The US healthcare system is surging into uncharted territory. We’re facing a population increasingly skewing older with myriad health concerns, costs outstripping inflation and previous spending markers, and an innovation boom driving personalized precision care to new heights. As our challenges increase, so do the novel opportunities for investment in disruptive growth-oriented companies that increase healthcare access, affordability, and efficacy.

 

We’re Getting Older

Improvements in life expectancy, coupled with a boost in population, means that by 2030 one out of every five US citizens will be of retirement age. Further, it’s projected that “more than 60% of this [Boomer] generation will be managing more than one chronic condition.”[i]

Healthcare Impacts

Advances in medicine mean people live longer, but their quality of life can vary with their care for chronic and acute injuries. Diabetes, depression, dementia, hearing loss, and chronic pain often plague those over 65. Additionally, more than a third of adults over 65 fall every year, and of those, roughly 20 percent suffer injuries that limit their mobility and independence.[ii]

There have been impressive steps in managing these conditions, like the recent FDA approval of the Alzheimer’s drug Leqembi. And with the onset of COVID, the channels through which Boomers receive care have changed. A June 2021 study showed 45 percent of this generation scheduled telemedicine appointments, 41 percent used a patient portal to work with a healthcare provider, and 24.7 percent used technology such as wearables to track their health remotely.[iii] Additionally, there was a 26.7 percent increase from 2019 in the use of smartphones and tablets to research healthcare providers.[iv]

Opportunities for Investment

The demand for novel treatments, diagnostics, and preventative care for chronic and acute injuries afflicting adults over 65 is increasing. This generation also spends more on healthcare than any other age group.[v] The Congressional Budget Office projects that “Medicare spending will double over the next 30 years relative to the size of the economy – growing from 2.9 percent of GDP in 2022 to 5.9 percent by 2052.”[vi]

Companies developing medical devices to track and manage health conditions and those delivering tests and supplies to the home will be poised for growth and serve the increasing needs of this generation.

 

We’re Paying More, For Less

US healthcare spending reached $4.3 trillion in 2021, about $12,900 per person, while in other wealthy countries, people spend about half as much.[vii] Healthcare costs push many Americans to delay or skip treatment, driving them into debt and reducing coverage with disproportionate impacts on traditionally underserved groups.

Healthcare Impacts

Just under half of working-age adults were ‘inadequately insured’ in 2022.[viii] Additionally, 46 percent of survey respondents noted that they had “skipped or delayed care because of the cost, and 42 percent said they had problems paying medical bills or were paying off medical debt.[ix]

This accumulation of debt accounts for 58 percent of all debt collection entries on credit reports, totaling $88 billion in medical debt on credit cards.[x] The expense of our healthcare industry is weighing down our economy and unequally impacting segments of our population.

 

The State of US Health Insurance in 2022[xi]

Unfortunately, this exorbitant spending doesn’t generally result in higher quality of care. From 1980-2020, the mortality rate in the US fell 19 percent, in comparable countries, it went down 43 percent.[xii] Additionally, in 2020 the US had a rate five times higher of pregnancy-related deaths than similar countries.[xiii] American maternal mortality rates are also particularly impacted by race, with Black women “more than three times as likely to die from pregnancy-related causes as White women.”[xiv]

Opportunities for Investment

Addressing rising healthcare costs alongside decades of under-investment and unequal care is a complex challenge.

Select disruptive companies are working to improve access and affordability of quality care for all Americans. Dispersed quick clinics that inexpensively provide discounted healthcare products and immediate care outside of hospitals are just two ways we can incrementally address the cost of US healthcare.

 

We’re Getting Personal

Preventative and reactive care is improving by leaps and bounds due to more personalized, precision care. With advances in gene editing and vaccine development, doctors can work with patients to prevent a broader array of conditions and prescribe optimally effective treatments as needed.

Healthcare Impacts

In the 1960s, we set a record for the fastest vaccine to go from development to deployment; it took four years. In 2019, we cut that record to a quarter of the time. From identifying the SARS-CoV-2 coronavirus to creating an effective vaccine took less than 12 months.[xv]

Beyond vaccine development, medical advancements are more precisely and quickly treating persistent health conditions. From post-partum depression to diabetes to cholesterol, our understanding of the human body is rapidly increasing with critical care improvements for patients.[xvi]

We are also developing more targeted medical prevention and intervention through sophisticated genetic testing. With technology like CRISPR, we can fight viruses at the molecular level, discover and specifically treat underlying cancers, and even edit genes to improve immunities.[xvii]

Opportunities for Investment

The healthcare industry is continuously improving and innovating with dramatic impact. Companies pursuing novel vaccine development, precision medicine, and gene editing lead the way to improving health outcomes.

 

Getting Healthier

American healthcare is a dichotomy of exceptional cutting-edge treatment and bloated costs overwhelming historically under-represented groups. This delicate balance is increasingly shifting as our population ages and requires more care. By thoughtfully investing in better, we can harness these innovations to make quality care more accessible for all.

 

DISCLOSURES: This material is proprietary and may not be reproduced or transmitted to any third party without the prior, written consent of Reynders, McVeigh Capital Management, LLC (“RMCM”). This material is educational in nature and does not constitute investment advice or a recommendation to transact in a particular sector or in a particular manner. Statements regarding potential events or outcomes in the future are not guarantees of future performance, and actual results or developments may differ materially from those statements. All investments involve risk, including a loss of principal.

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[i] Anyssa Garza, “The Aging Population: The Increasing Effects on Health Care,” Pharmacy Times, January 19, 2016. https://www.pharmacytimes.com/view/the-aging-population-the-increasing-effects-on-health-care
[ii] Anyssa Garza, “The Aging Population: The Increasing Effects on Health Care,” Pharmacy Times, January 19, 2016. https://www.pharmacytimes.com/view/the-aging-population-the-increasing-effects-on-health-care
[iii] Andrew Meola, “The aging US population is creating many problems—especially regarding elderly healthcare issues,” Insider Intelligence, January 1, 2023. https://www.insiderintelligence.com/insights/aging-population-healthcare/
[iv] Andrew Meola, “The aging US population is creating many problems—especially regarding elderly healthcare issues,” Insider Intelligence, January 1, 2023. https://www.insiderintelligence.com/insights/aging-population-healthcare/
[v] “Why Are Americans Paying More For Healthcare?,” Peter R. Peterson Foundation, July 14, 2023. https://www.pgpf.org/blog/2023/07/why-are-americans-paying-more-for-healthcare
[vi] “Why Are Americans Paying More For Healthcare?,” Peter R. Peterson Foundation, July 14, 2023. https://www.pgpf.org/blog/2023/07/why-are-americans-paying-more-for-healthcare
[vii] “Why Are Americans Paying More For Healthcare?,” Peter R. Peterson Foundation, July 14, 2023. https://www.pgpf.org/blog/2023/07/why-are-americans-paying-more-for-healthcare
[viii] Sara R. Collins, Lauren A. Haynes, Relebohile Masitha, “The State of U.S. Health Insurance in 2022,” The Commonwealth Fund, September 29, 2023. https://www.commonwealthfund.org/publications/issue-briefs/2022/sep/state-us-health-insurance-2022-biennial-survey
[ix] Sara R. Collins, Lauren A. Haynes, Relebohile Masitha, “The State of U.S. Health Insurance in 2022,” The Commonwealth Fund, September 29, 2023. https://www.commonwealthfund.org/publications/issue-briefs/2022/sep/state-us-health-insurance-2022-biennial-survey
[x] Sara R. Collins, Lauren A. Haynes, Relebohile Masitha, “The State of U.S. Health Insurance in 2022,” The Commonwealth Fund, September 29, 2023. https://www.commonwealthfund.org/publications/issue-briefs/2022/sep/state-us-health-insurance-2022-biennial-survey
[xi] Sara R. Collins, Lauren A. Haynes, Relebohile Masitha, “The State of U.S. Health Insurance in 2022,” The Commonwealth Fund, September 29, 2023. https://www.commonwealthfund.org/publications/issue-briefs/2022/sep/state-us-health-insurance-2022-biennial-survey
[xii] Nisha Kurani and Emma Wager, “How does the quality of the U.S. health system compare to other countries?,” Health System Tracker, September 30, 2021. https://www.healthsystemtracker.org/chart-collection/quality-u-s-healthcare-system-compare-countries/
[xiii] Nisha Kurani and Emma Wager, “How does the quality of the U.S. health system compare to other countries?,” Health System Tracker, September 30, 2021. https://www.healthsystemtracker.org/chart-collection/quality-u-s-healthcare-system-compare-countries/
[xiv] Nisha Kurani and Emma Wager, “How does the quality of the U.S. health system compare to other countries?,” Health System Tracker, September 30, 2021. https://www.healthsystemtracker.org/chart-collection/quality-u-s-healthcare-system-compare-countries/
[xv] Sandy Cohen, “The fastest vaccine in history,” UCLA Health, December, 10 2020. https://www.uclahealth.org/news/the-fastest-vaccine-in-history.
[xvi] Alicia Reale-Cooney, “Cleveland Clinic Unveils Top 10 Medical Innovations for 2022,” Cleveland Clinic, February 15, 2022. https://newsroom.clevelandclinic.org/2022/02/16/cleveland-clinic-unveils-top-10-medical-innovations-for-2022/
[xvii] Walter Isaacson, “A Spur to the Biotech Century Ahead,” The Wall Street Journal, March 26, 2020. https://www.wsj.com/articles/a-spur-to-the-biotech-century-ahead-11585238908