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 975,398 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 975,398 establishments that employ 17 million workers and generate $3.4 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
Recent Developments
Jul 16, 2024 - Moderate Sales Growth Expected
- Healthcare industry sales are forecast to grow at a 5.58% compounded annual rate from 2024 to 2028, faster than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc. Healthcare sector employment and average wages for nonsupervisory employees increased slightly during the first five months of 2024, according to the US Bureau of Labor Statistics.
- US health spending increased 7.1% year over year in April and represented 17.7% of GDP, according to health care nonprofit organization Altarum. Personal health care spending increased 7.6%, year over year in April, with utilization growth continuing to outpace price growth. Growth among major spending categories was highest for home health care, at 14.2%, year over year, while spending on prescription drugs grew the slowest at 6.8%.
- Legislation introduced in the US Congress is intended to increase healthcare cybersecurity through routine evaluations by the Department of Health and Human Services’ inspector general (HHS IG). The Strengthening Cybersecurity in Health Care Act would require the HHS IG to routinely probe the cyber defenses of healthcare IT systems through penetration tests and other measures. The testing would evaluate whether the systems are secure enough to prevent compromises that could either expose patient data or impact patient safety.
- 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.
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