The US healthcare sector includes over 820,000 hospitals, doctor offices, emergency care units, nursing homes, and social services providers, with combined annual revenue of over $1 trillion. Major companies include Kaiser Permanente, Hospital Corporation of America (HCA), and Ascension Health. The sector is highly fragmented: the top 50 organizations hold just 15 percent of the market. Hospitals are the least fragmented industry: the top 50 hospitals account for 30 percent of total hospital revenue.
The industry includes about 6,000 general hospitals; 20,000 nursing homes; 15,000 diagnostic labs; 30,000 outpatient clinics; 120,000 dentist offices; 200,000 doctor offices; 75,000 day care facilities; and 50,000 family and social services providers.
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: annual revenue per employee is $80,000. Revenue per employee is nearly $100,000 for ambulatory services and hospitals, and only around $45,000 for nursing homes, residential care facilities, and social assistance providers.
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