Healthcare industry

This section provides background information on the size, geographic distribution, employment, and economic condition of the healthcare industry.  Facilities described within the document are also described in terms of their North American Industry Classification System (NAICS) codes.  The NAICS, which was developed jointly by the United States, Canada, and Mexico to provide new comparability in statistics about business activity across North America, has replaced the U.S. Standard Industrial Classification (SIC) system, under which Health Services is designated 80. Facilities in the healthcare industry are identified under NAICS code 62.

Note that, while there are benefits to the NAICS codes for organizing categories of business, there are disadvantages in the case of the healthcare sector. For the most part, healthcare organizations, whether large or small, in-patient or outpatient, have some level of complexity to their operations and functions.  Even small multi-service hospitals have complex service offerings, and generate a large variety of waste.  Therefore, the NAICS code information presented below is supplemented with a more robust picture of the rapidly changing healthcare universe.

Introduction, Background, and Scope of the Notebook

The healthcare and social assistance industry (NAICS code 62) comprises many subsectors including ambulatory healthcare services, hospitals, nursing and residential care facilities, and social assistance. This Notebook focuses primarily on the activities performed at hospitals. However, many of these activities can be performed by others in the healthcare  industry, and as such, this notebook applies to those providers as well. 

The specific subsectors covered in this industry document are: CNAICS 621. Ambulatory Healthcare Services. The following types of facilities are covered under this NAICS code: 

• 1.     Physicians’ offices,
• 2.     Dentists’ offices,
• 3.     Other health practitioners’ offices,
• 4.     Outpatient care centers,
• 5.     Medical and diagnostic laboratories,
• 6.     Home healthcare services, and
• 7.     Other ambulatory healthcare services.

These entities may be free standing and perhaps privately owned or may  be part of a hospital or health system.  Currently, most hospitals (NAICS  622) also offer ambulatory healthcare services.  For some facilities, these services represent as much as 60-70 percent of hospital business.  Much of this change has been driven by adjustments in healthcare finance and reimbursement, advances in technology, and new and effective pharmaceuticals, that eliminate the need for inpatient and invasive care services. Also of note is the growing emergence of complementary healthcare services that are also ambulatory in nature.  These include chiropractic care, massage, acupuncture, and acupressure. C NAICS 622. Hospitals. The following types of facilities are covered under this NAICS code:

1.     General medical and surgical hospitals,

2.     Psychiatric and substance abuse hospitals, and

3.     Specialty (except psychiatric and substance abuse) hospitals.

This category potentially includes many types of hospitals such as academic medical center/university-based/teaching hospitals, community hospitals, speciality hospitals (i.e., orthopedic or pediatric), and tertiary care facilities that are qualified to handle major trauma cases (i.e., burns and catastrophic accidents). There are also distinctions between public and private hospitals, hospitals that are part of a healthcare system (i.e., organizations such as Kaiser Permanente),  Veterans Administration hospitals, and other types of facilities. Hospitals and healthcare systems are continually changing their service offerings, and responding to various internal and external forces including reimbursement issues, advances in technology, and shifts in the populations they serve. CNAICS 623. Nursing and Residential Care Facilities. The following types of facilities are covered under this NAICS code:

1.     Nursing care and assisted living facilities,

2.     Residential mental retardation/health and substance abuse facilities,

3.     Community care facilities for the elderly, and

4.     Other residential care facilities.

Nursing care and residential care facilities offer nonacute care to individuals, either those suffering from a chronic condition (e.g., dementia, developmental delay, multiple sclerosis, Parkinson’s disease, autism), aging, or mental health problems.

As population demographics in the United States shift and demand for care services and facilities increases, more and more facilities offering some component of the above services will arise.

The veterinary services industry (NAICS 541940) also performs many activities similar to the healthcare industry.  Veterinary facilities may find some of the information in this

Notebook relevant and useful. C NAICS 541940. Veterinary Services. This industry includes establishments of licensed veterinary practitioners primarily in the practice of veterinary medicine, dentistry, or surgery for animals, and establishments providing testing services for licensed veterinary practitioners.