THE $12,000 PROBLEM WORTH SOLVING
The cost of healthcare in the US and globally is a problem worth solving. As investors seeking opportunities, we often look for issues in the world with the most significant problems. We then look for companies in the private sector that are creating viable solutions. In two weeks, we will host Avory Idea Day, our annual event where we share major structural/secular trends from which we source investments. Send us an email or Twitter DM if you want to learn more.
Back to the data:
$12,000 per capita is a large figure and nearly 2-3x that of the following countries—Germany, Sweden, Canada, the UK, Italy, and others.
The reasoning is a combination of factors. This includes high administrative costs. The US has a complex and fragmented healthcare system, with many insurance companies, which leads to increased administrative costs. The cost of malpractice, inefficient delivery of care, and an aging population, among many other reasons.
Another critical area is medication adherence, a problem we are investing capital in solving.
The cost of medication non-adherence in the United States is substantial. According to a study published in the Annals of Internal Medicine, the annual cost of medication non-adherence in the US was estimated to be as high as $289 billion. This estimate includes the cost of preventable hospitalizations, additional medical treatments, and lost productivity.
Medication adherence can improve health outcomes and reduce healthcare costs by preventing preventable hospitalizations.
Potential Investment Implications
As healthcare costs rise, the opportunity grows. For investors, it comes down to finding companies that possess competitive advantages and can create value for all stakeholders.
For us, that company has been Omnicell for the last 7 years. A company with a 50% market share, a growing and highly profitable business model, and led by its original founder.
Disclaimer: See the disclaimer page. Not a recommendation to purchase or sell any securities mentioned.