economics at home and an equal pull from growing markets and smoother pathways abroad, US health providers are finding international investment offers a compelling path to growth, diversification and resilience. Hospital market growth rates are projected to decline in North America from an average of 5% over 2019–2024 to 3% during 2024–2029, while growth rates in Asia Pacific, Africa and the Middle East are forecast to grow by rates from 6% to 9% in the same period. (Figure 1) 

Figure 1

More than 10 leading health care providers have had overseas facilities for years, in Europe, the Middle East and Asia, and more are showing signs of interest. (Figure 2) It can be a rewarding road, as organizations from Johns Hopkins to the Cleveland Clinic have learned. It is also one lined with plentiful risks like those listed above, from small misunderstandings to major missteps, spanning areas from regulations to billing to doctor-patient confidentiality rules and customs. 

Figure 2

By embracing a disciplined, evidence-based approach to market selection and execution, not only large organizations but also small and medium-sized providers can unlock new opportunities, deliver world-class care across borders, and position themselves to make a sustainable impact in a dynamic global macro environment.

Despite complexity, the lure of foreign markets

International expansion presents very different challenges for hospitals, compared to those faced in other industries. Normally the most local of businesses, successful hospitals are highly attuned to local values, regulatory oversight, public welfare and mission; they are responsive to multiple constituencies — doctors, nurses, patients, administrators, regulators — each with its own culturally influenced needs and expectations.

Despite the high hurdles, US health systems are driven by financial and regulatory challenges that are slowing growth in the US market, especially for nonprofit and academic medical centers that depend on federal funding.

The attraction is partly economic and partly a matter of mission for many hospitals. Overseas markets, especially in Asia, the Middle East and Africa, are experiencing rising demand for advanced care, fueled by growing populations and the emergence of larger middle classes. There is greater readiness among potential partners for joint ventures and risk-sharing. Global recognition of US healthcare innovation and regulatory changes in many places are opening doors to foreign ownership.

Hospital systems in emerging regions consistently achieve strong revenue growth and high margins significantly exceeding US standards, despite varied regulatory and payer landscapes.

Potential benefits accessible to US entrants who select appropriate markets and operational strategies include:

• Attractive revenue growth. International providers routinely deliver high single-digit to double-digit top-line growth, driven by expanding demand, rising acuity and growing middle-market purchasing power. 
• Consistent EBITDA performance. Leading systems in emerging markets often attain 20%–40% EBITDA margins, supported by disciplined cost structures, scalable clinical pathways and favorable economics. 
• Superior cash-flow conversion. High margins, combined with controlled capital expenditure and efficient payer mechanisms, lead to strong, dependable cash flow, facilitating reinvestment, platform expansion and balance-sheet resilience. 
• Diversified earnings. Outside the US, revenue generated from international markets provides protection against domestic reimbursement challenges, rising labor costs and regulatory unpredictability. 

Private equity firms are finding the economics attractive. Since 2023, PEs have completed more than 90 transactions, worth over $15 billion, mainly in care delivery platforms, specialty services and outpatient models. Investors see opportunities to drive consolidation, enhance performance and capitalize on rising demand for cost-efficient care.

Capital-light business models, such as representative offices or consulting arrangements, allow US hospitals to enter new markets with minimal upfront investment, reducing risk while building experience, seeding demand and testing quality oversight models. These models can serve as entry steps that pave the way for direct investment later.

Collaborations with organizations in emerging markets can produce benefits for both sides, especially when there is a good fit between the capabilities of the US organization, the entry model, and local market conditions. A partnership between a US and local institution may mean that each party can share clinical best practices, exploration of innovative technologies and access to extensive research networks.

Five approaches to international market entry

US providers typically choose from among five approaches when investing in international markets. Each model balances factors such as potential return, capital intensity and ease of execution. The essential challenge from the outset is to develop a strategy based on organizational mission and strengths, risk tolerance, objectives, and available capital to invest.

Direct ownership of hospitals abroad offers the greatest control and brand integrity, but it requires substantial investment and time. Branding and affiliation agreements offer faster, lower-capital entry but depend on effective oversight and shared economic arrangements. Consulting and patient liaison services are fast, capital-light options for seeding demand and building market knowledge before scaling.

Success depends on aligning market entry strategy with organizational competencies, maintaining regulatory compliance, adapting to local cultures, managing risk and investing in long-term capability development.

Where to begin? Key lessons for successful global expansion

Providers that see potential benefits and new growth pathways in foreign expansion undoubtedly face big decisions getting started. Fortunately, numerous lessons can be drawn — and, consequently, risks lowered and pitfalls avoided — from the experiences of hospitals that have invested in foreign locations.

The following lessons from our experience with clients highlight essential approaches for navigating international markets:

• Understand local policy and macroeconomic factors and adapt. Government stability, policy and regulatory enforcement vary widely across markets. Failure to adjust the operating model accordingly can break what is otherwise a sound market opportunity.
• Lead with a clear patient-value proposition. Be explicit about the problem you solve as a new entrant (for example, quality, access, service range, speed).
• Master the local payer dynamics. Go beyond out-of-pocket spending and build reimbursement and billing models that match government, insurer and corporate payer requirements. 
• Recruit top-tier clinicians for credibility. Reputation and outcomes drive downstream hiring, referrals and patient trust.
• Design a robust partnership agreement. Structure roles, incentives, compliance controls and exit protections to manage local execution risk, including transparency, procurement integrity and brand protection.

Mapping return, capital and complexity

The other major decision is to select a target geography. Providers must choose markets with proven success to boost growth speed, reduce risk and enhance long-term outcomes. Large areas remain underserved by US providers. It’s important that leaders prioritize countries where demand, economics, policy and partnership opportunities are strong. Choosing the wrong market can tie up resources and expose the organization to regulatory and operational risks.

Attractive markets are those with growing, underserved demand for US-quality care, achievable entry pathways, readiness for collaboration among local stakeholders and a balance of strategic opportunity with acceptable risk.

Providers can benefit from a transparent scorecard that objectively compares geographies by translating assumptions into measurable criteria. It clarifies trade-offs, ties choices to leadership thresholds, and provides actionable criteria for capital allocation decisions. This approach replaces anecdotal enthusiasm with evidence-based evaluation, supporting repeatable and disciplined decision-making.

Shaping the future of international healthcare

Importantly, the potential for international growth is not reserved solely for nationally recognized brands or US honor roll health systems. There are meaningful opportunities across the continuum for a wide range of providers to become early movers and shape the future of global healthcare delivery. The future belongs to those who act boldly, adapt thoughtfully and remain steadfast in their commitment to advancing the highest-quality outcomes.

We would also like to thank our colleagues James Langford, Kate Kormushoff, Matthew Weiss, Ryan Anstine, Owen Dillon and Lance Keiffer S Sy Lato who contributed to the creation of this article.