Friday, May 27, 2011

Segmenting the Broader Health Care Industry

There are a variety of segments in the health care and wellness industry

Conventional Health Care Industry
• Health care financing
• Physician and Nurses services

Wellness Industry
• Complementary and Alternative health services
• Fitness
• Diet & nutrition

Support Industries
• Public education
• Professional education
• Research & technology innovation
• Institutional services (environmental services, security, design, management, ordering, etc)
• Input factors (natural resources & land, labor, and capital goods)

Health care financing through third party payers and the physician and nurses services that they finance are 18% of the United States GDP, which equals roughly $2.5 trillion dollars. The health care is growing due to a pending increase in health insurance coverage across the nation, population growth, and the aging of the population. Services tend to be clustered in urban and metropolitan areas with use primarily from insured individuals. 83% of the U.S. population is insured in some way. 59% of those insured under the age of 65 are employer insured and 19% under the age of 65 are insured through some sort of government sponsored program such as Medicare, Medicaid, or military health services. All individuals over the age of 65 are eligible for Medicare insurance. Most health services addresses chronic disease and according to the Centers of Disease Control and Prevention, it is estimated that health care costs for chronic disease treatment account for over 75% of national health expenditures. There is a high demand for quality service that is individualized and competition is plentiful. Services are primarily conducted in English and Spanish.

The size of the wellness industry is not as well known. In a 2007 report by the US Department of Health and Human Services, approximately $34 billion dollars was spent on Complementary and Alternative Health (CAM) care, which includes not only visits to CAM practitioners (only 1/3 of money spent) but also CAM products, classes, and materials. This equates to just over 11% of all out of pocket health expenses and to 1.5% of total health care expenditures in the United States. Like the health care industry, the wellness industry is clustered in urban and metropolitan areas but those who frequent these services tend to be wellness and fitness oriented, seeking preventative services, or suffering from chronic illness. According to the US Department of Commerce, nearly 1 in every 2 Americans has a chronic illness, so the wellness industry is certainly not limited to a small percentage of Americans. Based on the amount of growth over the past two decades, and projections for the demand of healthcare services, it is estimated that wellness services, especially CAM, is expected go grow at a fast pace over the next decade. The use of self-care practices has also been on the rise and growth is expected, as wellness and lifestyle interventions become a greater part of healthcare services.

Along with the growth of the health and wellness industries, the growth of support industries will also expand in order to accommodate and support the health and wellness industries. The need for more public education and better professional health care education will support the evolution of health systems towards comprehensive lifestyle interventions that encompass environmental and biological/genetic factors. Research and technological innovations will continue to drive health care practices, knowledge, and care. Currently, the United States spends approximately $100 billion on medical research alone and is not expected to decline. Technology innovations have always been a hallmark of American health systems, and that trend will not likely stop either. The need for institutional services, essentially, all the pieces of administration and business that keeps health organizations working, will also expand. As more health facilities are established to accommodate growing demands for health services, more people will be employed to design, manage, and upkeep the systems. More health services and facilities will also require more natural resources and land, labor, and capital resources.


Within the Conventional Care Industry, the continuum of care from cradle to grave encompasses 15+ different realms of medicine. These include:

1) Pre-natal care
2) Infant/neo-natal care
3) Pediatric
4) Adult care/primary care
5) Internal medicine
6) Specialists (ie: Oncologists, Urologists, Cardiologists, Endocrinologists, etc)
7) Critical Care & Emergency Care
8) Geriatrics
9) Long-term care
10) Mental Health
11) Behavioral Medicine
12) Environmental Medicine
13) Occupational medicine
14) Rehabilitation
15) Preventative Health (includes wellness care, self-care, and lifestyle management)

The wellness industry fits almost entirely into the last category. Support industries mirror the same set of realms of medicine.

The challenge of health care today is managing systems that streamline delivery of the entire continuum of care. 30 years ago, medicine went in the direction of institutionalized delivery of care. The entire industry became institutionalized. However, in the 80’s, the American health system entered into a transition phase attempting to demystify and deinstitutionalize health systems. This has produced a staggering array of delivery systems. To a large degree, we are still in this transition period trying to find effective delivery systems that address the complexity of health in American society. Some of these delivery methods are:

1) The “Medical Home” or “Health Home”
2) Integrative Health
3) Functional Medicine
4) Community Clinics & Satellite Hospitals
5) Conventional biomedical “silo system”
6) Home Health Care
7) Patient Centered

The diversity in Integrative Health systems, in part, is a result of Integrative Health combining different delivery systems together to produce new ideas and results.

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