This is free marketing research on the Hospitals industry and can include information on the background, market structure, definitions, competitors, trends and developments of hospitals and is related to other topics such as health, medical care, home health care, clinics and managed care.

Table of Contents

[edit] Background

Managed care has transformed the health care services delivery system in the United States. Hospital and physician services continue to be the largest subsectors of the health care delivery system, but their share of total spending is diminishing. These subsectors, which accounted for 57.6 percent of total national health spending in 1990, accounted for only 52.4 percent in 1999. The drop of 5.2 percentage points in spending was shifted to home health care agencies, nursing home care, prescription drugs, other professional services, and other alternative delivery services.

There are over 5,244 community hospitals in the nation, with about 15 percent of them privately owned and the rest being nonprofit institutions. Major private hospital corporations such as Columbia/HCA and Tenet Healthcare have become giant corporations through mergers and acquisitions. The 10 largest for-profit multi-hospital systems have maintained their share of the total market of for-profit hospitals with 16 percent of the total beds in the nation in 1996 compared with 15 percent in 1986.

[edit] Market Structure

With a slow trend towards hospital consolidations, the number of establishments in the hospitals industry continued to drop. Establishments fell to about 6,400.

_______________________________________________________________________

Employment in hospitals, however, continued to rise. Then industry employs a significant portion of the workforce and is clearly geographically wide-spread. The workforce has now exceeded 5 million.

For all the recent efforts at consolidation, this is still a relatively fragmented industry. The 20 largest players are responsible for approximately only 20% of the industry's revenues.

Concentration of Revenue by number of firms in the industry is as follows:


Total Number of firms       Revenue as % of all firms in the industry

     4 largest                              9.0%
     8 largest                             12.3%
    20 largest                             18.9%
    50 largest                             28.5%

[edit] Industry Definitions

• Access: The ability to obtain needed health care services.

• Adjusted admissions: A measure of all patient care activity in a hospital,

including both inpatient and outpatient care. The sum of inpatient admissions and an estimate of the volume of outpatient services, expressed as the number of inpatient admissions that could have been produced with the same amount of resources. This estimate is calculated by multiplying outpatient visits by the ratio of outpatient charges per visit to inpatient charges per admission.

• Copayment: A fixed dollar amount paid for a covered service by a

health insurance enrollee.

• Deductible: A type of cost sharing in which the insured party pays a

specified amount of approved charges for covered medical services before the insurer assumes liability for all or part of the remaining covered services.

• Graduate medical education (GME): The period of medical training

that follows graduation from medical school; commonly referred to as internship, residency, and fellowship training.

• Health maintenance organization (HMO): A type of managed care

plan that acts as both the insurer and the provider of a comprehensive set of health care services to an enrolled population. Benefits typically are financed through capitation with limited copayments, and services are furnished through a system of affiliated providers.

• Hospital Insurance (HI): The part of the Medicare program that covers

the cost of hospital and related posthospital services. Eligibility normally is based on prior payment of payroll taxes. Beneficiaries are responsible for an initial deductible per spell of illness and copayments for some services. Also called Part A coverage or benefits.

• Managed care: Any system of health service payment or delivery

arrangement in which a health plan attempts to control or coordinate the use of health services by its enrolled members to contain health expenditures, improve quality, or both. Arrangements often involve a defined delivery system of providers with some form of contractual arrangement with the plan. See health maintenance organization and preferred provider organization.

• Medicare: A health insurance program for people over age 65, those

eligible for Social Security disability payments, and those who need kidney dialysis or transplants. See Hospital Insurance and Supplementary Medical Insurance.

• Medicare + Choice: A program created by the Balanced Budget Act

of 1997 to replace the existing system of Medicare risk and cost contracts. Beneficiaries will have the choice during an open season each year to enroll in a Medicare + Choice plan or remain in traditional Medicare. Medicare + Choice plans may include coordinated care plans (HMOs, PPOs, and plans offered by provider-sponsored organizations), private fee-for-service plans, or high-deductible plans with medical savings accounts.

• Point-of-service (POS) plan: A managed care plan that combines features

of both prepaid and fee-for-service insurance. Health plan enrollees decide whether to use network or nonnetwork providers at the time care is needed and usually are charged sizable copayments for selecting the latter. See health maintenance organization and preferred provider organization.

• Preferred provider organization (PPO): A managed care plan that

contracts with networks or panels of providers to furnish services and be paid on a negotiated fee schedule. Enrollees are offered a financial incentive to use providers on the preferred list but may use nonnetwork providers as well. See managed care.

• Premium: An amount paid periodically to purchase health insurance

benefits.

• Prospective payment: A method of paying health care providers in

which rates are established in advance. Providers are paid those rates regardless of the costs they actually incur.

• Supplementary Medical Insurance (SMI): The part of the Medicare

program that covers the costs of physicians’ services, outpatient laboratory and x-ray tests, durable medical equipment, outpatient hospital care, and certain other services. This voluntary program requires the payment of a monthly premium, which covers 25 percent of program costs, with the rest covered by general revenues. Beneficiaries are responsible for a deductible and coinsurance payments for most covered services. Also called Part B coverage or benefits.

[edit] Market Metrics

This is also a non-cyclical business. Sickness and accidents happen with great statistical reliability. As a result, revenues for the industry regularly move upwards along with upticks in the national inflation rate.

[edit] Industry Players

These are major players in this market, but it is not an exhaustive list of all key firms.

Revenues, Net Income and Market Capitalization are expressed in US$ Millions.

[edit] Recent Trends and Developments

There is an overcapacity of hospital beds in the nation, as reflected by the rate of occupancy. Efforts to reduce that surplus have not been successful. As an example, average occupancy rate for community hospitals increased from 58.7 percent in 1996 to only 59.6 percent in 1997.

The financial performance of hospitals was better in the late 1990’s and 2000's than it had been since 1986. Despite declining occupancy, hospital closures, Medicare program regulations, the BBA, and competition from managed care, the hospital industry has remained financially sound.

Preliminary data show that total margins continued to increase in the new decade and more current data show that hospitals succeeded in controlling the growth in their expenses.

[edit] Sources

• Most current US government sources

[edit] Related ResearchWikis

Alternative Medicine Marketing Research

Medicare Drugs Marketing Research

Hospital Antibacterials Marketing Research