Monday 25 February 2008

See your money mature in healthcare

Getting old isn't a prospect that anyone looks forward to. But it could become an even grimer experience if the nation’s doctors have their way.

A recent report by Doctor magazine has revealed that one in three NHS doctors believe there should be a serious cut in treatments for elderly patients, especially those that are unlikely to get them back on their feet for long.  

It certainly sounds callous. But the truth is that doctors are wrestling with a problem that the rest of us haven’t woken up to yet; how we’re going to look after a rapidly-ageing population on what could amount to a shoestring budget.

It’s the same story in the US. The number of Americans over the age of 65 is set to double to nearly 80 million by 2045. The problem is that with Medicare running low (the traditional source of funding for health spending is expected to run dry by 2019), doctors are going to have to cut quite a few corners if they are going to be able to treat the increasingly geriatric and obese patients who will crowd into their waiting rooms.

But is there’s a silver lining to all this, it’s that your own pension fund can benefit from a pretty steady stream income by investing in the companies that will help the elderly during their twilight years.

Medical equipment makers, for example, can expect a windfall as they attempt to keep up with treating baby boomers who expect a better standard of old age than their own parents experienced for wear and tear. The global orthopedic industry is already growing at around 8% a year as the recently retired preserve with active leisure pursuits, such as skiing and hill walking.

Nursing home operators are another boom industry in waiting. Occupancy levels are already rising across the US as the over-75s become the fastest-growing demographic in the country.

But with caps over litigation introduced, those nursing-home operators who survived the 1990s shake-out find they are in a far better position, particularly with healthcare spending expected to reach $4trn in the US alone by 2015.

One of the very few pure play in the nursing home industry, Advocat (Nasdaq: AVCA) runs nursing home in eight US states, with the largest concentration of facilities in Texas and Arkansas.

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