Industry Composition:

The healthcare industry consists of those companies that manufacture medical products or provide services including prevention, diagnosis, and treatment of illness or other health issues, and rehabilitation.

There are many different kinds of healthcare facilities. In the United States, around 76 percent of establishments are practitioners' offices, from dentist to doctor to optometrist. Hospitals make up approximately two percent of establishments, but account for around 59 percent of revenues earned. Other establishments include Health Maintenance Organizations (HMOs) and Preferred Provider Organizations (PPOs), which are a kind of hospital-insurance company mix. There are also nursing and residential care facilities, specialty providers such as nursing homes or specialty treatment centers (such as those for diabetes treatment, physical therapy, or chemotherapy), home care providers, and medical laboratories.

The healthcare industry is highly fragmented and healthcare systems vary from country to country. In the United States, insurance coverage is the responsibility of the individual; however, recent legislation will transition it to a more universal care. In other developed countries, including United Kingdom, Canada, Australia and Italy, healthcare is provided by the government for all citizens.

Healthcare is the largest of the industries listed on globalEDGE. The United States’ healthcare system is the largest in the world, worth around $1.7 trillion, as compared to $700 billion in Europe. Despite the government control in Europe, healthcare providers are suffering due to the rising costs and demand exceeding capacity. In the United Kingdom, they have started teaming up with private care providers to handle the excess demand.


Healthcare began as a purely reactionary, medicinal practice, in which people learned the medicinal properties of plants through trial and error, and then passed on that knowledge to others. It later became a subject of purposeful study by many different cultures, including the Persian, Egyptian, Greco-Roman, Indian, and Chinese cultures. In the 19th century, there were numerous technological, chemical, and biological advances that gave physicians the means to better understand, diagnose, and treat ailments. The discoveries included anesthetics, syringes, antiseptics, x-rays, and penicillin.

Around the beginning of the 20th century, modern healthcare began to evolve. Doctors started to initiate prepaid arrangements for their services, foreshadowing the medical insurance and administration field that is in place today.


The current industry leaders by revenue in the product segment of the industry are Merck and Co., Johnson & Johnson and Bristol-Myers Squibb. Among service providers, the top companies are not hospitals, which are typically the largest establishments that actually administer care, but the companies or federal agencies that administer or insure healthcare services. This group includes Blue Cross and Blue Shield Association, UK National Health Service, Wellpoint Inc, and UnitedHealth Group.


One trend in the industry in the United States is the rise in the popularity of PPOs and HMOs, which are prepaid plans that focus on preventive care, thereby greatly reducing the costs associated with ailments caught too late. These plans tend to be more affordable than typical insurance. For the healthcare providers, there has been a rise in e-procurement of medical products.

Technological advances have dominated activity in the healthcare industry during the last decade, and have led to improved methods of diagnosing and treating illnesses and injuries. Clinical developments have emerged, such as infection control, less invasive surgical techniques, advances in reproductive technology, and gene therapy for cancer treatment. Research also remains an important part of companies’ budgets; although it is not as critical as in industries such as technology or pharmaceuticals, but it is primary to retaining market share and revenue levels. The healthcare industry is also turning towards using electronic records to save time and cost of operations.

However, on the reverse side, several issues are causing problems for healthcare establishments. The cost of healthcare and providing advance treatments has increased rapidly. Insurance premiums are going up due to malpractice lawsuits. The cost of prescription drugs is rising. Increased bad debt expenses, due to inadequately insured and uninsured patients, are also a growing problem. The cost of medical supplies such as syringes or other plastic-based disposables is also rising due to increased petroleum costs. Much of these higher costs come from the increased emphasis on patient safety. This emphasis leads to higher standards placed on operating physicians. The higher standards mean that physicians must go through more years of school and training, making the occupation much less attractive. For these reasons, there is expected to be a shortage of physicians and other operating medical professionals in upcoming years. The United States federal government is predicting that by 2020, nurse and physician retirements, without suitable replacements, will contribute to a shortage of approximately 24,000 doctors and nearly 1 million nurses.

International competition has started playing a large part in the healthcare industry too. Many companies outside the U.S. are developing patents to compete with many of the blockbuster products already on the market. This is putting a strain on R&D departments for more products blockbuster products. Additionally, with rising healthcare costs, many people are finding it less expensive to travel outside of the U.S. for expensive procedures and care.

Another effect of the higher cost of insurance is that many more people are either going uninsured or are receiving fewer benefits. This is leading to government intervention, particularly in the United States, where President Barack Obama has stated that his primary goal in office is to reform the healthcare industry.

Future Outlook:

People are both living longer and expecting a higher quality of life. Both of those will increase demand for the healthcare industry. In addition, the “baby boomer” generation is beginning to reach the age where increased medical attention is almost necessary. All of these lead to a positive outlook for growth in the healthcare industry.

There is a lot of political controversy, especially in the United States about this industry. The “Affordable Health Care for America Act,” has taken a major stage last year after being passed in March. While there are both pros and cons to the act it is very uncertain if this law will stay. A large part of the healthcare industry will be determined once the fate of this law has been determined. However, with the necessity of healthcare, growing populations, and average lifespans being elongated, the future for the industry should be bright.


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