As part of our KG Prime market intelligence series, we recently examined and retrieved data from the largest players in the U.S. healthcare market. Specifically, we studied 10 of the largest hospital systems, along with six renowned health insurers. After doing so, we suggested various takeaways for the ARM and RCM industries based on company-specific and market-wide data. Although it’s not a groundbreaking statement, we believe that the hospital segment and health insurance market will continue, in general, to present extremely worthwhile opportunities for ARM and RCM specialists. Additionally, we saw significant growth over the past few years among the major players, and even the emergence of some new massive companies (e.g., Centene Corporation), driven by, among other things, the effects and implementation of the Affordable Care Act (ACA).
After considering the healthcare industry market-wide data and analyses from earlier this year which are already available on KG Prime, we surmise that although this market vertical is quite mature and incredibly large, there’s still plenty of room for growth. This is substantiated by the recent robust growth of the already-massive hospital systems’ revenues (e.g., Tenet Healthcare Corporation and Trinity Health Corporation). Furthermore, many major hospital systems chose to forgo present-time profitability in lieu of greater investments for the future in the ever-changing healthcare industry. We can see these investments by hospitals (and other healthcare providers) rapidly adopting various technologically-advanced systems and almost exclusively maintaining electronic health records to better adhere to the HITECH Act, MACRA, and highly anticipated implementation of ICD-11. Among other things, this revenue and investment growth led to greater levels of companies’ accounts receivable and allowance for bad debt, suggesting there may be outsourced ARM and RCM opportunities available for third-party agents.
Similarly, major health insurers experienced consistent revenue and accounts receivable growth, along with modest volatility and stagnancy in profitability, over the past few years. There’s been endless debate and public discourse regarding the health insurance market in the U.S., particularly those participating in the ACA marketplaces, which went live in 2014. For example, many health insurers, such as Aetna and Humana, have recently stated that they’re pulling out of the ACA marketplaces in various regions throughout the U.S. Additionally, there’re significant discussions as to whether these profitability problems were driven by, among other reasons:
- Actuarial miscues by the health insurers;
- Due to the ACA allegedly being a failed piece of legislation, as many GOP members of Congress and President Trump stated numerous times; or
- Simply because the ACA just needs various amendments and updates.
Additionally, we recently saw four of the largest health insurers try to enhance business operations by merging with one another (Aetna & Humana and Anthem & Cigna). The Department of Justice blocked both attempts due to antitrust concerns, causing the prospective mergers to fail. Nonetheless, this is a rapidly-changing segment with billions of dollars in accounts receivable and bad debts.
Going forward, it’ll be incredibly important to track numerous healthcare-related events, including, but not limited to, the following: 1) the GOP’s attempts to repeal, and potentially replace, the ACA; 2) Trump’s actions and continual vows to “let ObamaCare implode”; and 3) healthcare market participants’ – both healthcare providers and health insurers – financial results. Most importantly, although this is a very tumultuous time in the U.S. healthcare market, it should endure and continue growing.
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