A must-read overview of US hospital industry spending
An overview of the healthcare sector
The healthcare sector comprises different types of setups, such as hospitals, ambulatory services, emergency services, primary care providers, and long-term care. These setups can be either independent or vertically integrated to provide the entire suite of medical services.
Hospitals have always been one of the major cornerstones of the healthcare industry. According to a survey on national health expenditures by Centers for Medicare and Medicaid Services (or CMS), in 2011, hospital care accounted for a total of $850 billion of the total $2.7 trillion of national health expenditures. Analysts have projected that, by 2015, U.S. hospital care will be a trillion dollar subindustry.
The National Health Expenditure Projections 2012–2022, written by CMS, suggests that healthcare spending will pick up in 2014 and reach 6.2% year-over-year. Nine million Americans are projected to have access to health insurance. This will reduce out-of-pocket spending by 0.2 %, resulting in an assured revenue stream from the insurance programs and substantially reducing hospitals’ total bad debt expenses. This should remain at about 6% from 2015 through 2022.
Hospital care spending amounts to approximately one-third of total healthcare spending. As payment models evolve and hospitals strive to introduce cost efficiencies, analysts predict that growth in hospital care spending will be less than the remaining healthcare industry’s spending.
Major companies in the hospital sector
HCA Holdings (HCA), Tenet HealthCare (THC), Community Health Systems (CYH), LifePoint Hospitals Inc (LPNT), and Select Medical (SEM) are a few publicly traded companies in the hospital industry. These companies are major holding companies that operate hospitals and other healthcare entities. There are other companies in the space, like Adeptus Health Inc. (ADPT), Surgical Care Affiliates (SCAI), and Kindred HealthCare (KND), which operate in niche provider areas like emergency healthcare, surgical facilities, and transitional care hospitals.
