Specialty Physicians May Benefit From Rising Health Care Costs, Study Says

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Rising health care costs and health care reform—particularly the creation of health insurance exchanges (HIEs)--may actually benefit, rather than hurt, 10 health care sub-segments.

That is the perspective expressed by market research organization IBISWorld in its recently issued five-year forecast. Specialist physicians head the list of industries anticipated to profit from increased costs and HIEs, followed by primary care physicians, podiatrists, dentists, and diagnostic and medical laboratories. Pharmacies and drug stores, ambulance services, emergency and other outpatient care centers, hospitals, and mental health and substance abuse centers round out the roster in descending order.

“Each of the 10 industries derives a significant percentage of income from private individual insurance and will benefit if the HIE is implemented,” states Sophia Snyder, health care industry analyst at IBISWorld.

Revenue is forecast to improve in these sub-segments with the implementation of HIEs because commercial insurance payments make up a larger source of operating profit than such government programs as Medicare and Medicaid, according to IBISWorld. The fact that government programs often reimburse at rates lower than the cost of care mean providers have been charging commercial insurance companies increasingly higher rates in order to compensate for the shortfall, according to the research.

The study also forecasts average growth in revenue and operating profit in the specialist physician, primary care physician, podiatrist, diagnostic and medical laboratories, and emergency and other outpatient care center sub-sectors forecast at 5.7% percent annually during the five years to 2016, up from a previous forecast of 4.5%.

Emergency and other outpatient care centers will gain the most in terms of operating margins from HIEs, according to IBISWorld, In 2016, operating profit in the industry is projected to be 9.6% of revenues, versus 8.6% in 2012, the study indicates.

To download the report, click here: http://www.ibisworld.com/mediacenter/researchpapers.aspx?a=192#192