The 50 Largest Companies in the US Healthcare Industry Occupy 60% of the $350 Billion Market

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Topics Covered:

Industry Overview

Quarterly Industry Update

Business Challenges

Trends and Opportunities

Call Preparation Questions

Financial Information

Industry Forecast

Website and Media Links

Glossary of Acronyms

Summary

Brief Excerpt from Industry Overview Chapter:

The US healthcare industry includes about 3,000 managed healthcare companies with combined annual revenue of about $350 billion. Large participants include Aetna, UnitedHealth, and Humana, and non-profit organizations such as Kaiser Permanente and state Blue Cross/Blue Shield organizations. The industry has become concentrated, with the 50 largest organizations holding more than 60 percent of the market.

COMPETITIVE LANDSCAPE

Demand is driven by the rising costs of providing medical care. The profitability of individual companies depends on efficient operations and the ability to negotiate favorable contracts with healthcare providers. Large companies and organizations have advantages in negotiating contracts with healthcare providers. Small companies can compete successfully only by providing special coverage plans, or in small markets. The industry is highly automated, with annual revenue per employee close to $1 million.

PRODUCTS, OPERATIONS & TECHNOLOGY

The industry provides various types of health insurance plans that have built-in cost containment measures, unlike traditional indemnity plans that pay whatever costs are incurred. Among the major products are health maintenance organization (HMO); preferred provider organization (PPO); point of service (POS); and indemnity benefit plans. Companies usually offer a number of such plans and may operate dozens of them.

HMO plans, sometimes called ‘closed system’ plans, have the most active cost-containment features. Consumers choose a primary care doctor from the HMO’s network of providers, who acts as a gatekeeper for any other medical services the consumer may need. PPO plans, also called ‘open access’ plans, allow consumers to …

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