Combining medical technology and the human touch, the health services industry administers care around the clock, responding to the needs of millions of people-from newborns to the critically ill.

About 518,000 establishments make up the health services industry; all vary greatly in terms of size, staffing patterns, and organizational structures. Three-fourths of all health services establishments are offices of physicians, dentists, or other health practitioners. Although hospitals constitute only 2 percent of all health services establishments, they employ 41 percent of all workers.

The health services industry includes establishments ranging from small-town private practices of physicians who employ only one medical assistant to busy inner-city hospitals that provide thousands of diverse jobs. Almost 3 out of 4 nonhospital health services establishments employed fewer than 10 workers. By contrast, more than 2 out of 3 hospital employees were in establishments with more than 1,000 workers.

The health services industry consists of the following nine segments:

Hospitals. Hospitals provide complete medical care, ranging from diagnostic services, to surgery, to continuous nursing care. Some hospitals specialize in treatment of the mentally ill, cancer patients, or children. Hospital-based care may be on an inpatient (overnight) or outpatient basis. The mix of workers needed varies, depending on the size, geographic location, goals, philosophy, funding, organization, and management style of the institution. As hospitals work to improve efficiency, care continues to shift from an inpatient to outpatient basis whenever possible. Many hospitals have expanded into long-term and home healthcare services, providing a wide range of care for the communities they serve.

Nursing and residential care facilities. Nursing care facilities provide inpatient nursing, rehabilitation, and health-related personal care to those who need continuous nursing care, but do not require hospital services. Nursing aides provide the vast majority of direct care. Other facilities, such as convalescent homes, help patients who need less assistance. Residential care facilities provide around-the-clock social and personal care to children, the elderly, and others who have limited ability to care for themselves. Workers care for residents of assisted-living facilities, alcohol and drug rehabilitation centers, group homes, and halfway houses. Nursing and medical care, however, is not the main focus of establishments providing residential care, as it is in nursing care facilities.

Offices of physicians. More than a third of all health services establishments fall into this industry segment. physicians and surgeons practice privately or in groups of practitioners who have the same or different specialties. Many physicians and surgeons prefer to join group practices because they afford backup coverage, reduce overhead expenses, and facilitate consultation with peers. physicians and surgeons are increasingly working as salaried employees of group medical practices, clinics, or integrated health systems.

Offices of dentists. About 1 out of every 5 health services establishments is a dentist’s office. Most employ only a few workers, who provide general or specialized dental care, including dental surgery.

Home healthcare services. Skilled nursing or medical care is sometimes provided in the home, under a physician’s supervision. Home healthcare services are provided mainly to the elderly. The development of in-home medical technologies, substantial cost savings, and patients’ preference for care in the home have helped make this once-small segment of the industry into one of the fastest growing in the economy.

Offices of other health practitioners. This segment of the industry includes the offices of chiropractors, optometrists, podiatrists, occupational and physical therapists, psychologists, audiologists, speech-language pathologists, dietitians, and other miscellaneous health practitioners. Demand for the services of the segment is related to the ability of patients to pay, either directly or through health insurance. Hospitals and nursing facilities may contract out for these services. This segment also includes practitioners of alternative medicine, such as acupuncturists, homeopaths, hypnotherapists, and naturopaths.

Outpatient care centers. Among the diverse establishments in this group are kidney dialysis centers, outpatient mental health and substance abuse centers, health maintenance organization medical centers, and freestanding ambulatory surgical and emergency centers.

Other ambulatory healthcare services. Included in this relatively small industry segment are ambulance services, blood and organ banks, and other miscellaneous ambulatory healthcare services, such as pacemaker monitoring services and smoking cessation programs.

Medical and diagnostic laboratories. Medical and diagnostic laboratories provide analytic or diagnostic services to the medical profession or directly to patients following a physician’s prescription. Workers may analyze blood, take x rays and computerized tomography scans, or perform other clinical tests. Medical and diagnostic laboratories provide the fewest number of jobs in health services.

In the rapidly changing health services industry, technological advances have made many new procedures and methods of diagnosis and treatment possible. Clinical developments such as organ transplants, less invasive surgical techniques, skin grafts, and gene therapy for cancer treatment continue to increase the longevity and improve the quality of life of many Americans. Advances in medical technology also have improved the survival rates of trauma victims and the severely ill, who need extensive care from therapists and social workers, among other support personnel.

In addition, advances in information technology continue to improve patient care and worker efficiency with devices such as hand-held computers that record notes on each patient. Information on vital signs and orders for tests are transferred electronically to a main database, eliminating paper and reducing record-keeping errors.

Cost containment also is shaping the health services industry, as shown by the growing emphasis on providing services on an outpatient, ambulatory basis, limiting unnecessary or low-priority services, and stressing preventive care, which reduces the eventual cost of undiagnosed, untreated medical conditions. Enrollment in managed care programs-predominantly preferred provider organizations, health maintenance organizations, and hybrid plans such as point-of-service programs-continues to grow. These prepaid plans provide comprehensive coverage to members and control health insurance costs by emphasizing preventive care. Cost-effectiveness also is improved with the increased use of integrated delivery systems, which combine two or more segments of the industry to increase efficiency through the streamlining of functions, primarily financial and managerial. According to a 2002 Deloitte & Touche survey, only 48 percent of surveyed hospitals expect to be stand-alone, independent facilities in 2005, compared with 61 percent in 2002. These changes will continue to reshape not only the nature of the health services workforce, but also the manner in which health services are provided.