Gas, food and rent costs have been climbing upward in the last six months due to the highest levels of inflation since the 1970s — and healthcare costs may soon follow, according to an analysis from McKinsey & Company.

The data pointed to an additional $370 billion above baseline in healthcare costs by 2027 – ultimately leading to an increase of $600 billion in national health expenditures (NHE) within that time frame. Consumers, employers and the government would all be impacted by the increase.

The impact of inflation hasn’t yet fully hit healthcare, as a recent Kaiser Family Foundation study found. But according to the McKinsey report, the U.S. will be feeling the effects soon enough: NHE is expected to grow at about 6.8% throughout 2027, as opposed to the 5.5% originally estimated without inflation.

Factors feeding into that increase include workforce spending and higher labor costs, as well as the ongoing effects of COVID-19.

In the last three years, supply input costs have risen 15% to 25%, according to the analysis. There’s also a labor shortage in the healthcare industry, especially in nursing. The U.S. may face a shortage of up to 450,000 nurses and 80,000 physicians by 2025 due to rising demand for care.

While the impact of COVID-19 has abated to some extent, even an endemic virus will continue to burden the healthcare system, with an estimated 100 million cases per year. That could lead to an extra $222 billion in healthcare spending by 2027, the analysis posited. That sum includes hospitalizations, treatment of long COVID and continued testing and vaccinations, not to mention increased demand for mental health and behavioral health services.

In his analysis, McKinsey senior partner Shubham Singhal argued that healthcare leaders can act now to lessen potential cost increases.

“Healthcare leaders, especially those in the private sector, have an opportunity to step up and invest in innovation for the betterment of healthcare,” Singhal wrote. “Implementing a well-known set of interventions — in care delivery transformation, administrative simplification, clinical productivity and technology enablement — could generate a collective opportunity of more than $1 trillion and potentially up to $1.5 trillion through 2027.”

Care delivery is becoming increasingly personalized and the shift toward value-based care continues unabated. But healthcare organizations could also benefit from investments in clinical productivity, which represent 75% of healthcare costs, the analysis said.

“Leaders can improve clinical productivity in the short-term by integrating several small solutions into a single platform,” Singhal wrote, pointing to planning tools in acute-care settings and asset optimization tools in surgical centers.

Healthcare organizations could also hone in on certain processes that would make them more resistant to economic downturns, like faster decision-making and a “disciplined approach to growth,” which involves a sustained investment in “areas that will drive growth or provide the greatest return,” he added.

In July, the U.S. inflation rate was at 8.5%, slightly lower than the high of 9.1% in June. June’s peak marked the highest rate of inflation since 1981.