Trends Shaping the Healthcare Industry

[Joanne98]

I'm posting this not because I support this view but to give a look into how the market bastards think about healthcare. These are investment suggestions. Look into the world of profit off the sick and dying. The biggest scums alive.

PART ONE

In my opinion, health care is the most difficult industry for novice investors to understand. With so many stakeholders involved in developing and manufacturing any given medical product, it is often hard to obtain a firm grasp of what is shaping the future of this industry. In this series, I will be analyzing the health care industry using a top-down approach to help you understand the current and future environment that will determine the success or failure of the efforts of health care companies.
Obama’s Health Care Plan

Probably the most capricious entity is the federal government. With many political figures working on so many social and political agendas, the topic of health care can often become fad-like within Congress; however, the Obama Administration has made it clear that health care is close to the top of its agenda. Obama’s plan will provide millions of Americans with stronger health care coverage while lowering the cost of health care per family by as much as $2500. Oh, and he wants to do all that without raising taxes to pay for the coverage. This plan may prove to be a double edged sword for the health care industry. Personally, I feel that this is too ambitious of a goal to not have any ramifications on taxes and health care companies. Many companies will be hurt by the increased competition and lower margins and will be pressured to lower prices, possibly discouraging innovation as well. Obama plans to achieve this $2500 in savings mainly by increasing investment in health care IT and by increasing competition in the insurance industry. I realize that an increase in the use of health care IT would lower expenses through the elimination or reduction of administrative inefficiencies, but to the tune of $2500 per family? Unrealistic. Regardless of my views, Obama still plans on providing health care insurance to millions of people who are currently lacking coverage.

What will this mean for health care companies? Well to start, managed care organizations will benefit greatly with the increased number of people with coverage. Companies like Tenet Health Care and Universal Health Services will have a larger base of paying clients that are utilizing their services rather than opting out of care, resulting in higher revenues. Because of the weak economy, more and more people do not have enough money to pay for medical services they should be receiving, but if Obama has his way, insurance companies will provide sufficient, preventative care for their clients at a lower cost. But if more people are receiving care at a lower cost, someone will be feeling the pains of government involvement here.

http://www.bullishbankers.com/summary-of-trends-shaping-the-health-care-industry-part-1/

PART TWO

As I have already highlighted, the health care industry is subject to many swings that are caused by macroeconomic variables, regulation, trends, and beliefs. These changes can be hard to pick up on, especially if you are new to the health care industry or if you are not as familiar with it as with more experienced investors. In the first part of this article, I explained how the Obama Administration and the FDA are shaping the environment for health care companies. It is very important to understand the relationship between companies and their stakeholders and the major forces in the industry in order to properly evaluate a health care company.

Major M&A Activity


Recently, there has been some major consolidation within the industry as companies are positioning themselves to swallow major patent expirations and unfavorable economic climates. Within the past year, Pfizer and Wyeth , Merck and Shering-Plough , Gilead Sciences and CV Therapeutics, Teva and Barr, and J&J and several smaller companies have already partnered up to weather the storms. The first half of 2008 was stagnant with M&A activity, but throughout the second half of 2008 and the first half of 2009, Big Pharma and Biotech companies have been taking advantage of attractive prices created as a result of the recession. With $150 billion worth of drugs coming off patent protection by 2016, companies are looking to beef up their pipelines to prevent a shrinkage in revenue.

I speculate that most of the big biotech and pharmaceutical companies will complete at least one acquisition when their cash position increases to combat this hardship. Over the next few years, M&A activity will pepper the industry making smaller, flourishing companies attractive targets. Much of a company’s valuation is based upon its ability to replenish the pipeline with successful drugs, and as we move forward, large companies with a strong cash balance and smaller companies with blossoming pipelines will be companies to keep an eye on as far as branded pharmaceutical drug manufacturing goes.

http://www.bullishbankers.com/summary-of-trends-shaping-the-health-care-industry-part-2/

PART THREE

By now, you should be getting a quick glimpse of the trends that are influencing health care companies operations and decisions. In my first article I discussed how the government’s and FDA’s agendas are affecting the health care industry, and in my second article, I examined recent M&A activity, generic competition, and trends within the CRO industry. In this article, I will touch over the things that are plaguing Managed Care Organizations (MCO) and Medical Supplies companies and forces that are inspiring growth in Health Care IT.
Decline in Hospital Admissions

The decreasing number of people admitted into hospitals is hindering the managed care industry. Although the healthcare industry has been typically perceived as recession-proof, due to the increase in unemployment and the decline in the amount of disposable income each family has, people have not been rushing out to the hospital as quickly as they were before the recession. Since hospitals have fewer patients coming in, they generate less cash, and in response, hospitals decreased inventory levels of every day items. Companies like Baxter and Becton Dickenson & Co have really felt the pinch on sales as hospitals cut costs by not refilling inventory back to previous levels. BDX’s medical device segment, BD Medical, experienced a 3% decline in sales during fiscal Q2 2009 in response to the decreased inventory levels. However, once hospital admissions start increasing, hospitals will need to increase their inventory level to reflect the number of patients admitted.

This trend spells bad news for the rest of the medical device sub-sector as well. To cut costs even further, and to add fuel to the fire, hospitals have significantly reduced their capital equipment budget. This has taken its toll on machine and equipment manufacturers like GE and Phillip’s Electronic , because the first part of the budget that hospitals cut is for capital machinery. In 1Q09, GE’s Health Care segment, orders for their medical equipment were down 16% and revenues were down 10%. Personally, I do not think hospitals will dish out money for capital equipment in the near term, so I am staying away from pure play capital equipment manufacturers. Hospitals won’t buy new MRI machines and CT Scanners until they are comfortable with market conditions or until their machines need updated.

Fortunately, Americans will return to hospitals at a faster rate since they will need the care that they had previously put off, which would help boost medical supplies companies stock prices. Discretionary health care companies that provide supplies for elective surgeries, tests, and procedures will benefit in the recovery. If you think about it, when you need a hip or a knee replaced, you will only put it off until the pain in your body is greater than the pain to your wallet. This should occur when people start feeling more secure about the future of our economy and when people start returning to hospitals for care. If you’re looking to capitalize on this trend, Stryker Corp. and Zimmer Holdings Inc. are the big players in elective surgeries.

http://www.forexhound.com/article/Stocks/Stocks/Trends_Shaping_the_Health_Care_Industry_Part_3/137877

[Locrian]

1. wow. just wow.

I skimmed past your first sentence and at first thought you were posting this as "good" info (sorry!).

I'm posting this not because I support this view but to give a look into how the market bastards think about healthcare. These are investment suggestions. Look into the world of profit off the sick and dying. The biggest scums alive.

>>>The decreasing number of people admitted into hospitals is hindering the managed care industry
>>>Fortunately, Americans will return to hospitals at a faster rate since they will need the care that they had previously put off

This is 100% the way these sick bastards think. And exactly why "profit" has to be eliminated from the Health Care industry.

Thanks

[Joanne98]

2. You're welcome. It's really shocking how they think.