Health Care Services Sector, 2007
U.S. Market Overview
The U.S. healthcare services sector is composed of three major sectors: hospitals; professionals (e.g., physicians, nurses and other medical personnel); and nursing homes/home care services. The sector consists of about 5,800 hospitals, 17,000 nursing homes, and thousands of physician offices and medical centers. This industry sector accounted for 16 percent of U.S. GDP in 2006 and employs nearly 10 million people.
Healthcare services in the United States are mainly provided by the private sector, with some government-funded programs. According to Hoovers.com, the U.S. health care services market is the largest in the world, worth about $1.2 trillion. Rising healthcare costs and ensuring adequate work forces to meet the rising demand for services are key issues.
Some U.S. healthcare facilities have developed a national or global reputation as leading providers of certain types of health care services. For example, in 2006 U.S. News & World Report ranked Johns Hopkins Hospital in Baltimore as the number one hospital in the United States. The ranking used reputation (built over 100 years of service), mortality rate, quality-of- care measures and number of technologies available. Johns Hopkins' top specialties are the treatment of digestive disorders; endocrinology; neurology and neurosurgery; and orthopedics. Other well-known facilities include The Mayo Clinic and The Sloan-Kettering Institute for cancer treatments and research. These global reputations bring patients in from many other countries, leading each of these healthcare facilities to compete with each other on domestic and international terms.
Costs of health care, labor, prescriptions, medical equipment, insurance premiums and basic supplies continue to rise. Increased insurance premiums are forcing some smaller businesses to drop coverage of their employees. Those covered by insurance are paying more for their coverage and face restrictions under managed care programs. According to the Lewin Group, about 3 million more Americans spent 25 percent of their incomes on healthcare costs in 2005 than in previous years.
Costs of government reimbursement programs such as Medicare and Medicaid also continue to increase. About 83 million people, or more than one in four Americans, receive healthcare benefits under these programs. In FY 2005, the Centers for Medicare and Medicaid Services (CMS) spent about $519 billion -- sixty-three percent on Medicare, thirty-five percent on Medicaid and two percent for other programs and administrative costs. CMS estimated that Medicare premiums would rise by 14 percent in 2006. However, a new prescription drug benefit initiated in January 2006 is expected to help reduce some consumer expenditures.