Health Care and Pharmaceuticals Consulting

The healthcare and pharmaceuticals consulting industry has origins in the management consulting field, which started to take root in the 1900s, with the growth of business and manufacturing operations and mass production. Companies wanted to improve their efficiency while reducing costs and sought advice from people with relevant work experience and expertise. An early founder of a management consulting firm was James O. McKinsey, who had previously been an accounting professor at the University of Chicago. He established the McKinsey & Company firm in 1926, with the aim of providing consulting services to help companies improve and grow their operations. Today, McKinsey & Company ranks among the top firms for healthcare consulting, as well as for providing consulting services for various other industries, and now has more than 130 offices in more than 65 countries.

The Great Depression in the 1930s increased the demand for consulting firms to help businesses continue operating during a weak economy. Consultants were also needed to advise and guide companies on the various banking and financial reforms that the U.S. Securities and Exchange Commission introduced at that time. Consulting firms continued to grow during World War II, providing advice to government agencies on manufacturing, fundraising, and other areas. The management consulting industry gained respect for its contributions to the war effort and started to expand into other industries and specializations after the war. By the 1970s, the consulting industry had grown in popularity, with many consulting businesses opening in the U.S. and in other countries.

The healthcare management industry started to professionalize in the late 1800s, with innovations in medical treatments and procedures, such as anesthesia, antibiotics, new imaging methods, and advancements in surgical procedures. More hospitals were built, with an increase in the number of hospital beds, creating greater demand for physicians, nurses, administrators, and other healthcare-related professionals. It was soon recognized that there was also a need to standardize healthcare business practices. The American College of Hospital Administrators was established in 1933 to provide education and industry standards of practice for healthcare workers. This organization continues to exist today, now known as the American College of Healthcare Executives, providing various benefits and resources for healthcare and pharmaceuticals consultants and other healthcare-related professionals.

Colleges and universities started offering educational programs in the healthcare administration and related fields in the 1900s. For example, Columbia Teachers College offered the first health economics training program in 1900, and the University of Chicago offered the first hospital administration graduate program in 1934. Today, many universities and other schools offer bachelor’s and master’s degree programs in hospital administration and healthcare-related specializations. Healthcare and pharmaceuticals consultants now have a wide variety of opportunities for education and training in their field.

The growth of computers in the 1980s, the Internet in the 1990s, and, more recently, mobile devices and cloud computing, changed the healthcare industry, particularly in terms of improving communication between healthcare professionals, patients, and the companies that provide healthcare and pharmaceuticals consulting services. Several technological advancements in recent years that have affected the healthcare field include the digitization of medical records, known as electronic medical records; the growth of medical informatics, which is the mathematical analysis of patient information to improve health outcomes; the use of data analytics software to assess healthcare workers’ performance and patient treatment outcomes; the utilization of virtual and augmented reality for training, surgical planning, remote patient care, improved diagnostics, mental health treatment, and other uses; and the growth of telemedicine, enabling medical professionals to consult with patients remotely. Advanced artificial intelligence (especially generative AI) is being used to more effectively analyze data from clinical trials, research papers, and other sources to fuel drug discovery and development; improve the design and efficiency of clinical trials; enhance drug safety monitoring and potentially identify adverse drug reactions; improve the speed of market research and industry forecasting; and meet other goals. With that said, the use of advanced AI is in its early stages, and concerns about the accuracy of the technology, its ethical use, cybersecurity risks, and other issues must be addressed before it can be fully adopted.

Several U.S. laws that have impacted the healthcare and pharmaceuticals consulting industry include the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the Patient Protection and Affordable Care Act. The SOX Act was passed in 2002 in response to accounting and corporate governance scandals; it enforces strict controls on corporations and the accounting industry. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 increases the regulation of the financial industry and provides greater protection for consumers. The Patient Protection and Affordable Care Act (2010) has streamlined the delivery of health care, enabling tens of millions of previously uninsured Americans to obtain health insurance. It has also created many challenges for insurance companies, state governments, health-care providers, and businesses. As a result, demand is on the rise for healthcare consultants with expertise in healthcare regulations and laws, as well as in business operations, finance, artificial intelligence, and data analysis.

The COVID-19 human coronavirus first emerged in late 2019 in China, and the ensuing pandemic caused hundreds of millions of people throughout the world to get sick and more than 7 million deaths (as of April 2024). "The pandemic was a significant crisis that required hospitals to make quick and difficult decisions," according to IBISWorld. "Many hospitals did not have the expertise in crisis management to handle the pandemic on their own and, therefore, sought the help of consultants." The pharmaceutical industry also sought consultants to help provide insights regarding vaccine development, other areas of pharmaceutical research and development, and operational and supply chain issues. This need created strong demand for consultants. Much of the work done by consultants can be done online and through teleconferencing, which enabled many consultants in this field to continue working through the coronavirus pandemic. Health care and pharmaceutical consultants found themselves especially concerned with efforts to respond to the pandemic, help medical facilities find ways to manage surges in patients, and help pharmaceuticals companies manage research into vaccines and treatments for COVID-19. The health care and pharmaceuticals consulting industry is expected to have continued growth in the coming years, with the rollout of the vaccine for COVID-19 in early 2021 and the eventual containment of the pandemic. McKinsey and Company predicts that, post pandemic, high-growth segments in the health care industry will include virtual care, home health, health care software and platforms, and specialty pharmacy.