Why a Health Care MBA? - Health Care's Role in the American Economy

(second in a string of posts answering questions employers, friends and associates have asked me recently about my pursuit of an MBA)

* Why a Health Care MBA?

The health care industry promises to be a major force in the American economy over the course of my career. Already comprising 16% of the GDP, health care is expected to balloon to 25% of the GDP by 2030. Late last year, Business Week had an excellent article entitled "What's Really Propping Up the Economy" that I recently re-read. It articulates well what the health-care industry currently provides and promises to provide in the future to the American economy.  

ENORMOUS WORKFORCE:

The article states that, since 2001, the health-care sector has added 1.7million jobs to the American economy, while the rest of the private sector (aside from construction and real-estate adding 940K jobs) has lost 1.2million jobs. The article claims that the US unemployment rate is 4.7% (at the time of the article's publication), significantly below European counterparts at 8.2% and 8.9% (Germany and France). But without the addition of health care jobs, the US employment rate would be 1 to 2 percentage points higher. If current trends continue, 30-40% of all new jobs created over the next 25 years will be in health care. The other promising sector of the past decade, the information technology segment, has turned into "one of the greatest job-growth disappointments of all time", losing over 1.1million jobs in the past five years.

INCREDIBLE INVESTMENT:

The health care sector is fortunate to be perceived as incredibly valuable to society, and thus governmental spending provides about half of all health care dollars (ranging from Medicare paying for hospital costs or the NIH funding promising new academic research ventures). The total expenditure is already over $2 trillion and growing. These monies are propping up economies and local job markets all across the United States as communities erect new or different provider facilities or promote economic development by incentivizing biotech or research facilities to headquarter nearby. Private industries, from hospital networks like HCA to insurance companies like Humana, to pharmaceutical companies like Merck, also provide tremendous investment into the system, and already are becoming dominant forces in the US economy both through their monetary outlay, their massive workforce, and their impact upon almost every American citizen.

PROBLEMS OF THIS GROWTH AND INVESTMENT

Sounds promising right? While "propping up" the economy and seeing tremendous growth opportunities, an economy that relies heavily on sector does not make an efficient system. Heavy governmental spending (predominantly through support of Medicare and Medicare Part D - which are increasingly seen as a right of citizens as the government has "promised" payment to seniors for their health expenditures) is straining the federal government. Federal outlays have totaled $600 billion in 2005, roughly one quarter of the entire federal budget, causing some to fear that the American government is increasingly reliant upon borrowing from foreign investors (like China) to support growing health care investments and costs.

American corporations and businesses also are feeling the burden, as an increasing segment of their budget goes to providing health care for their employees, leading some to cite an outflow of jobs from the American economy for locations that provide governmental health care.

As most consumers know, the costs of receiving health care are also increasing well-beyond inflation rates. This is caused by a deficient system that attempts to "pass the buck" to the next person: Pharmaceutical companies attempt to recoup R&D expenses (already sunk costs) by charging the American consumer more (other countries negotiate prices with the pharma companies to keep their prices down); the healthy are financing the care of the sick; the working funding the retired; the insured covering the uninsured, etc.

There are also incredible inefficiencies at all levels of health care that, in any competitive market, would be quickly worked out. However, with many different segments within the industry not playing traditional market roles (the consumer/patient is not the payer/insurance companies; the government is a provider - VA, a payer - Medicare/Medicaid, and an innovator - NIH funding of research), these inefficiencies are not resolved as segments again "pass the buck" of responsibility.

WHY A HEALTH CARE MBA?

No matter what the future is of the economy, whether the health care sector is allowed to grow unrestrained or the government places a cap on spending, health care will remain incredibly important to Americans. Therefore, the industry needs knowledgeable leaders of tomorrow to help navigate future challenges. These leaders must understand every segment, how they interact, what they think, future trends, and historical context. This knowledge can only  be gained from a comprehensive knowledge of the health care industry, and the Health Care MBA from Owen School of Management at Vanderbilt provides that. I have personally learned tremendous amounts of sectors of the industry I would never had examined before coming to Owen. I have shared this knowledge during conversations with major business leaders and future employers, and I know that I will look back upon this education as being the most singular important of my career.

Comments

[krunal]

What's current status of mba(health care) and what will be the future of this course in India after 5-10 years..

[Guru]

plz can i have your contact info?