Healthcare Sector Industry Profile

The US healthcare sector includes more than 780,000 hospitals, doctor offices, emergency care units, nursing homes, and social services providers with combined annual revenue of more than $2 trillion. Major companies include Kaiser Permanente, HCA, Ascension Health, and Tenet Healthcare. The sector is highly fragmented: the top 50 organizations generate just 15 percent of revenue. Hospitals are the least fragmented industry: the top 50 hospitals account for 30 percent of total hospital revenue.

The industry includes about 6,500 general hospitals; 75,000 nursing homes and residential care facilities; 13,000 diagnostic labs; 30,000 outpatient clinics; 140,000 dentist offices; 220,000 doctor offices; and 150,000 family and social services providers.

The healthcare sector doesn't include managed healthcare providers, fitness centers, or weight reduction services, which are covered in separate industry profiles.

COMPETITIVE LANDSCAPE

Demand for healthcare 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 healthcare 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 geographical area, offering specialized services, or building a local reputation for quality care. Healthcare is labor-intensive: average annual revenue per employee is around $100,000. Revenue per employee is around $125,000 for ambulatory services ...