Medicine and health care industry

Industry Snapshot

GENERAL INDUSTRY: Health Science

CAREER CLUSTER: Health Science

SUBCATEGORY INDUSTRIES: Family Planning Centers; Freestanding Ambulatory Surgical and Emergency Centers; HMO Medical Centers; Home Health Care Services; Kidney Dialysis Centers; Medical and Diagnostic Laboratories; Nurses’ Offices (Centers, Clinics); Offices of Physicians; Offices of Podiatrists; Outpatient Clinics and Care Centers

RELATED INDUSTRIES: Complementary and Alternative Health Care Industry; Counseling Services; Dental and Orthodontics Industry; Health and Fitness Industry; Hospital Care and Services; Pharmaceuticals and Medications Industry; Public Health Services; Residential Medical Care Industry; Scientific, Medical, and Health Equipment and Supplies Industry

ANNUAL DOMESTIC REVENUES: US$2.5 trillion (First Research, 2021)

ANNUAL GLOBAL REVENUES: US$9 trillion (First Research, 2021)

NAICS NUMBERS: 6211, 62132, 62149-6216, 62139-62141

Summary

The medicine and health care industry is dedicated to the prevention, diagnosis, treatment, and management of disease and the preservation of health through services provided by trained medical and allied health care professionals. These professionals usually have specific educational degrees, as well as certifications and licensure, qualifying them to provide care. Health care providers include medical doctors (M.D.s), dentists, nurses, dieticians, physical therapists, occupational therapists, speech therapists, recreational therapists, audiologists, chiropractors, optometrists, and mental health professionals. Many of these providers, however, may also be categorized in other industries. For example, dentists work in the dental and orthodontics industry, chiropractors work in the complementary and alternative medicine and health care industry, and mental health professionals work in the counseling services industry.

History of the Industry

The practice of caring for the sick in the United States predates the American Revolution. In 1751, Pennsylvania Hospital, chartered by Thomas Bond and Benjamin Franklin, cared for the poor, sick, and insane from the streets of Philadelphia. To launch this institution, Franklin pursued political support and private donors. Public welfare through almshouses included basic health care. Americans supported dependent people through public taxes and lotteries.

The American colonies had few educated physicians and many health care needs. Poor sanitation practices, such as pouring waste into local streams, bred infectious diseases. Doctors had little formal training, often limited to knowledge of stabilizing broken bones and administering herbs and liquors. In 1765, the College of Pennsylvania founded the first medical school in the United States, modeled after the school at the University of Edinburgh. Courses included basic anatomy, and students received experience in bedside care at the Pennsylvania Hospital.

Historically, care of the sick was delegated to women with little training. Generations passed down various folk remedies. In the late 1800s, nurses, sponsored by charitable organizations and churches, delivered care in the homes of new mothers and people with infectious diseases. Following the standards of Great Britain’s pioneering Florence Nightingale, American nurses established a professional training process through schools of nursing. By the early 1900s, nurses were licensed and credentialed by the states. In 1909, Jane Delano established the American Red Cross Nursing Service to complement the Army Nurse Corps. The need for nurses expanded during World Wars I and II, so the federal government funded nursing education and provided stipends.

For years, physicians held a place of respect and power in America. Central to both medical practice and its reputation is the belief that physicians have a moral obligation to act as healers. Traditionally, they valued the sanctity of life and embraced the unique nature of the patient-physician relationship. Physicians were viewed as selfless professionals putting the welfare of their patients before any other concerns. However, over time physicians became central figures in the business of health care in order to be paid for their services.

Physician practices and the business of medicine are linked to the formation of health insurance companies to guarantee payment for services. In 1929, Dr. Michael Shadid formed a health care cooperative for farmers in Oklahoma, requiring a predetermined fee to receive services. Baylor Hospital in Dallas, Texas, began a prepaid health care plan called Blue Cross to provide hospital services for teachers. Physicians joined this plan as Blue Shield to cover the cost of their services, forming Blue Cross Blue Shield. These examples represent the beginning of insurance and managed care to secure payment for medicine and health care services.

With advanced technology and disease management, the life expectancy of Americans increased, resulting in more seniors needing health care. In 1965, the federal government enacted landmark legislation, establishing Medicare and Medicaid. Medicare was a federal government-funded program designed to pay for basic medical care for Americans over sixty-five years old. Medicaid, funded with federal dollars but managed by the states, paid for basic health care services for indigent citizens and children.

For many years, most Americans received health care under fee-for-service plans provided through employer insurance. In these plans, physicians charge separate fees for each service performed. Usually, patients pay a portion of each bill while their insurance companies pay another portion.

The last three decades of the twentieth century witnessed the growth of managed care programs such as Health maintenance organizations (HMOs) and preferred provider organizations (PPOs), designed to save health care dollars. Still, millions remained uninsured and health care costs skyrocketed. It remained a challenge to provide access to medicine and health care services at reasonable cost for all citizens.

The Industry Today

In the twenty-first century, many new advances have been made in diagnosis, treatment of illness, and disease management. The health care industry continues to offer a wide range of services and products to prevent, treat, and manage disease, as well as to promote wellness. Emphasis on healthy lifestyle choices has heightened, as US health care costs have escalated alongside increased diagnosis and treatment of preventable diseases. Americans have been encouraged to take an active part in their health, and portions of the industry are transitioning from thinking of themselves as providing sickness care to instead providing health and wellness. Living healthful lifestyles remains the most cost-effective solution to the many complications and adverse outcomes of sickness and disease, as far more than half of all US health care dollars are spent to treat and manage illnesses that can be prevented or reduced through lifestyle change.

The US Surgeon General’s Healthy People: The Surgeon General’s Report on Health Promotion and Disease Prevention (1979) contained recommendations for Americans to follow. These recommendations were updated in 1990 as Healthy People, 2000; in 2000 as Healthy People, 2010; and in 2010 as Healthy People, 2020. States, communities, businesses, and professional groups have adopted these plans to improve the health of Americans and lower the cost of medical and health care.

Key goals of Healthy People, 2010 were increased quality and length of life and elimination of health care disparities. This government initiative defined twenty-eight focus areas, including access to quality health care, injury and violence prevention, healthy communication, community-based education and supporting programs, safety of medical products, occupational safety, and environmental safety and health. Target diseases for prevention and improved treatment included diabetes, cancer, chronic kidney disease, arthritis, chronic back conditions, osteoporosis, human immunodeficiency virus (HIV), heart disease, stroke, infectious disease, respiratory disease, sexually transmitted disease, nutrition, obesity, oral health, and mental health. Other focus areas were maternal, infant, and children’s health, as well as disability, tobacco use, substance abuse, hearing, vision, immunizations, food safety, and the public health infrastructure. The top ten leading indicators of health in America were defined, in order, as physical activity, overweight and obesity, use of tobacco, substance abuse, responsible sex, mental health, violence and injury, quality of environment, immunization, and access to health care. The goals of Healthy People, 2020 were similar and included a focus on fostering healthy environments and ensuring that people of all ages practice healthy behaviors.

Another major project that has significant implications for medicine and health care practice is the Human Genome Project. This international project began in 1990 and was completed in 2003. The purpose of this work was to discover and review the projected twenty thousand to twenty-five thousand human genes. The program studied the sequence of some three thousand units of deoxyribonucleic acid (DNA). Knowledge of DNA sequencing can enable scientists to crack the code of human genetics and treat and prevent devastating infectious and inherited diseases. These discoveries are especially important to understand the human immune system and to predict how each person will take in and utilize medications; this level of genetic analysis is expected to produce a future field of personalized medicine, in which care will be tailored meticulously to the genetically determined needs of each individual body. One day, these discoveries may also assist people to stay well by uncovering the secrets in the human genes that enhance health. Although ethical dilemmas surround this type of health science research, the benefits could prove useful to decrease disease and to manage human health, greatly affecting the medicine and health care industry.

Medical and health care services today are provided by a diverse group of providers in various settings. In the past, the majority of services were delivered within health care institutions such as hospitals. Today, many procedures and treatments once limited to inpatient settings have moved to outpatient settings and to patients’ homes. Ambulatory health care services help patients remain in their residences within their communities, decreasing costs and improving patient satisfaction. Many medical procedures can be performed safely in physician or dentist offices. Physical, speech, and occupational therapists offer their services in outpatient centers, rehabilitation centers, and patients’ homes. Innovative medical equipment allows patients to remain outside the walls of institutional care facilities such as hospitals.

Ambulatory outpatient settings include mental health and substance abuse centers, family planning centers, kidney dialysis centers, and surgical centers. Medical and diagnostic laboratories play an important role in patient care, as do diagnostic imaging centers. Although many hospitals offer these services through dedicated department staff and high-technology equipment, laboratories and diagnostic imaging establishments are becoming more available in the ambulatory health care setting. The improved technology of these services allows more options for diagnosis and treatment than ever before in health care history.

Traditional medicine still remains primary in patient care management; physicians and nurses provide the majority of care. However, many people have also adopted alternative practices to enhance wellness and treat illness. Specialists such as optometrists, chiropractors, podiatrists, homeopaths, acupuncturists, hypnotherapists, and naturopaths offer Americans additional choices for medical and health care services. Consultants in nutrition and fitness provide services to support lifestyle changes for disease prevention and wellness. Health care professionals work as educators as well as care providers to improve patients’ quality of life.

Americans enjoy many options for high-technology, sophisticated drug therapies and advanced medical and health care services. However, millions remain uninsured. Attempts to address this problem have resulted in incremental improvements, as the costs of medicine and health care services have continued to rise. Individuals and families pay higher prices each year for health care coverage and copayments, as insurers raise rates to cover their increasing costs. The promise of managed care as a cost-efficient way to decrease costs without lowering quality of care has not been fulfilled.

By 2010, the United States was spending 17.6 percent of its gross domestic product (GDP) on health care. While health costs were rising dramatically, real wages were falling. Some economists linked the two trends, asserting that the rising costs to business of providing health insurance benefits contributed to the falling wages of American workers. In March, 2010, the federal government passed the Patient Protection and Affordable Care Act (ACA, also commonly known as Obamacare after President Barack Obama), which was designed to expand greatly the availability of affordable medicine and health care services. The provisions of the act were to be phased in over the course of the 2010’s, with most provisions beginning in 2014. The law was projected by the Congressional Budget Office to result in more than 30 million Americans gaining health insurance. The law saw ongoing opposition from Republicans, and faced numerous challenges that weakened some of its provisions.

Industry Outlook

Overview

The outlook for this industry shows it to be on the rise. The medicine and health care industry has a long history of positive employment and economic growth. In 2022, the BLS reported that the industry employed 14.7 million people. On the bureau’s list of the twenty fastest-growing occupations, half were in the medicine and health care industry. Projections remained positive, despite ongoing serious debate over the structure of the health care system—and especially health insurance—in the United States.

More people entering Medicare and Medicaid, coupled with less funding for providers, will challenge businesses to create less expensive ways to care for patients. This may result in capped payments for the work of highly educated, extensively trained professional health care providers. Opportunities will increase for workers who can gain skills through on-the-job training, including nursing aides, home health aides, medical assistants, dental assistants, and housekeeping and cleaning assistants. Regardless of changes, people will continue to need health care services, making this industry a stable career choice.

Employment Advantages

The health care industry has a long history of employment growth offering good to excellent wages and benefits. Work environments are generally positive. Most health care employees receive access to health insurance and other benefits such as retirement plans. Some claim that this industry is recession-proof, as, even in economic decline, people need and seek health care services. Some sectors, such as nursing, are usually in a state of shortage to meet the country’s needs. The choice of vocations available is diverse, with new roles evolving yearly to meet developing needs. Economic challenges encourage creative thinking and allow variations on traditional approaches to care.

Workers can choose among various settings, from institutional to community-based businesses. Skills are sometimes transferable to other settings or industries and allow for advancement. For example, businesses may hire occupational health care nurses. Although professional health care providers usually require four-year college degrees or higher education and training, most roles in the health care field require either two-year associate’s degrees, vocational training, or on-the-job training, minimizing the educational investment costs to support staff and other nonphysician workers.

Annual Earnings

The overall health care industry in the United States had revenues of $2.5 trillion as of 2022. This figure includes pharmaceutical manufacturing, hospital services, and other related industries.

The industry has for decades grown faster than the rate of inflation. Though the ACA contained provisions designed to reduce health care inflation, one of the most important, an excise tax on very expensive health insurance plans, was repealed in 2019.

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