Overview of the Healthcare Sector
Lead Author: Chris Unger, Contributing Author: Cyrus Hillsman
This article describes some of the stakeholders of the healthcare sector and the factors which influence the application of systems engineering within it. For an overview of healthcare systems engineering and how it deals with these influences see the Healthcare Systems Engineering article.
The healthcare sector is a complex system made up of people, facilities, laws and regulations. It addresses current health, tries to ensure wellness, treats medical problems; creates new medication and medical devices; manages the health both individuals and populations; and helps determine regulations for safety, privacy, the environment, and healthcare delivery itself.
Stakeholders
There are many types of stakeholders in the healthcare sector. The space covers everyone from the general public – who have a stake in their own health and the health of those around them for issues like infectious disease – to the individual researchers who investigate current healthcare problems. The high-level groups of stakeholders include:
- The general public;
- Healthcare providers (such as doctors, nurses, clinics, and hospitals);
- Payers (such as insurance companies);
- Public health organizations;
- Researchers, scientists, and corporations in the pharmaceutical industry;
- Medical device manufacturers;
- Policy makers (particularly those with interest in public health, healthcare safety or privacy policies);
- Healthcare information technology technicians and organizations; and
- Professional organizations and societies relevant to the various aspects of the space.
The healthcare sector is an enormous area financially as well. For example, out of $2.87 trillion on healthcare spent in the US in 2010, the breakdown of components is:
| Hospital Care | $921B |
| Physician Services | $555B |
| Prescription Drugs | $280B |
| Nursing Home Care | $151B |
| Other Medical Products | $113B |
| Dental Services | $93B |
| Government Public Health | $84B |
| Other Professional Services | $79B |
| Home Health Care | $77B |
| Research | $48B |
The sections below provide insight into the landscape for these the stakeholder groups where there is sufficient information currently available. More detail will be added as the healthcare aspects of the SEBoK mature and the team will take particular care to incorporate additional information from outside the US going forward.
Healthcare Delivery
The largest share of the money spent on healthcare in the US healthcare is in hospitals (almost a third). The number of hospitals has been relatively flat for the last 20 years. However, due to the growing cost pressures and increasing paperwork, there has been a general consolidation of hospitals into chains, and independent physician providers into hospitals or group practices. (Emmanuel 2014)
| Total Number of All U.S. Registered * Hospitals | 5,627 |
| Total Number of U.S. Community ** Hospitals | 4,926 |
| Total Number of Nongovernment Not-for-Profit Community Hospitals | 2,870 |
| Total Number of Investor-Owned (For-Profit) Community Hospitals | 1,053 |
| Total Number of State and Local Government Community Hospitals | 1,003 |
| Total Number of Federal Government Hospitals | 213 |
| Total Number of Nonfederal Psychiatric Hospitals | 403 |
Hospitals range from small community hospitals to the New York-Presbyterian Hospital/Weill Cornell Medical Center with 2,259 beds (Becker 201)], or the University of Pittsburgh Medical Center Presbyterian with $12B in revenue in 2013. (Becker 2013).
Hospital chains tend to be less than 10 hospitals, with less than 10 chains having more than 10 hospitals (Becker 2015). The largest two have almost 200 hospitals (Community Health Systems with 188 and Hospital Corporation of America with 166). The largest systems by revenue are Kaiser Permanente and the Veterans Health Administration with revenue or budget of slightly over $50B each.
Medical Devices Manufacturers
The medical device development landscape is diverse, composed of many markets of intermediate size (many being above $10B in size, with high single digit to double digit growth rates). Some examples are, with projected market sizes in 2020, are:
| Medical Device Type | Projected Market Share |
|---|---|
| In-vitro diagnostics (IVD) | $75B |
| Endoscopy | $33B |
| Interventional Cardiology | $27B |
| Infection control | $17B |
| Minimally invasive surgery | $14B |
| Defibrillators | $13B |
| Dental Implants | $10B |
| Infusion pump | $ 7B |
| Magnetic Resonance | $ 7B |
| Digital Xray | $ 5B |
As described in Healthcare Systems Engineering, this is the area of the healthcare sector that is most closely aligned with classic product-focused businesses.
Healthcare IT
There is a large uncertainty in what constitutes Healthcare IT. The most visible segment is the Electronic Medical Record (EMR) or Electronic Health Record (EHR), but there is also large markets in billing management, clinical decision support, image management, etc. But there is a divergence of market sizes with estimates around $60B [Bain, FierceIT] and some around $104B [Markets and Markets, MedGadget, and PRNewswire].
An EHR installation at a hospital is similar to an Oracle database installation at a company, where much of the cost is customizing the database and workflows to the institution’s policies and workflows, and in training the users to the new system and standardized practices which come with IT and automation.
| Company | 2015 Revenue |
|---|---|
| Optum | $5.2B |
| Cerner Corp. | $3.4B |
| McKesson | $3.1B |
| Dell | $2.9B |
| Cognizant | $2.7B |
| Philips | $2.7B |
| Xerox | $2.4B |
| Siemens | $2.0B |
| Epic Systems Corp. | $1.8B |
| GE Healthcare | $1.5B |
Public Health Systems
The World Health Organization (WHO) defines public health as “all organized measures … to prevent disease, promote health, and prolong life among the population as a whole. Its activities aim to provide conditions in which people can be healthy and focus on entire populations, not on individual patients or diseases. Thus, public health is concerned with the total system and not only the eradication of a particular disease.” (WHO 2016) Governments at each level define exactly what “public health” will encompass, but typically there are three areas: epidemiology, provision of health services, and workplace and environmental safety and policy. Epidemiology is the study and control health-related events, including disease. Various methods can be used to carry out epidemiological investigations: surveillance and descriptive studies can be used to study distribution; analytical studies are used to study determinants.” (WHO 2016, “Health topics: Epidemiology”). Health services may include services such as preventive vaccinations, disease screening, or well-baby or well-child programs. Environmental safety can include developing policies for automobile or workplace safety, monitoring the quality of drinking water, or even conducting restaurant health inspections. In addition to these wide varieties of work, public health organizations are increasingly expected to be responsible for the health-related aspects of disaster and emergency response efforts.
In the US, the public health “system” is really a patchwork of independent healthcare departments. Each state or territory defines the scope and responsibilities of its own public health “department”, requiring information and cooperation from hospitals, private physicians, emergency personnel, laboratory networks, and sometimes public health organizations from other states. (Gursky 2005)
Conclusion
In addition to each group of stakeholders being complex in itself, these stakeholders then interact and work together - or sometimes contradict one another. This makes the landscape of the healthcare systems engineering space itself complex and highlights the need for systems thinking and systems approaches when attempting to address any health-related issues or challenges.
References
Works Cited
AHA. 2014. "Fast Facts on US Hospitals." Chicago, IL: American Hospital Association (AHA). September 2014. Available at: http://www.aha.org/research/rc/stat-studies/fast-facts.shtml
Becker's Healthcare. 2015. "10 largest for-profit hospital systems | 2015". Becker's Hospital Review. June 30, 2015. Available at: http://www.beckershospitalreview.com/lists/10-largest-for-profit-hospital-systems-2015.html
Becker's Healthcare. 2014. "100 Largest Hospitals in the US". Becker's Hospital Review. August 7, 2014. Available at: http://www.beckershospitalreview.com/lists/8-7-14-100-largest-hospitals-in-america.html
Becker's Healthcare. 2013. "100 Top-Grossing Hospitals in the US". Becker's Hospital Review. June 24, 2013. Available at: http://www.beckershospitalreview.com/lists/100-top-grossing-hospitals-in-america-2013.html
Eliades, G., M. Retterath, N. Hueltenschmidt, and K. Singh. 2012. Healthcare 2020. Amsterdam, The Netherlands: Bain & Company. Available at: http://www.bain.com/Images/BAIN_BRIEF_Healthcare_2020.pdf.
Emmanuel, E.J. 2014 Reinventing American Health Care: How the Affordable Care Act will Improve our Terribly Complex, Blatantly Unjust, Outrageously Expensive, Grossly Inefficient, Error Prone System. New York City, NY: PublicAffairs.
Gold, A. 2014. "Global healthcare IT market projected to hit $66 billion by 2020." FierceHealthIT. April 1, 2014. Available at; http://www.fiercehealthit.com/story/global-healthcare-it-market-projected-hit-66-billion-2020/2014-04-01.
Gursky, E. 2005. Epidemic Proportions: Building National Public Health Capabilities to Meeting National Security Threats. Arlington, VA: Analytic Services Inc. (ANSER). Healthcare Informatics. 2015."2015 HCI 100." Available at: http://www.healthcare-informatics.com/hci100/2015-hci-100-list
Markets and Markets. 2015. North American Healthcare IT Market by Product (EHR, RIS, PACS, VNA, CPOE, mHealth, Telehealth, Healthcare analytics, Supply Chain Management, Revenue Cycle Management, CRM, Claims Management) by End User (Provider, Payer) - Forecast to 2020. October 2015. Available at: http://www.marketsandmarkets.com/Market-Reports/north-america-healthcare-it-market-1190.html
MedGadget. 2015. "Global Healthcare IT Market 2020 - Industry Survey, Market Size, Competitive Trends: Radiant Insights, Inc". November 2, 2015. Available at: http://www.medgadget.com/2015/11/global-healthcare-it-market-2020-industry-survey-market-size-competitive-trends-radiant-insights-inc.html
PRNewswire. 2015. "Healthcare IT Market Size to Reach $104.5 Billion by 2020: Grand View Research, Inc." October 15, 2015. Available at: http://www.prnewswire.com/news-releases/healthcare-it-market-size-to-reach-1045-billion-by-2020-grand-view-research-inc-533012831.html
WHO. 2016. "Health Topics: Epidemiology." Geneva, Switzerland: World Health Organization. Available at: http://www.who.int/topics/epidemiology/en/
WHO. 2016. "Trade, foreign policy, diplomacy, and health: Public Health." Geneva, Switzerland: World Health Organization. Available at: http://www.who.int/trade/glossary/story076/en/
Primary References
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Additional References
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