February 22, 2025

Overview of the U.S. Healthcare Industry

John Dang M.D.

The U.S. healthcare industry is divided between organizations who pay (healthcare insurance companies) and organizations who provide services (hospitals, medical office). 

For patients, healthcare insurance plans are typically obtained through employer or school, purchased independently (healthcare exchange/Covered California), or provided by the government (Medicare, MediCAL). Each insurance plan will be subdivided into component pieces, which typically include:
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• Medical services (Doctor visits, labs, imaging)
• Hospitalization
• Medications
• Dental
• Vision (These are for optometrists. Ophthalmologists are considered medical services)
• Mental Health (More and more health insurance companies are categorizing this as separate from medical services)

It should be noted that each healthcare insurance company offers many different plans, so it is important to familiarize yourself with your insurance plan (PPO vs HMO, high vs low deductible, copay vs co-insurance).

Most healthcare services provided in the U.S. is private. These can be individual private practice or large healthcare organization. Your healthcare insurance plan determines who and where you see doctors. PPO plans offer the most freedom in choosing doctors, while Kaiser is the most restrictive; HMO plans fall in the middle. Below are a few key components of using healthcare services in the U.S:

Otherwise known as family doctors, internal medicine, or general practitioners; these doctors can treat a variety of conditions, though they do not specialize in any field. They are a good resource for any questions related to healthcare in general and should be able to treat most basic complaints. For issues they cannot deal with, they typically refer to specialists.

Some specialists and almost all ancillary services such as physical therapy requires a physician referral. The referral doesn’t necessarily have to come from a PCP, as specialists can refer to other specialists or PCP.

Most healthcare organizations operate under the concept of service first, payment later. This means most patients will see the doctor or go to the hospital first, then get the bill later. This also makes estimating the cost of office visits and hospitalization in particular very challenging. 

It should be noted that one patients can pay out of pocket, without insurance, for any or all of these services, though would not recommend that patients be without insurance for long in the United States.