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Federated learning (FL) is promoted as a privacy-preserving method for training machine learning models across healthcare institutions without sharing patient data, with growing use in medical imaging, electronic health records, and rare disease research. This critical review examines FL studies from 2017–2024, focusing on privacy guarantees, statistical heterogeneity, communication efficiency, and real-world clinical deployment. A structured search of PubMed, IEEE Xplore, arXiv, and Google Scholar was conducted using relevant FL and healthcare terms, including studies addressing privacy, heterogeneity, communication, or deployment. Reported privacy guarantees are often overstated, with most studies relying on FedAvg without differential privacy. Statistical heterogeneity in non-IID settings remains largely unresolved. Fewer than 5% of studies report real-world deployment, typically at very small scale. A significant gap exists between FL research and clinical application. Current methods fall short of healthcare-grade privacy and real-world constraints, limiting readiness for high-stakes clinical use.

Hospitals lack an objective and privacy-preserving mechanism to compare operational performance against peer institutions. This limits shared learning around capacity, discharge flow, staffing, and service demand. Traditional benchmarking often depends on centralized data warehouses, voluntary reporting, or retrospective surveys. These approaches can create privacy, competitive, regulatory, and selection-bias concerns that discourage full participation. This article proposes a federated analytics framework for computing aggregate operational benchmarks without moving raw hospital data outside local institutional boundaries. The framework would support medians, percentiles, and risk-adjusted comparative indicators through secure aggregation. The framework combines a local data standardization engine, a secure multi-party computation aggregator, a differential privacy injector, and a participatory dashboard. Together, these components would allow each hospital to compare its position against anonymous peer distributions. The framework could enable hospitals to identify performance gaps in bed occupancy, discharge delays, staffing ratios, and service demand while preserving confidentiality. It would be expected to encourage more honest participation because institutional data sovereignty remains intact. A federated analytics approach offers a practical pathway for collaborative operations improvement across health systems. It aligns benchmarking, privacy protection, and organizational learning within a single governance-aware framework.