Healthcare industry


The healthcare industry is an aggregation and integration of sectors within the economic system that provides goods and services to treat patients with curative, preventive, rehabilitative, and palliative care. It encompasses the creation and commercialization of products and services conducive to the preservation and restoration of well-being. The contemporary healthcare sector comprises three fundamental facets, namely services, products, and finance. It can be further subdivided into numerous sectors and categories and relies on interdisciplinary teams of highly skilled professionals and paraprofessionals to address the healthcare requirements of both individuals and communities.
The healthcare industry is one of the world's largest and fastest-growing industries. Consuming over 10 percent of gross domestic product of most developed nations, health care can form an enormous part of a country's economy. U.S. healthcare spending grew 2.7 percent in 2021, reaching $4.3 trillion or $12,914 per person.  As a share of the nation's Gross Domestic Product, health spending accounted for 18.3 percent. The per capita expenditure on health and pharmaceuticals in OECD countries has steadily grown from a couple of hundred in the 1970s to an average of US$4'000 per year in current purchasing power parities.

Backgrounds

For the purpose of finance and management, the healthcare industry is typically divided into several areas. As a basic framework for defining the sector, the United Nations International Standard Industrial Classification categorizes the healthcare industry as generally consisting of:
  1. Hospital activities;
  2. Medical and dental practice activities;
  3. "Other human health activities".
This third class involves activities of or under the supervision of, nurses, midwives, physiotherapists, scientific or diagnostic laboratories, pathology clinics, residential health facilities, or other allied health professions, e.g. in the field of optometry, hydrotherapy, medical massage, yoga therapy, music therapy, occupational therapy, speech therapy, chiropody, homoeopathy, chiropractic, acupuncture, etc.
The Global Industry Classification Standard and the Industry Classification Benchmark further distinguish the industry into two main groups:
  1. healthcare equipment and services; and
  2. pharmaceuticals, biotechnology and related life sciences.
The healthcare equipment and services group consists of companies and entities that provide medical equipment, medical supplies, and healthcare services, such as hospitals, home healthcare providers, and nursing homes. The latter listed industry group includes companies that produce biotechnology, pharmaceuticals, and miscellaneous scientific services.
Other approaches to defining the scope of the healthcare industry tend to adopt a broader definition, also including other key actions related to health, such as education and training of health professionals, regulation and management of health services delivery, provision of traditional and complementary medicines, and administration of health insurance., chiropractic, acupuncture, etc.

Providers and professionals

A healthcare provider is an institution or person that provides preventive, curative, promotional, rehabilitative or palliative care services in a systematic way to individuals, families or communities.
The World Health Organization estimates there are 9.2 million physicians, 19.4 million nurses and midwives, 1.9 million dentists and other dentistry personnel, 2.6 million pharmacists and other pharmaceutical personnel, and over 1.3 million community health workers worldwide, making the health care industry one of the largest segments of the workforce.
The medical industry is also supported by many professions that do not directly provide health care itself, but are part of the management and support of the health care system. The incomes of managers and administrators, underwriters, and medical malpractice attorneys, marketers, investors, and shareholders of for-profit services, all are attributable to health care costs. Many healthcare providers outsource non-clinical and revenue cycle functions such as medical billing, claims processing, and denial management to business process outsourcing companies. In 2025, several firms were recognized by Clutch as among the top medical billing providers for their compliance with HIPAA standards and strong client satisfaction ratings.
In 2017, healthcare costs paid to hospitals, physicians, nursing homes, diagnostic laboratories, pharmacies, medical device manufacturers, and other components of the healthcare system, consumed 17.9 percent of the gross domestic product of the United States, the largest of any country in the world. It is expected that the health share of the Gross domestic product will continue its upward trend, reaching 19.9 percent of GDP by 2025. In 2001, for the OECD countries the average was 8.4 percent with the United States, Switzerland, and Germany being the top three. US health care expenditures totaled US$2.2 trillion in 2006. According to Health Affairs, US$7,498 be spent on every woman, man and child in the United States in 2007, 20 percent of all spending. Costs are projected to increase to $12,782 by 2016.
The government does not ensure all-inclusive health care to every one of its residents. However, certain freely supported healthcare programs help to accommodate a portion of people who are elderly, disabled, or poor. Elected law guarantees community to crisis benefits paying little respect to the capacity to pay. Those without health protection scope are relied upon to pay secretly for therapeutic administrations. Health protection is costly and hospital expenses are overwhelmingly the most well-known explanation behind individual liquidation in the United States.

Spending

Expand the OECD charts below to see the breakdown:
  • "Government/compulsory": Government spending and compulsory health insurance.
  • "Voluntary": Voluntary health insurance and private funds such as households' out-of-pocket payments, NGOs and private corporations.
  • They are represented by columns starting at zero. They are not stacked. The 2 are combined to get the total.
  • At the source you can run your cursor over the columns to get the year and the total for that country.
  • Click the table tab at the source to get 3 lists of amounts by country: "Total", "Government/compulsory", and "Voluntary".

File:Health spending by country. Percent of GDP.png|thumb|none|upright=1.4|Health spending by country. Percent of GDP. For example: 11.2% for Canada in 2022. 16.6% for the United States in 2022.


File:Average annual health spending. US dollars per person. OECD countries and more.png|thumb|none|upright=1.4|Total healthcare cost per person. Public and private spending. US dollars PPP. For example: $6,319 for Canada in 2022. $12,555 for the US in 2022.

File:Life expectancy vs healthcare spending.jpg|thumb|upright=1.4|Life expectancy vs healthcare spending of rich OECD countries. US average of $10,447 in 2018.

Health system

The delivery of healthcare services—from primary care to secondary and tertiary levels of care—is the most visible part of any healthcare system, both to users and the general public. There are many ways of providing healthcare in the modern world. The place of delivery may be in the home, the community, the workplace, or in health facilities. The most common way is face-to-face delivery, where care provider and patient see each other in person. This is what occurs in general medicine in most countries. However, with modern telecommunications technology, in absentia health care or Tele-Health is becoming more common. This could be when practitioner and patient communicate over the phone, video conferencing, the internet, email, text messages, or any other form of non-face-to-face communication. Practices like these are especial applicable to rural regions in developed nations. These services are typically implemented on a clinic-by-clinic basis.
Improving access, coverage and quality of health services depends on the ways services are organized and managed, and on the incentives influencing providers and users. In market-based health care systems, for example in the United States, such services are usually paid for by the patient or through the patient's health insurance company. Other mechanisms include government-financed systems. In many poorer countries, development aid, as well as funding through charities or volunteers, help support the delivery and financing of health care services among large segments of the population.
The structure of healthcare charges can also vary dramatically among countries. For instance, Chinese hospital charges tend toward 50% for drugs, another major percentage for equipment, and a small percentage for healthcare professional fees. China has implemented a long-term transformation of its healthcare industry, beginning in the 1980s. Over the first twenty-five years of this transformation, government contributions to healthcare expenditures have dropped from 36% to 15%, with the burden of managing this decrease falling largely on patients. Also over this period, a small proportion of state-owned hospitals have been privatized. As an incentive to privatization, foreign investment in hospitals—up to 70% ownership has been encouraged.
Healthcare systems dictate the means by which people and institutions pay for and receive health services. Models vary based on the country with the responsibility of payment ranging from the public and private health insurers to the consumer-driven by patients themselves. These systems finance and organize the services delivered by providers. A two-tier system of public and private is common.
The American Academy of Family Physicians defines four commonly utilized systems of payment: