Hospitals (U.S.) — NAICS 622

An investor's primer for public-market and private investors. NAICS (the North American Industry Classification System) is the U.S. government's standard code for industries. Code 622 is a subsector (3-digit) — the "Hospitals" rung — and it aggregates three child industry groups (4-digit): general medical and surgical hospitals (6221), psychiatric and substance-abuse hospitals (6222), and specialty hospitals (6223). This page synthesizes across those three; each child has its own full primer.

1. Overview

NAICS 622 is every U.S. establishment licensed as a hospital — a facility that admits patients to beds under physician-directed, around-the-clock care. It is the single largest line item in American health care: hospital care ran roughly $1.5 trillion in 2023, about 31% of all national health spending.[3] It is also one of the country's largest employers, with about 6.3 million workers — roughly one in every 26 U.S. jobs.[1]

Three features define the whole subsector for an investor, and they hold across all three children:

• Demand is largely non-cyclical — people get sick regardless of the economy — but payer mix is cyclical, because recessions push patients off commercial insurance and onto Medicaid or into the uninsured pool.
• The patient rarely pays the bill. Payment policy — mostly set by Medicare (federal insurance for people 65+ and some disabled) and Medicaid (joint federal-state insurance for low-income patients) — is the dominant variable, not consumer demand.
• The economics are local, and most of the industry is not a stock. Pricing power is set in each metro or rural market, and the majority of hospital capacity is nonprofit or government-owned and cannot be bought as a share.

What separates the three children is who owns them, which way volumes are moving, and how concentrated and investable each one is. That contrast is the point of this page.

2. What's inside — the three children and how they differ

The subsector splits into three industry groups. General acute-care hospitals dominate so completely that they set the tone for the whole subsector; the two smaller children are where ownership is shifting and where the sharper investment stories sit.

The single most important contrast is that general hospitals are 77% of the establishments but ~94% of the receipts and ~92% of the employment — because each general hospital is far bigger than a specialty or psychiatric one (about 1,000 employees per general hospital, versus roughly 300 each for the two smaller children).[1] For most purposes, "the hospital sector" is 6221; the other two are specialty pockets with distinct economics.

Two other differences matter to investors:

• Ownership trend. General hospitals are a stable nonprofit/government majority. Psychiatric is the one child where for-profit ownership is actively rising — the for-profit share of standalone psychiatric beds went from about 11% to 27% between 2011 and 2023 as government retreated.[8] Specialty is bifurcated: for-profit chains dominate rehab and LTAC, while children's and cancer institutions are overwhelmingly nonprofit or public.
• Investability. Despite being 94% of the money, general hospitals offer only a handful of for-profit stocks because the capacity is mostly nonprofit. The two small children are, if anything, more concentrated among listed names — behavioral is effectively two operators (Acadia and UHS), and freestanding specialty is essentially one pure-play (Encompass) after Select Medical was taken private in July 2026.[6][7]

3. Size (this level's rollup figures)

From our ground-truth federal file for NAICS 622:

How the children add up. Establishments, employment, and payroll sum exactly to the parent; receipts do too:

Note that firm counts do not sum (2,280 + 403 + 280 = 2,963, above the parent's 2,787): a company that runs both general and specialty hospitals is counted once in each child but only once at the subsector, so the parent is smaller than the sum.[2]

Undercount and coverage caveats — read before using the headline numbers:

1. Two surveys, two years. Establishments, employment, and payroll are CBP 2023; receipts, firms, and concentration are the 2022 Economic Census. Don't blend them into one same-year snapshot.[1][2]
2. Government hospitals are handled differently by the two surveys. Hospitals are an explicit exception to CBP's usual exclusion of government establishments, so the employment/establishment/payroll figures do include public hospitals (state, county, city, VA, military).[4] The Economic Census, however, largely excludes government-owned hospitals, so the $1.357 trillion receipts and 2,787 firms are undercounts — they miss the entire public system. Reconcile that figure against the broader ~$1.5 trillion "hospital care" spending total (2023), which captures all hospital types and owners.[3]
3. Care delivered inside a general hospital is counted under 6221. A psychiatric unit or cancer department run inside a general hospital sits in 6221 — where a large share of U.S. psychiatric admissions and specialty care actually happens — not in 6222 or 6223, which capture only freestanding single-focus hospitals.[6][7]

Our federal file gives no subsector-wide figures for beds, occupancy, admissions, payer mix, or margins; those come from company filings and industry research in the child primers.

4. Investable universe (where value concentrates across the children)

The striking fact is how thin and overlapping the listed universe is for a $1.4-trillion subsector, and how the same few names recur across children:

• General acute care (6221): the for-profit operators — HCA Healthcare (the scale leader), Tenet Healthcare, Universal Health Services (UHS), Community Health Systems, and Ardent Health — plus two hospital landlords, Medical Properties Trust (MPW) and Universal Health Realty Income Trust (UHT).[5]
• Behavioral (6222): effectively two names — Acadia Healthcare, the closest listed pure-play, and UHS, whose behavioral division is the largest investor-owned behavioral footprint in the country (about 44% of UHS's 2024 revenue).[6]
• Specialty (6223): essentially one large listed pure-play, Encompass Health (the biggest freestanding inpatient-rehab operator), after Select Medical was taken private and delisted on July 1, 2026.[7]

Notice the cross-cutting exposure: UHS is simultaneously a top general-hospital operator and the largest listed behavioral operator; HCA touches all three children (dominant in general, incidental in behavioral and specialty); MPW is a landlord to both general and specialty hospitals. A single-name view therefore understates how few independent bets this subsector really offers — and how much of it is not investable at all, because the largest systems (Kaiser Permanente, CommonSpirit, Advocate Health, Ascension, Trinity Health) and the flagship children's and cancer institutions are nonprofits or public bodies you cannot buy shares in. They finance themselves chiefly through tax-exempt municipal bonds.[5][7] Full ticker-level tables, scale figures, and the common miscounts live in each child primer.

5. How the money works

Across all three children the model is the same shape: revenue ≈ volume × acuity × price, reported net of contractual discounts, against a high fixed-cost base where labor is the swing item (roughly half of expenses subsector-wide). The single biggest profit lever everywhere is payer mix — commercial insurance pays the most and cross-subsidizes the rest; Medicare pays fixed administratively-set rates; Medicaid usually pays the least (often below cost); and the uninsured generate uncompensated care. Because costs are largely fixed to bed count and staffing, occupancy and throughput drive profitability — incremental patients drop toward the margin, and empty beds still cost money.

The children differ in the unit of that formula:

• General (6221): paid per admission and per outpatient/ER visit under Medicare's inpatient and outpatient prospective payment systems (PPS — fixed, predetermined rates), with a rich commercial-payer book the key to profit.
• Behavioral (6222): paid mostly per day (per diem); needs far less capital equipment (no ORs, imaging, or ICUs), so well-run operators have historically earned higher operating margins, and growth comes from adding beds rather than raising price.[6]
• Specialty (6223): paid per case/discharge under IRF and LTCH prospective payment systems; margins diverge sharply by ownership — Medicare's advisers (MedPAC) have found for-profit freestanding rehab hospitals earning Medicare margins above 20%, while nonprofit children's and cancer hospitals run near breakeven and lean on philanthropy, National Institutes of Health (NIH) research funding, and the 340B drug-discount program.[9]

6. Demand drivers

The durable subsector-wide tailwind is demographics — the 65-plus population uses far more hospital care and is the fastest-growing age group — reinforced by rising medical intensity, higher survival after serious illness, and broader insurance coverage. The shared headwind is the site-of-care shift: care keeps migrating out of the inpatient bed toward outpatient departments, ambulatory surgery centers, and the home, so inpatient volumes are flat-to-declining even as ambulatory volumes grow.

The children then diverge:

• General is the most exposed to the site-of-care shift (its inpatient business is what's leaking out).
• Behavioral has its own, structurally rising demand — high mental-illness and substance-use-disorder prevalence, elevated overdose deaths, youth mental-health pressure, and a chronic bed shortage (patients "board" in ERs for lack of beds) — though high need does not automatically become inpatient revenue.[6]
• Specialty is largely derived demand, sitting downstream of general hospitals (Encompass reported 92% of its patients were admitted from acute-care hospitals in 2025); its swing factor is Medicare Advantage (private Medicare plans that use prior authorization to steer toward cheaper settings and shorter stays).[7]

7. Regulation

Hospitals are among the most heavily regulated businesses in America, and the Centers for Medicare & Medicaid Services (CMS) is simultaneously the biggest customer and the chief regulator across all three children. Shared regimes: annual CMS payment rulemaking, Medicare Conditions of Participation, EMTALA (the 1986 Emergency Medical Treatment and Labor Act, requiring emergency screening and stabilization regardless of ability to pay), the 340B drug-discount program, the No Surprises Act, fraud-and-abuse laws (Anti-Kickback, Stark, False Claims Act), nonprofit tax-exemption scrutiny, antitrust review, and Certificate of Need (CON) laws that gate new capacity in 35 states plus Washington, D.C.[5][6][7][10]

The children each carry a distinct payment rulebook and a distinct binding constraint:

• General: the Inpatient and Outpatient Prospective Payment Systems, plus EMTALA duties that make it the default provider of last resort.
• Behavioral: the Inpatient Psychiatric Facility PPS (IPF PPS) per-diem, the Mental Health Parity and Addiction Equity Act, and — the single biggest structural limit — the IMD exclusion, under which federal Medicaid generally won't pay for adults (21–64) in a psychiatric facility of more than 16 beds.[6]
• Specialty: the IRF "60% Rule" (≥60% of patients must have a qualifying condition), LTCH "site-neutral" payment (which has shrunk the LTCH count since 2013), and the Affordable Care Act's freeze on new physician-owned hospitals.[7]

8. Consolidation

On the national numbers the whole subsector looks fragmented — the top four firms hold just 8.0% of receipts and the HHI is a minuscule 34.4[2] — but those national figures mislead, because patients don't choose a hospital in another city. In local markets the picture reverses: by 2022 one or two systems controlled the entire inpatient market in nearly half of all metro areas, and research links that concentration to higher prices.[5] Concentration also rises as you move from the big child to the small ones:

The subsector totals track general hospitals almost exactly (general is 94% of receipts), which is why the parent looks so fragmented. But specialty is meaningfully more concentrated nationally, and the federal HHI for the psychiatric child is suppressed in the source data, so no value is available.[2][6] The live frontiers are vertical and cross-market integration (systems buying physician practices and insurers, and combining across regions), for-profit share gains in behavioral, and private-equity roll-up of the adjacent outpatient, residential, and specialty segments.[5][6][7]

9. Risks

The risks are shared across the children, differing mainly in which one bites hardest:

• Policy / reimbursement (the dominant risk). Rates are set by government and insurers, not the market. The 2025 budget law's roughly $900 billion–$1 trillion in Medicaid cuts over a decade directly threaten hospital revenue and payer mix as they phase in from 2026, with rural and Medicaid-dependent hospitals most exposed; behavioral is additionally hostage to the IPF PPS update and any tightening of the IMD exclusion, and specialty to any further site-neutral expansion.[5][6][7]
• Labor. Persistent wage inflation, clinician shortages, and reliance on contract (agency) staffing — labor is ~half of subsector costs and also caps capacity in behavioral.[5][6]
• Payer pushback. Rising denials and prior-authorization friction, sharpened by Medicare Advantage growth (a particular drag on specialty rates and length of stay).[7]
• Leverage and financial engineering. Sale-leaseback rent and debt make thinly-capitalized operators fragile when census dips — the Steward Health Care bankruptcy (general) and ScionHealth's debt distress (specialty) are live examples.[5][7]
• Concentration of investable options. With so few listed pure-plays, single-name and policy risk are hard to diversify away (Acadia's stock fell roughly 64% during 2025).[6]
• Nonprofit-specific and cyber risks. Dependence on philanthropy, NIH grants, and the politically contested 340B program (children's/cancer), plus system-wide cybersecurity shocks (the Change Healthcare ransomware attack).[5][7]

10. How to invest & outlook

Public-market routes are narrow and overlapping: the diversified for-profit operators (HCA, Tenet, UHS, Community Health Systems, Ardent) give general-hospital exposure; Acadia and UHS are the behavioral book; Encompass is the freestanding-specialty pure-play; and two landlords (MPW, UHT) plus a sponsor (Apollo) offer indirect, real-estate-and-credit-flavored exposure. Reserve tickers, yields, and multiples for the child primers — but underwrite the whole group knowing that a small number of names (UHS and HCA especially) recur across children, so a "hospital basket" is less diversified than it looks.[5][6][7]

Private-market routes are, in aggregate, the larger opportunity, because the nonprofit and government majority is unreachable through equities: private-equity behavioral and post-acute platforms, direct operator equity and joint ventures with nonprofit systems, hospital real-estate sale-leasebacks, private credit, and — the single largest capital channel into the nonprofit core — tax-exempt municipal / hospital-revenue bonds.[5][6][7]

Outlook (editorial judgment, not a reported fact). Long-term demand is favorable across all three children — aging demographics, higher survival, rising behavioral prevalence — but reimbursement is the ceiling and margins, not volumes, are the thing to watch. Expect returns to stay highly uneven: a widening gap between well-capitalized systems in strong commercial markets and Medicaid-dependent or rural hospitals facing closure (general); durable volume growth capped by Medicaid pressure and modest rate updates (behavioral); and a demand-durable but policy-capped grind under Medicare Advantage and site-neutral pressure (specialty). The federal data carries no official growth forecast for NAICS 622, so underwrite individual operators and facilities rather than the subsector as a whole. For the full treatment of any child — investable universe, payer mechanics, regulation, consolidation, and risks — see the 6221, 6222, and 6223 primers.

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Sources

1. U.S. Census Bureau, County Business Patterns (CBP), 2023 — NAICS 622 (establishments, employment, annual and first-quarter payroll; hospitals included as an exception to the government-establishment exclusion). Histometrics ground-truth federal file. https://www.census.gov/programs-surveys/cbp.html
2. U.S. Census Bureau, 2022 Economic Census — Concentration of Largest Firms, NAICS 622 (receipts, firm count, CR4/CR8/CR20/CR50, HHI; government hospitals largely excluded). Histometrics ground-truth federal file. https://www.census.gov/programs-surveys/economic-census.html
3. Centers for Medicare & Medicaid Services, National Health Expenditure data / Fact Sheet (hospital care ~$1.5 trillion, ~31% of national health spending, 2023). https://www.cms.gov/data-research/statistics-trends-and-reports/national-health-expenditure-data/nhe-fact-sheet
4. U.S. Census Bureau, County Business Patterns — Methodology (hospitals as an exception to the government-establishment exclusion). https://www.census.gov/programs-surveys/cbp/technical-documentation/methodology.html
5. Histometrics primer, General Medical and Surgical Hospitals — NAICS 6221 (pass-through to 62211/622110; operators, payer mechanics, local concentration, Medicaid-cut and Steward risks). Internal.
6. Histometrics primer, Psychiatric and Substance Abuse Hospitals — NAICS 6222 (pass-through to 62221/622210; per-diem model, IMD exclusion, IPF PPS, for-profit bed-share gains, Acadia/UHS exposure). Internal.
7. Histometrics primer, Specialty (except Psychiatric and Substance Abuse) Hospitals — NAICS 6223 (pass-through to 62231/622310; IRF/LTCH economics, site-neutral pay, Encompass/Select Medical, ScionHealth risk). Internal.
8. Columbia University Mailman School of Public Health, Large For-Profit Chains Gain Share of Psychiatric Hospital Inpatients (for-profit share of standalone psychiatric beds ~11% → 27%, 2011–2023), 2025. https://www.publichealth.columbia.edu/news/large-profit-chains-gain-share-psychiatric-hospital-inpatients
9. MedPAC, Inpatient Rehabilitation Facilities Payment System (IRF PPS basics; for-profit freestanding rehab Medicare margins >20%), 2024–2025. https://www.medpac.gov/wp-content/uploads/2024/10/MedPAC_Payment_Basics_25_IRF_FINAL_SEC.pdf
10. National Conference of State Legislatures, Certificate of Need State Laws (35 states plus Washington, D.C., as of January 2025). https://www.ncsl.org/health/certificate-of-need-state-laws