Investopedia defines and explains the “Healthcare Sector”
A category of stocks relating to medical and healthcare goods or services. The healthcare sector includes hospital management firms, health maintenance organizations (HMOs), biotechnology and a variety of medical products.
Stocks in the healthcare sector are often considered to be defensive because the products and services are essential. Even during economic downturns, people will still require medical aid and medicine to overcome illness. Having a consistent demand for goods and services makes this sector less sensitive to business cycle fluctuations.
Hoover’s overview of the “Health Care Sector”
Health Care Sector Industry Overview
Excerpt from Health Care Sector Report
Companies in this industry provide a wide range of health care and social services through hospitals, doctors’ offices, nursing homes, outpatient surgery centers, and other facilities. Major companies include Ascension Health, HCA, Kaiser Permanente, and Tenet Healthcare (all based in the US), as well as Fresenius (Germany), National Hospital Organization (Japan), and Ramsay Health Care (Australia).
Demand for health care services is driven by demographics and advances in medical care and technology. The profitability of individual companies depends on efficient operations and, in the case of many nonprofit health care providers, obtaining grants and federal funds. Large companies have advantages in accessing the latest medical research, buying supplies, offering a wide range of services, and negotiating contracts with health insurers. Small institutions can compete successfully by serving a limited geographical area, offering specialized services, or building a local reputation for quality care. The US health care sector is highly fragmented: the top 50 organizations generate about 15 percent of revenue.
Products, Operations & Technology
Major services include hospital medical care (45 percent of industry revenue) and outpatient care provided by physicians (20 percent). Other services include dental work, urgent care, elderly and hospice care, and social assistance. Leading health care entities in the US include a number of for-profit entities, an exception to the global norm of nationalized medicine. However, of the 6,500 US hospitals, around 75 percent are not-for-profit. Most doctor offices, nursing homes, outpatient and urgent care centers, and day care facilities are run as for-profit enterprises.