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Healthcare Sector Outlook

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Submitted By stizzi310
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Healthcare Sector Overview

Industry Theme:

The Healthcare sector is divided into two main industry groups. The first includes companies who manufacture healthcare equipment and supplies, as well health care related services, including basic healthcare service providers, owners and operators of health care facilities, and equipment distributors. The second group comprises companies that are primarily involved in the research, development, production, and marketing of biotechnology and pharmaceutical products.

Business Overview:

Healthcare companies currently shift their focus toward having more efficient management to drive profit higher. Significant regulatory changes, technological innovations, and financial pressures have influenced the need for health services to grow at a more aggressive rate. While monitoring the sector, it is easy to see that the average increase across the six industries has had a positive return of 1.54% over the past year, with the only lagging industries being Biotechnology (-0.76%) and Health Care Technology (-8.40%). Since the introduction of ObamaCare (or the Affordable Care Act) in 2010, insurance companies have taken advantage of those enlisted in the program by creating fewer opportunities to use “inside network” physicians and forcing patients to either forego treatment or take on the financial burden themselves. Estimates for 2016 show that insurance companies around the country are seeking premium rate increases of 20 percent to 40 percent or more, saying their new customers under ObamaCare turned out to be more sick than expected. Despite these circumstances, the overall sector is very strong, and other industries such as biotechnology and pharmaceuticals are still in a stage of rapid growth. For these reasons, we conclude that the Healthcare sector is still going to outperform most sectors and shows great

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