(This and other client markets of the U.S. ARM industry were evaluated in our 2014 Accounts Receivable Management Midyear Review. Click here to request your copy now).
Between 2016 and 2034, the baby boomer generation – the largest population group in the United States – will begin retiring from the labor force. Baby boomers include all people born in the United States between the years 1946-1964, estimated to be 77.3 million people or nearly 25 percent of the U.S. population today. As a result, the healthcare industry is expected to grow rapidly during this time, due to the needs of this aging population.
In order to service these numbers, hospitals, senior living centers, doctors’ offices, and other healthcare providers will seek greater support in Revenue Cycle Management and Client Relationship Management. Couple this with increased regulation and consolidation among healthcare providers, and embracing scale becomes essential. This presents major opportunities for the ARM industry to expand its service offerings into markets that will not only be profitable but are also growing rapidly.
There is very little concentration of market share in any one player’s hands, although the industry has been moving towards consolidation in recent years and is expected to continue this trend going forward.
- Economies of scale will provide more efficient allocation of resources for better doctors, equipment, research, understanding to respond to regulatory adjustments, and cost-cutting strategies.
- Given the low concentration of market share, it will be a long time before any one player(s) truly dominates the market.
- U.S. hospitals in 2014 are estimated to generate $935.6 billion in revenue with expected annual revenue growth of nearly 4 percent to over $1.1 trillion.
- Given the demographics of the U.S. population, revenue growth should continue long-term since increased life expectancy includes increased medical expense.
- Low levels of unemployment, increases to disposable income, and insured patients will reduce doubtful accounts within hospitals.
- Doubtful account volume will transfer to insurance providers since more patients will have insurance under the Affordable Care Act.
- The focus will be on managing patients throughout the revenue generation process and integrating systems with insurance providers.
- Revenue Cycle Management in conjunction with collection services will be even more important and is the primary growth opportunity for ARM.
However, this is a highly regulated industry and entry into this industry will require investment in compliance and regulatory knowledge to properly service client needs. Those entering this industry stand to realize tremendous gains but only if they are willing to properly address the regulatory climate by understanding Medicare and Medicaid, the ACA, HR 4302, ICD-10, and other public policies.