New York, NY (PRWEB) February 25, 2014
Specialty hospitals that focus on rehabilitation, long-term acute care, children's medicine, cardiology, orthopedics, women's medicine and surgical procedures represent an increasingly larger sector of America's healthcare system. In contrast to traditional healthcare facilities, industry hospitals provide specialized care to patients in both large-scale, well-known establishments and small, local clinics. According to IBISWorld Industry Analyst Jocelyn Phillips, “This labor-intensive industry has consolidated in recent years as large operators have acquired smaller companies to gain market share, particularly of relatively lucrative, privately insured patients.” As a result, most major industry companies have grown in the past five years, and total revenue has increased an average 3.0% annually to $42.3 billion, including expected 6.2% growth in 2014 as recent healthcare legislation expands access to medical insurance. This growth has also been bolstered by the aging US population, which requires more medical care, particularly in long-term acute care (LTAC) hospitals and inpatient rehabilitation facilities (IRFs).
However, fluctuating Medicare reimbursement rates have hampered industry profitability over the past five-year period. Medicare kept reimbursement rates relatively flat in the five years to 2014, with plans to reduce rates in several industry product segments in the next five years. However, sequestration-related reductions to the federal budget introduced a 2.0% cut to Medicare funding in 2013, which will likely persist in coming years. Because many specialty hospitals collect a significant amount of revenue from Medicare, such persistent limitations may further threaten industry profitability.
In the five years to 2019, IBISWorld expects industry revenue to grow. The aging population and continued increase in the number of insured individuals as a result of healthcare reform will likely drive revenue growth, although uncertain Medicare reimbursement rates and competition from home healthcare will keep growth moderate. “Moreover, healthcare reform requires mandatory quality data-reporting programs for LTAC hospitals and IRFs, the costs of which could further damage industry profitability,” says Phillips. Furthermore, industry consolidation, supported by the formation of accountable care organizations and the ban on physician-owned specialty hospitals, will play a key role in further decreasing the number of industry operators.
Although the Specialty Hospitals industry is consolidating, it still has a low level of market share concentration. The largest four firms are: Memorial Sloan-Kettering Cancer Center, Kindred Healthcare Inc., HealthSouth Corporation and Select Medical Holdings Corporation. Several factors have contributed to the consolidation trend within the industry and will cause it to accelerate in upcoming years. While there are several large companies in operation, the industry remains fragmented, with the majority of industry firms employing fewer than 500 people. This provides an opportunity for large companies to acquire smaller operations in order to gain market share, grow economies of scale and entrance into a new geography. Moreover, the struggling economy and the uncertainty created by the debate over healthcare reform caused many buyers to delay acquisitions during 2008 and 2009. The improving economy will increase access to capital with which companies may complete mergers and acquisitions.
For more information, visit IBISWorld’s Specialty Hospitals in the US industry report page.
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IBISWorld industry Report Key Topics
The Specialty Hospitals industry includes companies that provide diagnostic and medical treatment to inpatients with a specific type of disease or medical condition. Specialty hospitals include hospitals that primarily provide long-term care for the chronically ill and those that offer rehabilitation, restorative and adjunctive services to physically challenged or disabled people. The industry does not include specialty units within general hospitals or psychiatric or substance abuse hospitals.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.