Health Care Sector

Health Care Sector

Brief Excerpt from Industry Overview Chapter:

Companies in this industry provide a wide range of health care and social services through hospitals, doctors offices, nursing homes, outpatient surgery centers, and other facilities. Major US companies include Ascension Health, Fresenius, HCA, Kaiser Permanente, and Tenet Healthcare.

Worldwide, health care expenditures total about $5 trillion annually, according to Swiss Re. Total health spending (both public and private) as a portion of GDP ranges from about 6 percent in countries such as Estonia to more than 17 percent in the US, according to the Organisation for Economic Co-Operation and Development.

The US health care sector includes more than 780,000 hospitals, doctors offices, emergency care units, nursing homes, and social services providers with combined annual revenue of about $2 trillion. Output of the health care sector is forecast to grow at a high rate over the next two years. Key growth drivers include the Affordable Care Act (ACA), which ensures that previously uninsured Americans will receive access to health care, and the recovering economy.

COMPETITIVE LANDSCAPE

Demand for health care services is driven by demographics and advances in medical care and technology. The profitability of individual companies depends on efficient operations and, in the case of many nonprofit health care providers, obtaining grants and federal funds. Large companies have advantages in accessing the latest medical research, buying supplies, offering a wide range of services, and negotiating contracts with health insurers. Small institutions can compete successfully by serving a limited...