Doctors and Dentists Account for 27 Percent of $1.6 Trillion in Health Care Revenue

Physician’s offices accounted for $330 billion in revenue in 2006, while the dental profession made up another $87 billion of the $1.6 trillion in revenue of the health care and social assistance sector, according to a U.S. Census Bureau report.

The report, 2006 Service Annual Survey: Health Care and Social Assistance, provides estimates such as revenue and sources of revenue for taxable and tax-exempt offices of physicians, hospitals, nursing care facilities and social assistance services. It covers firms with paid employees.

Health care and social assistance grew 6 percent in 2006, with a 7.1 percent increase the year before.

“The service industries make up about 55 percent of all economic activity in the country,” said Mark Wallace, chief of the Census Bureau’s Service Sector Statistics Division. “At $1.6 trillion in 2006, the health care and social assistance sector continues to play a strong role in the health of the U.S. economy.”

All four subsectors of health care and social services gained revenue from 2005. Revenue in 2006 was $654 billion for hospitals; $647 billion for ambulatory health care services, which includes offices of physicians, dentists and other health practitioners, such as chiropractors and optometrists; $149 billion for nursing and residential care facilities; and $117 billion for social assistance, which includes child and youth services, services for the elderly and community food services.

Other highlights:

• Kidney dialysis centers (11.3 percent) and social assistance services for the elderly and persons with disabilities (12 percent) both grew in 2006.

• The revenue for taxable employer firms in health care and social assistance sector was almost $779 billion, while tax-exempt employer firms was about $789 billion.

• Eighty-eight percent of hospital revenue comes from tax-exempt hospitals, while only 19 percent of the revenue of homes for the elderly comes from tax-exempt firms.

• Physician’s offices receive $163 billion of their revenue from health insurance; 34 billion comes directly from the patient.

• Medicare makes up 22 percent of physicians’ revenue, and Medicaid another 5 percent.

• At hospitals, patient out-of-pocket spending contributes $33 billion as a revenue source, while private health insurance adds $265 billion. Medicare and Medicaid represent $177 billion and $68 billion of revenue, respectively.

• Of the $31 billion of revenue for community care facilities for the elderly, $21 billion comes from the patient (equal to $6.77 of every $10), the largest source of revenue in this industry group.

The Service Annual Survey provides data that help measure America’s service economy. This particular report focuses on health care and social assistance providers for individuals. Both health care and social assistance are included in this sector because sometimes it is difficult to distinguish between the boundaries of these two. The industries in this sector are arranged on a continuum starting with those establishments providing medical care exclusively, continuing with those providing health care and social assistance and finishing with those providing only social assistance. Trained professionals provide the services in this sector. All industries in this sector share this commonality of process, namely labor inputs of health practitioners or social workers with the requisite expertise. Many of the industries in the sector are defined based on the educational degree held by the practitioner.

The estimates provided in this release are based on data from the 2006 Service Annual Survey based on the 2002 North American Industry Classification System and apply only to employer firms. Estimates contain sampling and nonsampling errors. To keep the identity of an individual firm confidential, some estimates may be suppressed. Users making their own estimates, based on the survey estimates, should cite the U.S. Census Bureau as the source of the original estimates only. See <http://www.census.gov/svsd/www/cv.html> for measures of sampling variability and other survey information.