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Healthcare to Grow for Decades

By: Steve Johnson

3/6/2008 - 17 Comments

Regardless of who takes the presidency in 2008, the government will be the driver of healthcare spending for decades to come. 

US public healthcare expenditure is on track to hit $2 trillion by the next decade, almost twice the current spending. The growth in healthcare and the slowing of other economic sectors is bound to attract a wide range of investors and new businesses to get their piece of the pie.

According to a new federal study by the Center for Medicare and Medicaid, Medicare alone will account for 20.7 percent of government healthcare spending by 2017. Total healthcare spending will hit $4.3 trillion by the next decade, which is almost 20 percent of gross national product. Last year it was 16.3 percent.  Healthcare spending over the next decade will grow by 6.7 percent annually, far surpassing the bleak economic projection of 1.9 percent growth for 2008.

The expected boost in federal spending on national healthcare is the clear result of a graying population -- the baby-boomer generation.  The baby-boomer generation was a result of the end of WWII, when the soldiers returned to their countries to have babies.  But, the baby-boomers are not just in the US - as China, India, Japan, Russia, and several other nations also have a large aging population.  Therefore the healthcare industry will not only grow in the US, but throughout the world. This provides even more potential for healthcare investors and new businesses to sell products and services around the world.

Reference Article: Make Money on the Coming Healthcare Explosion

Where Is the Money Going?

Some of the larger investment opportunities are based on the climbing cost of researching, developing and bringing new pharmaceuticals to market; and the increased costs of ever more sophisticated medical technology. Medical technology includes advanced scanning systems like, CT scans and MRI machines that cost millions of dollars – and are sometimes vital to determine the source of an illness.

It’s hard to visit the doctor for ten minutes and pay a $200 bill, because we don’t see the hundreds of people working on the technology that was part of the visit.  It’s like the Verizon Wireless commercials, with one person using a cell phone and hundreds of people walking behind them as part of the supporting network.

Other Opportunities

As the money flows into the Healthcare industry, you may not have to be a nurse take part in the opportunity.  New construction and remodeling of clinics and hospitals will continue into the foreseeable future.  Software and IT services will be needed along with medical devices like wheel chairs and walkers – which will be good for the manufacturing sector. 

All of these market sectors will benefit from the growth in the Healthcare industry.

  • The pharmaceutical sector. The recently-enacted government prescription drug plan as an adjunct to Medicare will also help stimulate drug sales.  
  • Insurance companies that provide supplementary healthcare coverage. Medicare coverage is limited and additional insurance is purchased by many of the millions of people covered by Medicare
  • Private and publicly-held hospital and healthcare facilities including retirement communities, assisted living facilities, surgery centers, outpatient and emergency clinics
  • Rehab centers and rehab hospitals
  • Laboratories and diagnostic centers
  • Manufacturers of prosthetic devices and surgical implants, a multi-billion dollar industry
  • Medical supplies industries, such as giant Johnson and Johnson
  • The healthcare-related technology sub-sector, including manufacturers of advanced diagnostic devices such as MRIs, CT scans, video-assisted surgical instruments and devices

Japan Looks to Robots

Japan has been investing billions in research and development of advanced robot technology for decades. They are now planning to use their robot technology to support their aging population. Hospital care is one of the highest expensives in the Healthcare industry.  Beds are always in short supply and the cost of 24/7 staff is very high. The future is to keep the elderly in their homes as much as possible with the help of a personal robot assistant.

Reference Article: Japan looks to a robot future

If Japan’s robot technology progresses to the point where this is actually possible - with little risk to the patient, then they are in a good position for large profits as they will surely export medical robots throughout the world. 

The Healthcare profession looks to be one of the safest as the coming recession takes aim at almost every other sector of the economy.

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