Due to limited competition and expected steady demand, industry revenue will rise
New York, NY (PRWEB) November 11, 2014
The Hospitals industry in Canada has experienced slow but relatively steady growth during the past five years. According to the Canadian Institute for Health Information, more than 90.0% of total industry revenue comes from the Canadian government, which funds public healthcare coverage at the provincial level. This steady source of the majority of the industry's funding largely buffers the industry from macroeconomic volatility. According to IBISWorld Industry Analyst Jocelyn Phillips, “The overall level of health of the population also drives demand for hospital services, and although the obesity rate and average age of the Canadian population has increased during the past five years, this growth has happened only very slowly.”
As a result of these factors, revenue for the Hospitals industry in Canada is expected to grow slightly over the five-year period to 2014.
Hospital operators in Canada are under consistent pressure to reduce costs in order to keep government healthcare spending down. As a result, hospitals across the country have increasingly shifted their operations to encourage patients to avoid inpatient admission whenever possible, as the cost of inpatient treatment significantly outweighs the cost of ambulatory care. Ambulatory (also known as outpatient) care's share of total industry revenue has accordingly grown during the past five years, contributing to 3.0% revenue growth in 2014 alone.
“However, although inpatient volumes have decreased during the five years to 2014, the patients admitted to hospitals in Canada are now more likely to have more acute conditions, necessitating more expensive treatment,” says Phillips. At the same time, the cost of care has gone up across the industry, rendering the inpatient volume losses less lucrative. As a result, the industry has experienced only moderate gains from this shift.
The Hospitals industry in Canada has only a low level of market share concentration, with the four largest hospital systems combining to account for a small amount of total industry revenue. Although the largest hospital systems benefit from their scale by minimizing redundancies and entering into group supply purchasing contracts to keep costs low, small and independent local hospitals still largely characterize the industry. According to data from Statistics Canada, more than 30.0% of industry establishments employ fewer than 100 people. Industry concentration has remained relatively steady during the past five years, and is not expected to change significantly during the five years to 2019.
The industry faces competition from both other sources of traditional medical care (such as specialty hospitals), as well as alternative care providers, such as acupuncturists, massage therapists and chiropractors. Although most specialty hospitals are fully eligible for government funding, public coverage for alternative care varies from province to province, limiting their ability to fully compete with hospitals. Due to this limited competition, coupled with expected steady demand and funding for hospital care, IBISWorld expects industry revenue to grow slowly during the next five years to 2019.
For more information, visit IBISWorld’s Hospitals in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry includes general medical and surgical hospitals that provide surgical and nonsurgical diagnostic and medical treatment to inpatients with medical conditions. Hospitals maintain beds and usually provide other medical treatment, such as outpatient services and pharmacy services. This industry excludes psychiatric and other specialty 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
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