Healthcare Facts

The healthcare industry in the US includes care providers (hospitals, clinics, doctors offices, nursing homes) with combined annual revenues of $900 billion; manufacturers of drugs, medical devices, and other medical equipment and supplies, with combined annual revenues of $300 billion; private health insurers with annual revenues of $300 billion; and government health insurance programs like Medicare and Medicaid, with combined annual payments of $500 billion. The industry is highly fragmented. There are about 7,000 general hospitals; 15,000 nursing homes; 10,000 diagnostic laboratories; 30,000 outpatient clinics; 120,000 dentists' offices; 200,000 doctors' offices; and 1,000 drug manufacturers; 5,000 manufacturers of medical equipment and supplies; and 3,000 private health insurers.

Although a large majority of hospitals are operated by nonprofits, most doctor offices, nursing homes, insurers, and manufacturers of medical products are for-profit entities. The industry is one of the few in the US with large participation from the government, both as a direct-care provider through the Veterans Administration and other hospitals and clinics, and as an operator of health insurance and other payment programs like Medicare and Medicaid. Healthcare providers compete based on location and reputation, and to a lesser extent on cost. Providers of health insurance plans compete mainly based on cost, with corporate customers footing a large part of the bill.

The average cost of health insurance coverage for an American family is fast approaching $1000 a month and family premiums in some areas of the country are already exceeding this amount.

After a brief pause in the mid 1990s, healthcare costs are now rising again annually at double-digit rates. According to Mercer Human Resource Consulting, the average premium rate increase for health insurance in 2005 will be 12.9% .

According to the Congressional Budget Office, every 1% increase in health insurance costs causes nearly 200,000 Americans to lose coverage. Independent researchers have put that number even higher, at 300,000.

According to Sherlock Health Consultants, the nationwide increase in employee contribution in 2005 to the cost of their insurance is estimated to be 18.2%, nearly double the increase in employer contribution.

Administrative waste and bureaucracy is estimated to comprise over 20% of the $1.6 Trillion U.S. healthcare economy. It is estimated that physicians spend fifteen to twenty cents out of every claims dollar to collect payment for services rendered to their patients.

The low-dollar ($15) co-pay for treatment at a doctor's office is going the way of the dinosaur. High-Deductible Plans and Defined-Contribution Health Plans are growing in popularity. These products require the insured to become a more "savvy" healthcare consumers. These dramatic and ongoing changes in healthcare have created a new phenomenon that is known as Consumer-Directed Healthcare.

Since 2000, when the Minneapolis startup Definity Health launched the first "consumer-driven" health plan, more than 20 companies have begun offering similar plans, including the health insurers Aetna, CIGNA, and Blue Cross of California, as well as the managed care giants, Humana, Anthem, and United Health Group.

According to Deloitte Consulting, adoption of a Consumer-Directed Health (CDH) Plan by employers has nearly doubled since 2003.