Healthcare firms will demand consultants to manage risk and handle reform
Los Angeles, CA (PRWEB) March 02, 2012
Healthcare is often related to doctors, nurses and patients; yet, healthcare companies are businesses. Healthcare employers, hospitals, insurance companies, pharmaceutical developers and medical device manufacturers turn to consultants to improve operating efficiencies and manage risk. During the five years to 2012, demand for healthcare consultants has increased, due to technological advances in the healthcare sector and the changing regulatory environment. Nonetheless, revenue for the Healthcare Consultants industry is expected to decrease at an average of 0.8% per year during the period to $9.6 billion. According to IBISWorld industry analyst Sophia Snyder, “the fall in revenue is mainly due to the recession, which forced healthcare companies, like many other types of businesses, to cut costs.”
Some healthcare companies initiated the use of consultants to stay in the black by getting advice on improving efficiencies. In recent years, companies have increasingly used healthcare consultants as corporate profit improved. In 2012, revenue is expected to increase 5.7%, as demand continues to rise. Industry operators have subsequently been able to charge higher fees. Snyder says, “this trend has particularly occurred as specialty services develop and consulting becomes more technical.” Rising operating profit will be more evident during the next five years as major parts of healthcare reform are implemented. In 2017, profit margin is forecast to reach 20.3%, up from 19.8% in 2012. In line with profit growth, in the five years to 2017, industry revenue is forecast to grow.
This relatively strong profit margin has enticed entrants into the industry. The number of niche independent practices has declined moderately during the past five years, as general consulting firms acquired these companies to gain entrance into the market. The number of companies is expected to increase at an average of 0.9% per year during the five years to 2012 to 39,495. This percentage represents a slowing in company growth from the previous five-year period. During the next five years, this trend is forecast to reverse, with growth in companies accelerating. Niche companies are projected to enter the industry at a faster rate to meet mounting demand, as healthcare companies look to comply with new regulations associated with healthcare reform. Electronic health record (EHR) implementation will likely be a significant growth area for the industry. The industry is in the midst of a shift in concentration, evidenced in opposing trends among small and large players. While concentration is low in the industry as a whole, there is increasing concentration among major companies. Existing firms compete in terms in price, quality, aggressiveness of contracts and breadth of services offered. In pursuit of this last basis of competition, major companies Deloitte, IMS Health and PricewaterhouseCoopers have aggressively expanded in the past five years.
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This industry provides specialist advice to businesses that are involved in the healthcare fields, such as hospitals, physicians, pharmaceutical companies and insurance providers. These services include advice related to financial management, human resources, information technology and other operations.
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