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Investing In Healthcare

The baby boom cohort has changed the world in which we live and the lens through which we view it. The aging of this cohort (roughly one third of the population) will continue to usher in dramatic changes across most business sectors and areas of our lives in the years to come. The boomer demographic in North America is also presenting unique challenges for government run social programs and presenting unprecedented opportunities for businesses with the right entrepreneurial mindsets and resources. While boomer consumptive patterns have evolved over time, there are still strong correlates between their wants/needs (and the wants/needs of their children) and the flow of capital across virtually all economic sectors. Clearly, as boomers are aging, their spending habits are evolving as well. This re-prioritization of spending has become an area of study for governments and investment organizations alike. One area that surfaces repeatedly and is becoming pre-eminent in the study of boomer consumption patterns is healthcare.

Healthcare is one of the industries that are most acutely impacted by this demographic shift. While many boomers will continue working, many are also retiring or are getting close to retirement. Most boomers are or still view themselves as reasonably young (mentally and physically) – the oldest, born in 1946 one year after the “boys came home” from WWII. For those of you without a calculator handy, the oldest boomers will be 62 years of age in 2008. This small but important factoid is lost on many bullish investors who see the present time as the “halcyon days” in healthcare investment in seniors housing options or Long-term care. Yet it will be 15 to 20 years before the leading edge of the boomers reach the age where these services will be in higher demand.

What many people, including even professional investors, forget or never learned is that much of the the current demand for healthcare is being driven by WWI babies, or what has been coined The Greatest Generation. The Greatest Generation is compromised of those who reached adulthood just before, and served in WWII. Many came from rural areas of Canada and the U.S. and settled in the larger centers after the War. This generation was entirely different than succeeding generations. While the differences are beyond the scope of this article, suffice to say that those who seriously study demographic shifts expect the baby boom generation to have an entirely different set of expectations regarding healthcare service and other services than their parents.

So, to recap thus far, there are a significant number of opportunities in the United States and Canada in healthcare investment; but these opportunities are not limitless and nor are they a sure bet. Demographic shifts are significant drivers of healthcare consumption patterns. It is important to attribute healthcare supply and demand drivers to the market and demographic to which they rightfully belong.

So, while healthcare investment opportunities abound, there is no replacement for sound judgment based on analytical inquiry. This is true of any investment decision. It is also key that current and projected changes across the following domains are reviewed in detail: demographics, finances, macro-economics, geography, consumer attitudes and behaviours, motivating factors (e.g., luxury, fear), urban/rural, SES, educational, cultural, risk orientation, and other personal and group-related factors. While this article zeros in on the effect that the baby boom will have on the healthcare investment market, there are a multiplicity of other factors and population segments that are, and will continue to exert significant pressure on healthcare economics and consumption patterns.

The following businesses related to healthcare delivery are and will continue to be worthy of consideration by individuals, private equity, and venture capital investors. Again, it should be noted that the list is only a starting point, and that investment decisions should be made on the best current and projective information possible. It will be necessary to use an array of analytical tools and methods (e.g., Porter’s Five Forces and other financial and statistical methods and models) to assess the industry/sector/business opportunity prior to making a significant investment into healthcare. Having said this, potential healthcare investment opportunities exist in the following areas:

  • Integrated Healthcare Centers, i.e., primary care (particularly where physician services, diagnostics (X-ray, CT, MRI), laboratory, and pharmacy are delivered within a short radius)
  • Providers of products & services for diabetes management, congestive heart failure, COPD, coronary artery disease, and other high incidence chronic diseases
  • Providers of mobility and other daily living assistive devices for those with a range of impaired gross or fine motor skills or other mobility limitations (e.g., caused by pain, arthritis, joint immobility)
  • Pharmaceutical and biotechology innovators and providers (care must be exercised due to patent limitations, proliferation of substitutes – generic drugs, lengthy approval processes, and other process and outcome risks such as the Vioxx controversy )
  • Health and hospitality services outsourcing (again, highly contextual and requires significant demand/supply driver analysis, political, environmental, union/non-union and other forces analysis)
  • In-home healthcare services (e.g., nursing, physical therapy, occupational therapy, care and support)
  • Medical or surgical retreats (highly specialized, significant risk)
  • Assisted Living or Long-term Care (these resources are capital intensive and targeted at the parents of the boomers, i.e., the WWI babies) – it will be 20 years before boomers will require these services in any great volume (be careful)
  • Major equipment and major/minor supplies providers (e.g., MRI, CT, ultrasound through to re-useable and disposable equipment)
  • Providers of re-furbished medical equipment to secondary markets, which include more price-sensitive purchasers (e.g. re-furbished CT scanner for a smaller rural hospital)
  • Alternative medicine centers (e.g., offering Ayurvedic Medicine, acupuncture, traditional Chinese Medicine)

Since information technology is a core function in healthcare, the following is a stand alone list of technology-related opportunities related to data/information collection and transfer:

  • Devices: quick, simple to use, portable, and ease workflow in high stress healthcare environments (e.g., emergency departments, tele-health)
  • Devices whose operating systems converge with mainframe of networked systems that admit, track, audit, and generate reports with minimum input and robust rule-based error checking
  • Devices or system that integrates disparate healthcare network data and traffic
  • Devices or systems which accurately expedite services
  • Devices or systems which improve the accuracy and speed of diagnosis
  • Devices or systems which improve reduce human error and increase the probability of appropriate and targeted treatment options
  • Translational devices and applications of all sorts, i.e. translating actual “hands-on” data into useable, and interoperable information which can be used for diagnostic, treatment, recovery, and planning purposes
  • Electronic dashboard technology for strategic decision-makers
  • Providers of software applications that integrate disparate healthcare value chain and supply chain fragmentation
  • Providers of software applications that integrate in-hospital processes (e.g., admission, discharge, transfer); care-finance-payments; care-supplies-payments and other A/P and A/R alignment platforms and applications
  • Providers of software applications which refine, simplify, or facilitate the care planning of patients
  • Providers of systems integration
  • Providers of software applications for Human Resources, CRM, Finance, and other corporate functions

These are a few opportunities which currently exist in the healthcare context. As you might guess, many areas are being explored by larger firms. Healthcare IT is particularly attractive to larger, more highly capitalized companies and software developers. The competition amongst these groups is fierce due to the large volumes of funds in healthcare and the market opportunities driven by demographics and the need to constantly improve system performance. To date, there is no one firm with a strategic competitive advantage in any one area, though some healthcare sectors (e.g., diagnostics) have a high concentration of highly capitalized firms (e.g., GE and Siemens competing in the CT, MRI market).

Whatever investment decisions you decide, the amount of money you risk should be in proportion to your risk tolerance. Even “slam dunk” opportunities can turn out to be dogs if the circumstances are not right; or a context specific barrier is not weighed; or social attitudes do an about face.

If you are scanning the healthcare markets for opportunities to invest, be sure to do your due diligence and get help to investigate this complex and ever-expanding area. The due diligence you do prior to investing significant capital is essential to ensuring high double digit returns whilst minimizing your risk.

Recession Proof Businesses and Strategies to Recession Proof Your Own Business

Recession Proof Businesses will always have a better opportunity to survive in a severe recession, and if you are smart, and do your research, not only can they survive, but they can actually thrive in a recession or any economic collapse as we are now seeing in the U.S.

In choosing a business in a recession, look for the industries which are being impacted the most and identify a business which addressed the downturn in each. Obviously, most businesses will feel the impact, but there will always be some which experience more profit erosion than others.

As example, real estate has been hit hard due to the subprime mess and banking collapse. What do real estate people do when there is no business, then start prospecting as they are on commission basis for the most part, and no sales, no commissions, no income.

Just look in the newspaper to see the impact the downturn is having on the real estate industry, ads are a fraction of what there were, and this has a ripple effect in all advertising mediums, so here is the opportunity to thrive while others are trying to survive.

Look for more cost effective advertising alternatives to promote to the real estate industry. One of the best businesses which address this is the sales prospecting industry. When ads stop pulling in customers, you have to cultivate your existing client base trying to extract new business from your existing business, and this is a huge market.

One of the best advertising promotional businesses is the Predictive Call Dialer Sales Prospecting Industry. Simply put, imagine if you could offer the real estate industry a method to reach all their clients by internet phone messaging system with the touch of a key on any computer. You can now send a personal message to all your clients offering an update on local real estate prices, interest rates, taxes, anything relevant to a home owner shows you are committed to your clients. You don’t have to leave a message that is sales oriented, but staying in contact is critical in down economies when people are worried about their homes value.

This is an industry which most business owners do not know exists. Some of the most depressed markets are real estate, mortgage industry, auto dealers, stock brokers, financial consultants, insurance brokers, even the trades like plumbers, electricians and auto repair shops are struggling as people put off repairs. Everyone needs to stay in contact with their customers and clients to cultivate as many future sales as possible. It is always easier to create sales from within your client base than it is outside of it. Your warm market is always going to be the most receptive to being contacted with valuable information on your business or your industry in general.

There are several companies which specialize in predictive call dialers software. The most powerful system I have researched is an internet based system which does not require your phone lines being tied up when using as was the case with older dialers I had used a decade earlier. This new system is more powerful and less costly as there is no equipment to purchase or extra lines to be added in your home or office. Speaking of the real estate industry above, the mortgage industry is also dead due to subprime mortgage mess and banking system collapse. Even if people have good credit, mortgage money is not available. And for those who are losing their jobs, facing bankruptcy or foreclosure, never mind the millions who have bad or no credit, where is their hope of the American dream of home ownership? With millions unable to realize their dream home, this new business is worth your attention as it addresses a huge need with unending demand, even in good economic times.

New home construction is off by over 50% this past year, and as prices come down, it doesn’t help when there is no mortgage money available. ICF World Homes has a new strategy perfect for the first time home buyer, those with no or bad credit, bankruptcies, or worse, facing foreclosure. We know from the subprime mortgage disaster that there will be no hope for millions of credit challenged home buyers as mortgage underwriting guidelines become almost impossible to get an approval even with 30% plus down payments, the market is consumed with the fear factor banks all have.

Imagine a solution where the home buyer has an option to earn their dream home? ICF, which is Insulated Concrete Form homes provides the best construction for less. ICF is hurricane and earthquake strength construction which lowers insurance costs and energy costs, and with this new earn your new home option, it requires no mortgage approval. This is an industry which solving one of the largest economic issues in our history, and you can get in at the ground floor level with a new home construction company offering this self funded new home plan.

If you want to start a new business, you want to research ICF World Homes by taking a free tour of their new home presentation. As one who was in the environmental construction industry for years, I saw the value of this new option immediately. This is one of the best recession proof businesses I have researched over the years and worth your consideration.

As you can see, the above businesses can either enhance your existing real estate business, or other related businesses, or you can choose to start a new business, either way, both are recession proof and will produce extra profits by lowering your advertising costs while adding to your bottom line. There are very few products or services which will lower your business overhead while also increasing your profits. These two are unique in that they are at worst, cost free to use as others will also see the extreme benefits of implementing them in their businesses. How many business owners do you have as clients?

The third business I have identified as recession proof is introducing a breakthrough new T1 T3 super high speed wireless WiFi technology which will save everyone thousands over all the competition. As with all new technologies, you want to be positioned upon introduction to capitalize on this tremendous new wireless technology.

T1 high speed currently costs on average $350.00 per month. How many people do you know who complain about their current ISP’s, Internet Service Providers? Cost is one thing, but with Its-Your-Net you get super high speed, both upline and downline for only $19.95 per month. T3 is only $79.95, so imagine the demand for this new WiFi wireless which you take with you wherever you go for only $19.95. Current mobile wireless is $80.00 per month from the major carriers. Imagine offering this recession proof low cost higher quality service to your existing business clients, or as a new business, or better yet, both.

In closing, choose your recession proof businesses carefully. The above are what I have identified as the best of the best, and ones I too am involved with. Do your own due diligence, don’t take the word of anyone on which business is best suited for you, for only you can answer that. I prefer low risk to no risk businesses especially in a recession.

In my years in traditional and online businesses, I have learned how to survive and thrive in all economic environments. No matter what category of business you are in, you can make it recession proof with a little research. Another little known strategy is to join with other business cooperatives which allow you to access business tools for less than the cost for individual businesses, especially the small businesses. Health coverage plans are available, major advertising media is available at discounts of up to 90% if you are a member. Research business organizations so you can access these business tools at a huge discount lowering your business overhead. It is like having a Wealth Warranty on your business.

Success to all,
M. R. Sullivan