US Healthcare Sector

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 1,881,424 healthcare sector establishments in the US provide medical care, health services, and living accommodations to patients and residents. Services are paid for by medical insurers, patients, government programs, and families. The sector includes physicians offices, hospitals and clinics, mental health services, medical and imaging labs, home healthcare services, and nursing and residential care facilities.

Managing Rising Costs

The costs - particularly labor costs - of providing healthcare have increased steadily and have generally outpaced inflation.

Maintaining Skilled Staffing

Healthcare providers struggle with shortages of nurses, medical technicians, pharmacists, and other clinical workers.

Industry size & Structure

The healthcare sector is comprised of 1,881,424 establishments that employ 20.5 million workers and generate $3.2 trillion in annual revenue, according to government sources.

    • The healthcare sector represents 7% of the nation's Gross Domestic Product (GDP) and employs 11% of the country's workers.
    • The sector is fragmented: the 20 largest firms represent 16% of revenue. The 50 largest firms represent 24.5% of revenue.
    • In addition to employer establishments, the healthcare sector has nearly 1.3 million owner-operated establishments with no employees that generate $57.6 billion annually. Subsectors with the highest numbers of nonemployer establishments are home healthcare services (17.2%) and offices of physicians (10.7%). The owner of nonemployer establishments typically performs the work or uses contract labor.
    • The health and education services sectors shed 167,000 establishments in 2021, which equals about 8.2% of existing establishments, according to the Bureau of Labor Statistics. However, the two sectors added about 250,000 new establishments, which is equivalent to 12.3% of existing establishments. As a result, the sectors had a growth rate of 4.1%.
    • The healthcare sector is forecast to grow its employment base by 12.3% overall in 2021-2031, which is much higher than the national average of 5.3% for all jobs, according to the Bureau of Labor Statistics. Factors contributing to job gains in the healthcare sector include the expanding and aging population, and a greater volume of treatment and exams performed by physician assistants (PAs) and Nurse Practitioners (NPs) under the supervision of MDs.
                                    Industry Forecast
                                    US Healthcare Sector Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    May 5, 2024 - Cost Of Care Increases For Consumers
                                    • The prices that consumers paid for healthcare decreased slightly during the first eight months of 2023, according to the US Bureau of Labor Statistics. Sector employment increased slightly during 2023 while wages for nonsupervisory employees were unchanged.
                                    • UnitedHealth Group CEO Andrew Witty estimated that data from one-third of Americans could have been compromised in the late-February cyberattack on subsidiary Change Healthcare. The company confirmed that files containing protected health information and personally identifiable information were compromised in the breach. Company officials also said that it will likely be months before affected individuals are notified, given the "complexity of the data review." UnitedHealth said that it is offering free access to identity theft protection and credit monitoring for individuals concerned about their data.
                                    • Increased fundraising by private equity (PE) firms in 2023 is not expected to translate into increased health care industry deal counts in 2024, according to Home Health Care News. “Dry powder or available capital is not always indicative of future dealmaking,” Rebecca Springer, lead health care analyst at PitchBook, told Home Health Care News. “The typical investment period for a 10-year fund is five years with some additional flexibility through a number of technicalities. In 2024, we anticipate that PE health care managers will focus on deploying capital into existing portfolio companies, lower-middle-market platforms, and occasionally pursue opportunistic carve outs.” Health care’s share of global PE deal count peaked at 13.7% in 2020. That number fell to 10.8% in 2023— its lowest level since 2015.
                                    • The US Department of Justice, the Federal Trade Commission, and the US Department of Health and Human Services said that they are investigating how certain transactions in the healthcare sector may increase consolidation and boost corporate profits at the expense of patient health, worker safety, quality of care, and affordability. The agencies have issued a request for information, seeking public comment on deals conducted by health systems, private payers, private equity funds, and other alternative asset managers that involve healthcare providers, facilities, or ancillary products or services. Research shows the competition in healthcare provider and payer markets leads to higher-quality and lower-cost healthcare, as well as greater access to care and higher wages and benefits for workers, agency officials said.
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