#1 Rule for Healthcare Investing

The Number 1 Rule for Healthcare Investing... We can only make money if the Patient Comes First.

Historically, healthcare investors have benefitted from healthcare companies (pharma, medical device, PBMs, hospitals, private equity-owned doctor practices) increasing prices.

Pricing power in healthcare comes from 1) inelastic demand and 2) limited competition.

In cancer for example, high healthcare prices and investor returns have been born on the backs of American cancer patients whose out-of-pocket healthcare costs average almost $2,600 per month (even with insurance). In Europe and Australia, cancer patient out-of-pocket costs are $609 and $438 per month, respectively.

In America, the average cancer drug cost $150,000, but only increases life expectancy by about 3 months on average.

As a result of high cancer costs in the US, 51% of cancer patients have medical debt and 28% deplete their savings to pay for their out-of-pocket expenses.

We choose to make money ourselves on the backs of suffering patients when we invest in publicly traded pharmaceutical companies, hospitals, health insurance companies and their PBMs and private equity firms that own physician practices.

We can choose differently if we like.

Sources:
https://www.ncbi.nlm.nih.gov/pmc/arti...

https://dailynews.ascopubs.org/do/sal...

https://kffhealthnews.org/news/articl...

https://focusbankers.com/private-equi...

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