The healthcare industry is widely regarded as a key driver of economic growth and social development in the 21st century. This study employs multi-source data alongside hybrid analytical techniques, including Principal Component Analysis (PCA), hotspot analysis, and clustering analysis, to explore the development factors and spatial patterns of the ethnic medicine and healthcare industry (EMH) in Yunnan Province, China. The results indicate that the first five principal components account for 79.80% of the total variance, providing significant insights into the industry’s competitive drivers. Using the Porter Diamond Model, spatial clustering of the EMH sector across Yunnan reveals a distinct pattern of ”one ring, two points, three areas, and multiple clusters.” The analysis further shows that industrial competitiveness is closely linked to the spatial distribution of regional factors, suggesting the need for a targeted development strategy: ”central innovation, western optimization, eastern enhancement, northern strengthening, and southern expansion.” These findings provide valuable recommendations for policymakers aiming to enhance the EMH sector’s contribution to regional economic development and healthcare modernization.