If you’re sick of hearing about healthcare, stay calm.
No matter the outcome of the U.S. election, healthcare looks to be a focal point in the economy for years to come, according to David K. Randall, who noted that the U.S. spent more than double what other wealthy nations spent on a per-person basis in 2010.
That’s 17.9 percent of its gross domestic product on healthcare.
Even more significant, S&P Dow Jones Indices replaced Kraft Foods with health insurer UnitedHealthcare on the Dow Jones industrial average.
Yet everything isn’t coming up roses for health insurance, as it struggles with tremendous pressure to bring costs down, as a result of an aging population (there are currently 558,284,383 people over age 65 in the world).
You’d think the extra spending would result in longer life expectancies for Americans. But guess again. Spending a great deal on healthcare does not result in a healthier population, according to Michael B. Sauter and Charles B. Stockdale. Of 34 OECD member countries, only three that spent the most per person have citizens that live the longest.
The United States spends more than any other country but only has the eighth-lowest life expectancy in the OECD.
So why would investors be interested in healthcare? “The race to cut costs is creating profits in parts of the industry,” according to Randall.
He noted that biotechnology companies could reduce the costs of surgery and cancer treatment, quoting Rob Lutts, chief investment officer at Cabot Money Management, a Salem, Massachusetts-based firm.
One of Lutts’ picks is Intuitive Surgical, which designs and builds robots that doctors can use to perform less invasive surgeries. The smaller incisions reportedly lead to faster recovery for patients and shorter hospital stays.
The company's da Vinci System is used in more than 1,450 hospitals worldwide, and growing more popular every day, with the number of machines in hospitals growing by about 25 percent a year.
“The company trades at a price-to-earnings ratio of 36.2, and is up about 10 percent for the year compared with an approximately 16-percent gain for the broad Standard & Poor's 500 index,” Randall pointed out.
Lutts also mentioned Myriad Genetics, which creates personalized gene maps that can help doctors identify how likely a patient will be to respond to a drug or the risk of a disease progressing or recurring. For now, Myriad has a lock on the market.
The good news is there’s a lot happening in healthcare that will benefit Americans, even if we don’t live longer.
The bad news? You’ll be hearing all about it longer, too.
Edited by
Braden Becker
