- The US healthcare industry is massive, with healthcare spending accounting for over 18.3% of US GDP in 2021.
- We break down the industry’s various sectors and recent trends hoping to reduce costs while improving care.
- Do you work in the healthcare industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research.
The US healthcare industry is massive, and is continuing to grow as the population swells. Many different types of companies and healthcare institutions work together to provide patient satisfaction and a better quality of care—but sometimes it comes at a large cost.
Could new digital health startups help reduce costs while improving health care services? Insider Intelligence examines the healthcare industry, its latest trends, and what the future has in store.
US Healthcare Industry Size & Spending
The global healthcare market will reach $665.37 billion by 2028, according to Verified Market Research. US national healthcare expenditure reached $4.3 trillion in 2021, or $12,914 per person, and is estimated to reach $6.2 trillion by 2028, per the Centers for Medicare and Medicaid Services.
US healthcare is more expensive than most countries. According to the Commonwealth Fund, the US spent nearly 16.8% of gross domestic product (GDP) on healthcare in 2019. Germany was the second-highest ranking country, spending 11.7%, followed by Switzerland, spending 11.3%.
Deloitte estimates that, if the current trajectory continues, health spending will triple to nearly $12 trillion by 2040, or 26% of the GDP. The consulting firm also suggests that this growth is largely driven by inequities in the US healthcare system. Unnecessary healthcare spending that stems from structural inequities and biases, specifically related to race, gender, and socioeconomic status, currently costs the country $320 billion.
Another driver of these high costs is healthcare companies’ adoption of emerging health-focused technology. US healthcare providers and facilities spent $17.9 billion on cloud-based technologies in 2022—a figure that is expected to jump to $29.15 billion in 2026.
To offset costs, healthcare providers are leveraging the increase in consumers who want to play a more active role in monitoring their own health by encouraging tech that promotes vital tracking, early detection, and prevention of disease. Specifically, remote patient monitoring (RPM) tools, which enable a continuous stream of real-time health data between patients and their doctors, will account for much of this savings.
In 2023, the RPM space in 2023 will be rife with players, from providers to retailers. In fact, some 57% of provider organizations already use RPM to monitor patients’ vital signs at home, according to a January 2022 survey conducted by Sage Growth Partners on behalf of Rhythm. And, by 2024, over 75% of US medical practices will be leveraging the technology.
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US Healthcare Sectors
Healthcare involves many parties working together. From healthcare staffing and administration to providers and patient care, the market is buoyed by a variety of different workers and technologies. Some healthcare sectors include:
- Health insurance
- Healthcare marketing
- Healthcare tech
- Health administration
US Healthcare Industry Trends
House calls are making a comeback—in a way. Insurers and retailers are now buying home health companies to expand into in-home care. Remote patient monitoring (RPM) and at-home diagnostic tests are helping to boost these efforts. Up to $265 billion in care services for traditional Medicare and Medicare Advantage (MA) beneficiaries could migrate from traditional facilities to the home by 2025, per McKinsey & Company. Expect more big brands to move in.
Retailers and Insurers
Providing in-home care can reduce costs related to emergency room visits, decrease hospital readmissions, and even speed recovery time. Over the past year, big companies—including retailers like Amazon—have spent billions to stake a claim in the home healthcare market.
Baby boomers looking to “age in place” will be prime candidates for in-home healthcare. By 2030, all of the nearly 70 million boomers (now 58 to 76 years old) will be 65 or older, with the oldest close to 85. Most will be using some form of Medicare for their health coverage.
Demand for convenience and distanced care continues, and RPM adoption will only increase post-pandemic. We estimate there will be 70.6 million RPM users in the US by 2025, up 56.5% from 2022. In three years, more than one-quarter of the US population will be regularly using a device that remotely tracks or collects their well-being or medical data for their doctors to assess.
The do-it-yourself healthcare market is booming. While sales of COVID-19 tests are waning, manufacturers and providers are rolling out other types of at-home tests, including those for sexually transmitted diseases—now considered an “out-of-control” situation in the US.
The global home diagnostics market was estimated at $5.42 billion in 2021 and is expected to reach $8.15 billion by 2030, according to Precedence Research.
Mental Health Coverage
Mental health benefits are now a priority for both employees and employers. Offering virtual mental health care programs helps to mitigate employee “burnout” and keep costs low.
Rising prescription drug costs and treating chronic health conditions, however, are adding pressure on employers every year. At the same time, inflation has led 13% of adults to cut healthcare costs completely, per an August 2022 First Insight report.