Chapter 1: Business Basics: The Big Picture in Healthcare

INTRODUCTION

The World Bank Group (2016) describes health expenditures in general as the sum of all public and private monies spent related to healthcare. These include preventative and curative services; family-planning activities; nutritional counseling; and emergency aid. According to Fuchs (2013), following an analysis of the past 60 years, the growth rate of national healthcare expenditures appears to be closely related to the growth of the gross domestic product (GDP), thus tying the overall state of the economy to healthcare expansion or contraction. The GDP is a monetary measure of the total value of a nation’s economy in a given time period, such as quarterly or annually (United States Department of Commerce, Bureau of Economic Analysis, 2016). In 2014, the U.S. GDP was estimated to be $17.42 trillion (The World Bank Group, 2016).

THE EXTERNAL ENVIRONMENT

Healthcare in the U.S. is big business. Not only that, the industry is fraught with chaos due to governmental initiatives, political influence, and policy changes yet to be fully executed. This may explain why spending on healthcare in the United States far exceeds that of most other developed countries. In fact, healthcare spending represented 17.1% of the GDP (over one-sixth of it!) in 2014—approximately $2.96 trillion (The World Bank Group, 2014). Even so, disparities in healthcare access, benefit coverage, and specialty care remain.

The high cost of healthcare isn’t the only problem. Changing demographics present another challenge. In 2016, the World Bank Group cited 2015 U.S. population estimates at 321.21 million. Table 1.1 displays the age distribution for the U.S. population (as of 2014), as estimated by the Kaiser Family Foundation (2016). As shown in the table, the majority of the U.S. population is aging. With that comes an increase in both healthcare consumption and expenditures.

Both these factors—the high cost of healthcare in the U.S. coupled with the nation’s aging population—indicate that the American healthcare industry is ripe for change. But who will lead that change? I posit that nurses are uniquely positioned to lead this change.

Nursing is healthcare’s largest single ...