medical industry

The health care industry is one of the world's largest and fastest-growing industries.^[3] Consuming over 10 percent of gross domestic product (GDP) of most developed nations, health care can form an enormous part of a country's economy.

The health care industry, or medical industry, is an aggregation of sectors within the economic system that provides goods and services to treat patients with curative, preventive, rehabilitative, and palliative care. The modern health care industry is divided into many sectors and depends on interdisciplinary teams of trained professionals and paraprofessionals to meet health needs of individuals and populations.^[1][2]

Background

For purpose of finance and management, the health care industry is typically divided into several areas. As a basic framework for defining the sector, the United Nations International Standard Industrial Classification (ISIC) categorizes the health care 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, homeopathy, chiropractics, acupuncture, etc.^[4]

The Global Industry Classification Standard and the Industry Classification Benchmark further distinguish the industry as two main groups:

1. health care equipment and services; and
2. pharmaceuticals, biotechnology and related life sciences.

Health care equipment and services comprise companies and entities that provide medical equipment, medical supplies, and health care services, such as hospitals, home health care providers, and nursing homes. The second industry group comprises sectors companies that produce biotechnology, pharmaceuticals, and miscellaneous scientific services.^[5]

Other approaches to defining the scope of the health care 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.^[6]

Medical tourism

Medical tourism (also called medical travel, health tourism or global health care) is a term initially coined by travel agencies and the mass media to describe the rapidly-growing practice of traveling across international borders to obtain health care.

Such services typically include elective procedures as well as complex specialized surgeries such as joint replacement (knee/hip), cardiac surgery, dental surgery, and cosmetic surgeries. However, virtually every type of health care, including psychiatry, alternative treatments, convalescent care and even burial services are available. As a practical matter, providers and customers commonly use informal channels of communication-connection-contract, and in such cases this tends to mean less regulatory or legal oversight to assure quality and less formal recourse to reimbursement or redress, if needed.

Over 50 countries have identified medical tourism as a national industry.^[17] However, accreditation and other measures of quality vary widely across the globe, and there are risks and ethical issues that make this method of accessing medical care controversial. Also, some destinations may become hazardous or even dangerous for medical tourists to contemplate.

Providers and professionals

A health care provider is an institution (such as a hospital or clinic) or person (such as a physician, nurse, allied health professional or community health worker) 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,^[7] 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.^[8]

In 2011, health care costs paid to hospitals, physicians, nursing homes, diagnostic laboratories, pharmacies, medical device manufacturers and other components of the health care system, consumed 17.9 percent ^[9] of the Gross Domestic Product (GDP) of the United States, the largest of any country in the world. It is expected that the health share of the GDP will continue its upward trend, reaching 19.6 percent of GDP by 2016.^[10] In 2001, for the OECD countries the average was 8.4 percent ^[11] with the United States (13.9%), Switzerland (10.9%), and Germany (10.7%) being the top three. US health care expenditures totaled US$2.2 trillion in 2006.^[12] 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.^[13]

Delivery of services

See also: Health care delivery

The delivery of health care services—from primary care to secondary and tertiary levels of care—is the most visible part of any health care system, both to users and the general public.^[14] There are many ways of providing health care 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 the flesh'. This is what occurs in general medicine in most countries. However, with modern telecommunications technology, in absentia health care 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.

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 such as that 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 (such as the National Health Service in the United Kingdom). 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.^[15]

The structure of health care 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 health care professional fees.^[16] China has implemented a long-term transformation of its health care industry, beginning in the 1980s. Over the first twenty-five years of this transformation, government contributions to health care 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.^[16]