A complete analysis of the Health Care Industry, including trends, statistics and profiles of the 500 most successful Health Care firms, is available in the Health Care Industry Almanac.

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Major Trends Affecting the Health Care Industry:		Health Care Industry Data Order Plunkett's Health Care Industry Almanac (Print and eBook Format available) Health Care Industry Statistics
1)	Introduction to the Health Care Industry
2)	Continued Rise in Health Care Costs
3)	Employers Push Health Care Costs onto Employees
4)	Medicare and Medicaid Spending Will Continue to Surge as Baby Boomers Pass 60 Years of Age
5)	Medicare Changes Include Drug Benefits for Seniors for the First Time
6)	Health Savings Accounts and Health Reimbursement Accounts Gain Traction
7)	Vast Number of Uninsured and Underinsured Americans
8)	Cost of Pharmaceuticals Soars in U.S., Controversy over Drug Prices Rages On
9)	Boom in Surgery Centers
10)	Managed Care Becomes More Patient-Friendly
11)	Growing Use of Managed Care by Medicare
12)	Malpractice Suits Are Blamed for Rising Health Care Costs
13)	Transplants Are Big Business
14)	Hospitals are Reengineering
15)	Health Care Goes Offshore, Private Clinics Thrive in China and India
16)	Disease Management Programs Take Root
17)	Clinics Open in Retail Store Settings
The Outlook for Health Care Technology:
18)	Health Care Technology Introduction
19)	Information Technology and Health Care
20)	Stem Cells—Controversy in the U.S. Threatens to Leave America Far Behind in the Research Race
21)	Stem Cell Funding Trickles at the Federal Level While California Creates Funding of Its Own
22)	Stem Cells—Therapeutic Cloning Techniques Advance
23)	Stem Cells—A New Era of Regenerative Medicine Looms
24)	Gene Therapies and Patients’ Genetic Profiles Promise a Personalized Approach to Medicine
25)	New Drug Delivery Systems
26)	Advances in Cancer Research
27)	Advances in Diagnostic Imaging and Monitoring
28)	Advances in Laboratory Testing
29)	Advances in Surgery
30)	Other Treatment Technologies

1) Introduction to the Health Care Industry

Today’s health care costs are staggering. Total U.S. health care expenditures are projected to increase from $1.9 trillion in 2005 to $3.6 trillion in 2014, with annual increases averaging about 7%. Health spending in the U.S., at about 16% of Gross Domestic Product (GDP) in 2005, will grow to about 18.7% by 2014. U.S. health spending accounts for a larger share of GDP than in any other major industrialized country. Despite the incredible investment America continues to make in health care, an astounding 15% of Americans lack health care coverage altogether.

Continuous increases in the cost of health care, growing at rates far exceeding the rate of inflation in general, are hammering health consumers and payors of all types. Managed care providers continue to struggle to contain costs. Meanwhile, employers are hit hard by vast increases in the cost of providing coverage to employees and retirees. In 2005, employers saw health coverage cost increases of about 9.2%. This figure is projected to mediate in 2006 to an increase of 8%.

Some employers are utilizing unique new programs in efforts to reduce employee illness, and thereby reduce costs. For example, the use of preventative care programs is growing, as is the use of employee education programs aimed at better managing the effects of diseases such as diabetes.

Smart employers are showing their employees how to use the Internet to obtain better information about diseases and prevention. Insurance providers are jumping on the Internet bandwagon as well. For example, Humana's web-based Emphesys benefits system puts everything from monthly payments to participating physicians to claims on the Internet, at a substantial decrease in cost. Some employers are even hiring in-house physicians and nurses to provide primary care in the workplace. (See, “Employers Push Health Care Costs onto Employees.”)

Patients and insurance companies are also dealing with sticker shock as the nation's prescription drug bill soars. Prescription drug costs have increased more than 10% every year since 1995, surging 13.4% in 2003, 12.9% in 2004 and 12.5% in 2005 to a total of $233.6 billion. To put this increase in perspective, annual increases at this average will double the cost of drugs in only 5.5 years. Other factors edging costs upward are excitement over new medical technology and patients' demands for greater plan flexibility in choosing doctors and specialists at their will. At the same time, hospitals and health systems write off record amounts of revenues to bad debt.

In the wake of the tremendous growth of all aspects of the health care industry from the end of World War Two onward, efficiency, competition and productivity were, regretfully, largely overlooked. Much of this occurred because federal and state governments paid such a large portion of the health care bill. Total Medicare and Medicaid (the U.S. Government programs that provide health care for senior citizens and economically disadvantaged citizens respectively) program outlays in 2005 reached $513.2 billion, or 20% of the total federal budget.

Physicians are caught between the desire for quality care and the desire for cost control on the part of payors, including HMOs, Medicare and Medicaid. The cost versus care debate has spawned an energetic movement to improve the quality of health care in the U.S., much of it centered on patients’ rights, disease management, preventative health care and patient education.

Another major challenge facing the health care industry is the severely tarnished image of managed care companies in general. Supporters of managed care contend that its structure offers higher-quality care at a lower cost. Critics of managed care argue that the system risks lives by allowing plan managers to question, and sometimes reverse, the decisions made by medical professionals while emphasizing cost control at the expense of quality, thus sabotaging the bond of trust that should exist between doctor and patient. There is also concern among managed care detractors about the trend of mergers creating huge managed care companies. Some metropolitan markets are dominated by as few as two major health plans. Critics are equally concerned about the lack of autonomy of physicians who are forced to deal with the growing power of managed care giants.

While both supporters and critics make valid arguments, sweeping generalizations about the state of managed care are inherently flawed, since no two managed care plans are exactly alike. Neither society nor consumers can afford to turn back the clock to the traditional, considerably more expensive fee-for-service system in which quality preventive care was largely non-existent, and patient care was generally provided without regard to cost.

The American health care industry faces more challenges than ever, due to a number of significant factors: While the advent of managed care appeared to tame health care cost inflation during the early and mid 1990s, costs have been rising very rapidly since then. The number of Americans who are underinsured or are without any type of insurance coverage remains staggering. The U.S. population is aging rapidly. At the same time, the life expectancy of seniors is extending. Senior citizens will place a significant strain on the health care system in coming years. The future obligations of Medicare and Medicaid are enough to cause vast problems for the federal budget for decades to come. Reforms are vital. Meanwhile, the number of seniors covered by Medicare will continue to grow at an exceedingly high rate, and new prescription coverage costs will add to the government's financial problems. Likewise, costs for Medicare, which is administered at the state level, have grown so rapidly that they are decimating state budgets and causing cuts in education and other vital services. The pharmaceuticals industry faces continued financial challenges. Annual expenditures for pharmaceuticals are skyrocketing, creating a large backlash among health consumers and payors. At the same time, the drug industry remains under intense public scrutiny and is facing continued calls for increased government legislation and regulation. We are now entering what will long be remembered as the beginning of the Biotech Era. Breakthroughs in diagnostics and drug therapies are occurring at a rapid pace, creating financial and ethical challenges along with opportunities. Personalized medicine is beginning to emerge, but it remains to be seen who will be the early beneficiaries and who will pay the costs. Due to rising health care costs, employers large and small are straining under the financial burden of health care coverage costs for current employees and retirees. The percentage of health costs paid by employees continues to rise. Medical Savings Accounts, used by only a small number of Americans, are getting a renewed push in an effort to put more choice and responsibility in the hands of the patient. Physicians, other care providers, pharmaceutical manufacturers and insurers face daunting pressure from litigation and potential claims regarding malpractice and denial of care. Malpractice insurance costs are out of control. Some lawsuit reform legislation has begun, but much more reform is needed. Few Americans focus on leading healthy lifestyles that would prevent disease and cut both the amount and the cost of medical care. A 2005 study led by researchers at Michigan State University estimated that 76% of Americans do not smoke, but only 40.1% maintain a healthy weight and only 22.2% exercise for at least 30 minutes, five times per week. Likewise, only 23.3% were found to eat the recommended amount of daily fruit and vegetable servings.

  

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