Defining the Essentials of the Healthcare Industry

Objective

After completing this lesson, you will be able to define the key characteristics of the Healthcare industry and its unique attributes, competitive advantages, and distinguishing features.

Characteristics of the Healthcare System

Healthcare software from SAP helps the healthcare industry to optimize clinical operations and bring drugs and therapies to market faster and more sustainably. To understand the SAP healthcare solution, let's start with the healthcare business and recap some industry characteristics across country and region specifics.

Hospital Types

First, healthcare has an institutional side. The probably most known healthcare institutions are the hospitals. Depending on how they are funded, we differentiate three hospital types:

Public hospitals are funded and owned by local, state or federal governments.
Non-profit hospitals are often community-based hospitals providing healthcare services to their community.
Private hospitals are funded by patients themselves ("self-payers"), by insurers, or by foreign embassies.

Play the video to learn more about the various hospital types.

Patient Care

Besides the various institutions, healthcare includes a huge spectrum of services provided by healthcare professionals to diagnose, treat, and manage an individual’s health needs. They are listed in the following graphic:

The graphic shows six pictures illustrating specialist care, mental care, emergency care, longterm care, primary care, and hospice care.

Play the next video to learn more about the various types of patient care illustrated in the preceding image.

Healthcare Job Roles

Healthcare institutions and patient care could not exist without the expertise and engagement of the healthcare professionals all over the world in their various job roles and professions. The following video gives an impression of how many divers professions are included, for example:

Doctors or physicians
Nurses
Pharmacists
Laboratory technicians, radiology technicians, pharmacy technicians, and other technicians
Physical therapists, rehabilitation specialists, respiratory therapists, speech therapists
Psychotherapists, occupational therapists
Administrative and clerical staff
IT services and operational services

Play the video to get an overview of which job roles belong to the healthcare business.

Financial Challenges of the Healthcare Industry

Considering what we discussed, it is not a surprise that healthcare is expensive. Even diagnosing and treating a short-term illness can cost thousands of dollars.

In some countries or regions, health insurance is a way to spread out the cost of healthcare among a group of people. Health insurance follows the principle of solidarity: The financial contributions that the citizens pay each month create a pool of money. When someone in the group is sick or injured, money from the pool pays for their healthcare. Some people pay in more than they ever use. Others get back more than they paid in.

As the healthcare costs are high, the health insurance is expensive, too. The sum of money must be sufficient to cover the costs for treating each sick individual including those who get healthcare at a reduced cost and those without health insurance at all.

To ensure fair and equitable access to healthcare services for all citizens, the funding, commissioning, and reimbursement models of healthcare vary from country/region to country/region.

Overall, healthcare costs are either paid by private payers such as insurance companies, or public payers such as federal or state governments. There are a huge number of private health insurers around the world. Each company must offer a health insurance plan that meets or exceeds the standards that are set by the state and federal government in the respective country/region. The health insurance plans vary. Generally, lower-cost healthcare plans give patients fewer choices and make it more difficult for them to seek advice from a specialist.

Note

Healthcare models around the world are, for example, the Bismarck model, the Beveridge model, the National Health Insurance model, and the Out-of-Pocket model. Find more details of these healthcare models on public web pages.

Summary of the Lesson

Hospitals can be public, private, or nonprofit. Each hospital type has another ownership and a different financial goal.
Depending on the patient need, healthcare includes various types of patient care: Primary care, specialist care, emergency care, long-term care, hospice care, and mental care. Each type includes specific services and requires specific knowledge and skills.
Healthcare is a team sport. Due to the different care types and organizational requirements, it includes a huge spectrum of job roles with various tasks and skills.
To ensure fair and equitable access to healthcare services for all citizens, the funding, commissioning, and reimbursement models of healthcare vary from country/region to country/region.
Overall, healthcare costs are either paid by private payers such as insurance companies, or public payers such as federal or state governments. In some countries or regions, health insurance is a way to spread out the cost of healthcare among a group of people following the principle of solidarity.

Next lesson