Investing in Healthcare: Trends & Opportunities

Imagine being able to invest in a growing industry that shows resistance to economic downturns and contributes to the well-being of millions. Investing in the healthcare sector can offer just that, providing various avenues for individuals seeking to diversify their portfolios and capitalize on the growth potential of this industry.

What's Driving the Growth in Healthcare?

There are two main factors driving the growth of healthcare - the aging population and advancements in technology.

As a society, we are getting older. "In 2020, about 1 in 6 people in the United States were age 65 and over," according to the US Census. The baby boomer generation (those born between 1945 and 1964) are hitting retirement age and by 2030 all boomers will be over the age of 65. Since people aged 65 and older have a higher number of doctors' visits and health issues, this has caused a huge strain on the healthcare industry.

Additionally, advancements in technology and medical research are driving the development of better screening, innovative treatments and therapies, and more convenience for the consumer creating more investment opportunities.

Current Trends in Healthcare

The healthcare sector is constantly evolving, with new trends emerging every year. These trends reflect the changing landscape of healthcare and aim to improve patient outcomes, increase efficiency, and enhance the overall patient experience. Here are some of the recent trends in the healthcare sector:

• Telehealth: The COVID-19 pandemic has accelerated the adoption of telehealth. Now, more than ever, patients can consult with healthcare professionals from the comfort of their homes, using video conferencing and digital communication tools. Telehealth offers convenience, reduces the travel burden for patients, and minimizes the risk of exposure to contagious diseases.
• Artificial Intelligence (AI): AI is increasingly being used in healthcare to improve preventative care and treatment of patients. Machine learning algorithms can analyze large volumes of data to identify patterns and predict disease outcomes. For example, one area that has found many applications for AI is in radiology. AI can perform time-consuming tasks, like analyzing and comparing dozens of images, in a matter of minutes giving faster results and improving patient outcomes. "It is estimated that AI applications can cut annual US healthcare costs by USD 150 billion in 2026," according to the National Library of Medicine.
• Wearable Technology: Wearable devices like smartwatches and fitness trackers are everywhere. These devices encourage healthier lifestyles by tracking physical activity and monitoring vital signs. However, wearables are particularly useful in managing chronic conditions, providing real-time health updates to individuals and their healthcare providers from the comfort of their homes.
• Personalized Medicine: Advances in genetics and genomics have paved the way for personalized medicine. Instead of a one-size-fits-all approach, personalized medicine considers an individual's genetic makeup, lifestyle, and environment to tailor treatments and prevention strategies. This precision medicine approach can lead to more effective and efficient healthcare interventions.
• Data Analytics: The healthcare industry generates an enormous amount of data, from electronic health records (EHRs) to medical images and clinical trials. Data analytics tools can extract valuable insights from this data, improving treatment outcomes, reducing costs, and identifying trends that can inform public health policies.
• Virtual Reality (VR) and Augmented Reality (AR): VR and AR technologies are finding their way into healthcare, from medical training to patient care. VR can provide immersive simulations for surgeons to practice complex procedures without the risk of harming real patients. AR is used during surgeries as a navigation tool, showing surgeons real-time information overlaid on the patient's body.
• Population Health Management: Population health management focuses on improving the health outcomes of a specific group of individuals. It considers social determinants of health, such as socioeconomic status, zip code, education, and access to healthcare services. By addressing the broader factors that influence health, population health management aims to create healthier communities.

These trends illustrate the increasing integration of technology, precision medicine, and patient-centered care in the healthcare sector. As healthcare professionals and organizations embrace these trends, patients can expect to receive higher quality care, experience improved health outcomes, and enjoy a more connected and efficient healthcare system.

Opportunities Investing in the Healthcare Sector

With the demands on healthcare by an aging population and the spike in technological advancements, there are more opportunities than ever before for investing in this sector.

One way to invest is by purchasing stocks of pharmaceutical companies, biotech firms, or medical device manufacturers. These companies play a vital role in the healthcare industry and demand for innovative drugs and medical devices continues to rise.

However, if you are interested in investing in alternative assets, investing in healthcare facilities either directly or through real estate investment trusts (REITs) is also a great option. The demand is growing for properties such as emergency rooms, urgent care facilities, medical office buildings, and assisted living facilities. With an aging population and increased demand for healthcare facilities, investing in healthcare REITs can provide consistent returns and have long-term growth potential even during economic downturns.

Lastly, investing in healthcare-focused venture capital funds allows investors to participate in the growth of early-stage healthcare companies. These funds identify promising startups in the healthcare sector and provide them with capital and expertise to develop and commercialize innovative healthcare products and services.

The healthcare sector offers numerous opportunities for investors. As the population ages, increasing demand for healthcare services, and continued technological advancements, the healthcare sector is expected to continue its growth trajectory, making it an attractive investment option.

If you would like to learn more about opportunities to invest in healthcare, watch Quest's webinar Investing in Healthcare Businesses: A Cure to Market Volatility with Azhar Hirani from ZT Corporate from August 31, 2024.