Introduction
The healthcare industry is most important for the economic growth of the countries because it’s for the life and the betterment of the people globally. The healthcare industry is integration and the aggregation of the sectors in the economic structure that offers the services and the goods to treat the patients with the curative, rehabilitative, palliative care and preventive care.
It involves the commercialization and generation of the services and the goods that leads them to maintain and re-establish the health in the nation. The healthcare industry is the most leading and the fastest growing sector in the world that contributes highly toward the GDP and economic growth. In the US the health care service is provided by numerous distinct organizations (Rosenthal, 2013).
According to the report of the World Health Organization, almost USD 9,403 are spent on healthcare per capita in the United States. The United States (US) don’t have the universal health care program like the other advanced and developed industrialized countries this affects the healthcare industry of the United States and even after much of the reforms and revolutions in the health care sector it is still facing issues that affect patients in the United States (Fisher, 2012).
Issues in the healthcare industry in the US
The healthcare industry is highly significant for people globally. The healthcare industry includes a wide range of players like the hospitals, doctors, pharmacies, nursing homes, medical device manufacturers, diagnostic laboratories and numerous other elements of the system of health care. The US health care uses more artificial intelligence in improving the healthcare service in the US and for providing efficient service at reasonable charges (Wire, 2018)
The healthcare of the United States is working for finding the way to balance the quality of the health care service and the fee charged for this service in order to support the people that provide them better health that is useful for the country economic growth because when people in the economy are healthy they work more that improves productize and boost all the sectors of the economy and raise the economic development of the country.
But the ever-changing processes, policies, complexities, and capabilities impose the significant negative impact on the healthcare industry of the United States. Moreover, the factors like the raising revenue pressure, demand for innovative and latest technology and equipments, consistently decreasing margins and the limited financial resources make it challenging and difficult for the healthcare providers like hospitals to ensure quality services with lower fee charges and this raise the issue in the healthcare industry of the United States (Deloitte, 2019).
The healthcare industry of the US has often covered the other industries of the US when it occurs to the modernizing but the payment system, reliance on the face to face negotiation and the complicated barriers of the regulations, high investment of the private equities, etc. this affect the growth of the healthcare in the United States of America.
A degree of Competition in the Industry
In all types of businesses, the competition is encouraged as this competition helps the industries to grow and better their products for more customer satisfaction. In other words, petitions are about getting better than your rival in every aspect of delivering, creating and communicating the value of your product to satisfy the customer needs better.
Traditional competition in health care is about convenience, price, quality and superior services: however, on the other hand, competition can also be based on new technology and innovation. The purpose which gives this competition momentum is that the costs which need to be reduced for better services and higher selling of the service.
The competition is essential as it eliminates the inefficiencies in the processes which would otherwise result in higher costs which will ultimately affect the patient’s level of service and costs higher. Fuch 1988 noted that America is going to change its health industry structure by allocating the scarce resources to the industry (Glover, 2010).
However, on the other hand, ReinHardt (1996) comes with the theory that it is not increasing the competition as all the bills paid in terms of health industry are three quarters from the insurance in all the bills paid. Porter and Teisberg 2004 suggested that the competition in the US market has become at the sub-zero as the health industry is more focused on dividing the value than creating the value for customers (Goddard, 2015).
In this Porter and Teisberg has identified some features which increase the need of concern as they are affecting negatively to the competition in terms of value creation, bad strategic choices high focus on the cost reduction sometimes compromising quality of the services and goods, focusing on satisfaction surveys and giving the improper incentives to the providers and also subscribers.
Supply/Demand Dynamics for the Industry’s Products
The supply and demand are important to create balance in providing the services in 2018; Senate failure to develop, replace, repeal or change the Affordable Care Act (ACA) has occurred which left the market unchanged in terms of legislative implementation. Outside from the larger cities where the healthcare system is developed and has some problems in rural areas for the patients who have difficult access to the cities suffer from lower quality services by providers and patients suffer because of this. According to the American, Healthcare Association, rural hospitals provide the services of more than 57 million people including essential health care services (Santilli, 2018).
The people living in rural countries declined in numbers by 200,000 from the period of 2010 and 2016 which was the first ever recorded decrease in rural population. Rural healthcare providers are in crisis due to the cost cuts, cost-saving and spending cuts due to which the operations are distressed.
According to the server 1 in 3 hospitals are facing the finance shortage, at the current level of finance shortages the 25% of hospitals are estimated to be non-operational in the decade. Further, these problems are added by a shortage of physicians, the growth of high deductible health plans and a lack of choices added to the health epidemic including the opioid epidemic.
All these factors collectively added to the poor supply and demand due to the finance shortages in the rural area hospitals which indicate the supply problems and the surveys conducted also shows that the financials of the rural areas are not satisfying to cope up with future demand.
Industry Cost Structure
The industry cost structure gives insights about the costs of the industry. According to stats published by American economist’s states that America is spending $650 billion higher than expected on healthcare. Which is also more than any high income 11 countries including Canada, Germany, Australia, and the UK.
The US economy spends 17.8% of its total GDP on healthcare services which are far higher than the other compared which are spending 11.5% of their GDP. On the per capita basis, the US spends $9403 per capita which is also double than the countries compared with the US health cost structure (Farrell et al., 2008).
The findings explain that the US cost structure of the healthcare system is inflated across the board all the treatment, diagnostic test, medicine, and doctors all are perceived to be high paying which makes these prices inflated. The additional costs are administrative costs which are higher due to the higher prices and administrative spending of managing the finances further increase the costs of healthcare in the US (Blumberg, 2018).
Drugs costs are also higher and so thus the spending which also accumulates 15% of the total amount which is more than the expected budget of the US. Health administration costs are also made up of 9% of the higher expected spending in the US economy on healthcare. Government programs for less privileged can also be considered a factor as governments spend on the welfare of the people of the country.
All these costs are also higher due to the poor system of healthcare in the US compared to the other nations which are managing better, and their spending is less than the American spending on health care. The higher number of specialists are also to be considered as the specialists cost more than physicians which are also a factor in higher spending in the US (Deloitte, 2019).
The degree of Government Regulation-Favourable or Not
The current estimation shows that the healthcare industry of the United States spends the highest cost for pharmaceuticals all over the world. Almost 85 percent of the US citizens avail the health insurance service through their organizations, employers or they purchased individually. The federal government of the US does not guarantee the universal service of healthcare to all of the US citizens.
The healthcare schemes that are funded by the government only provide the service to some of the elderly, poor and the disabled persons. In the United States, the Federal laws ensure the public access and admission to the emergency services irrespective of their capability to pay for the service fee. Those people in the US who don’t avail any of the health insurance plan or coverage are likely to pay privately for the medical services, which is much costly (Farrell, et al., 2008).
In the United States, the utmost common cause for personal bankruptcy is an expensive medical bill and health insurance. But the developing trends and patterns in the industry of the United States healthcare are trying to bring significant changes into the landscape of the market. In the United States, government regulations in health care are complex, and this sometimes affects the healthcare industry growth in the US. The US government has to improve their policies and regulations and offer more programs that reduce the healthcare cost in the US for reducing the health issues in the US.
Exposure to the Business Cycle
In the business cycle as the US health industry is improving its situation day by day through using efficient artificial intelligence technologies, skilled people, high investment, and improving processes and policies that make them reach the expansion and recovery phase of the business cycle. It is expected that in the future the United States healthcare industry will be improved highly and they will mitigate all their issues and become able to offer low cost and high quality of healthcare service to the people that support them to reach the prosperity phase of the business cycle.
Size of Industry
In terms of the market size, the US healthcare industry is one of the leading in the global world because of high spending in the GDP. It’s the 2.8 trillion USD market that serves millions of people each year. In the United States, the facilities of health care are mainly operated and owned by private businesses. According to the statistics of United States of America hospital 2019 almost 62 percent of the United States community hospitals are owned and controlled by non-profit organizations, 20 percent are owned by the government, and almost 18 percent are owned and controlled by the profit-seeking organizations (The American Hospital Association, 2019).
From the facts of the United States hospital healthcare sector, it is revealed that a total number of hospitals in the US is 6,210 hospitals in 2019. The total admission of patients in all of the US hospitals is 36,510,207 out of which 34,305,620 admissions are in the community hospitals. The overall expenses of all of the US hospitals are $1,060,933,249,000 out of which $966,204,239,000 expenses are for the community hospitals in the US (The American Hospital Association, 2019)
Conclusion
It is concluded that the healthcare of the United States is working for finding a way to balance the quality of the health care service and the fee charged for this service in order to support the people that provide them better health that is useful for the country economic growth because when people in the economy are healthy they work more that improves productize and boost all the sectors of the economy and raise the economic development of the country. Drugs costs are also higher and so thus the spending which also accumulates 15% of the total amount which is more than the expected budget of the US.
It is concluded that in the United States the government regulations in health care are complex and this sometimes affects the healthcare industry growth in the US. In the business cycle as the US health industry is improving its situation day by day through using efficient artificial intelligence technologies, skilled people, high investment and improving processes and policies that make them reach the expansion and recovery phase of the business cycle. Therefore, the US government has to improve its policies and regulations and offer more programs that reduce the healthcare cost in the US for reducing the health issues in the US.
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References
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Deloitte. (2019). 2019 US and Global Health Care Industry Outlook. Retrieved from https://www2.deloitte.com/us/en/pages/life-sciences-and-health-care/articles/us-and-global-health-care-industry-trends-outlook.html
Farrell, D., Jensen, E., Bob Kocher, M., Lovegrove, N., Melhem, F., Mendonca, L., & Parish, a. B. (2008). Accounting for the cost of US health care: A new look at why Americans spend more. McKinsey Global Institute.
Fisher, M. (2012). Here’s a Map of the Countries That Provide Universal Health Care (America’s Still Not on It)”.
Glover, P. A. (2010). Health care competition, strategic mission, and patient satisfaction: research model and propositions. Health Organ Management, 627-641.
Goddard, M. (2015). Competition in Healthcare: Good, Bad or Ugly? Health Policy Management, 567-569.
Rosenthal, E. (2013). News Analysis – Health Care’s Road to Ruin. New York Times.
Santilli, F. R. (2018). Healthcare Trends for 2018. Am Health Drug Benefits, 48-54.
The American Hospital Association. (2019). Fast Facts on U.S. Hospitals, 2019. Retrieved from https://www.aha.org/statistics/fast-facts-us-hospitals
Wire, B. (2018). 2018 US Healthcare Industry Overview and Top Trends | Quantizing. Retrieved from Yahoo Finance: https://finance.yahoo.com/news/2018-us-healthcare-industry-overview-140300005.html
