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The US healthcare system is an ongoing train wreck and federal and state governments have yet to implement any real plan for fixing it other than randomly throwing cash at one segment or another. What I want to do here is provide an overview of the problems and which companies are poised to profit off of them. This is going to be long because healthcare is very complicated. I'm not including [alternative medicine](https://en.wikipedia.org/wiki/List_of_forms_of_alternative_medicine) because grifters abound in that market so I haven't done any research on it.
**Problems**
First lets look at the labor pipeline. Most every role in healthcare that has patient contact requires education and licensing. Because these are controlled at state level the requirements vary as do the titles and job roles. The table below shows the years of education and training required.
| Title | Undergrad | Graduate |Training* | Total | Note |
|--------------------|-------------------------|---------------|----------------|--------------------|---------|------------------------------------------------------------------|
| [Doctor/physician](https://en.wikipedia.org/wiki/Medical_education_in_the_United_States) | 3-4 | 3-4 | 3-7 | 9-15 | [DO and MD](https://en.wikipedia.org/wiki/Comparison_of_MD_and_DO_in_the_United_States) |
| [Physican assistant (PA)](https://en.wikipedia.org/wiki/Physician_assistant#United_States) | 3-4 | 2-3 | 2000 hr | 6-8 | |
| [Nurse Practitioner (NP)](https://en.wikipedia.org/wiki/Nurse_practitioner#Nurse_practitioners_in_the_United_States) | 3-4 | 1.5 | | 4.5-5.5 | Prerequisite 500 hours experience as a nurse |
| [Psychiatrist](https://en.wikipedia.org/wiki/Psychiatry) | 3-4 | 4 | 4 | 11-12 | A mental health doctor/physician specialty |
| [Psychologist](https://en.wikipedia.org/wiki/Clinical_psychology) | 3-4 | 2-3 | 1–2 | 6-9 | Training requirement varies by state |
| [Social Worker](https://en.wikipedia.org/wiki/Clinical_social_work#In_the_United_States) | 3-4 | 2-3 | (varies) | 5-7 | Training requirement varies by state |
| [Dentist](https://en.wikipedia.org/wiki/Dentistry_in_the_United_States) | 3-4 | 2 | 2 | 7-8 | |
| [Veterinarian](https://en.wikipedia.org/wiki/Veterinary_education) | 3-4 | 4 | 4 | 11-12 |Multiple species for half the pay
|
| Software engineer (healthcare) | 0-4 | 2-4 | |0-8 |No medical training required
|
| Wellness influencer | | | | |LOL
|
*On the job training or [residency](https://en.wikipedia.org/wiki/Residency_\(medicine\)) and [fellowship](https://en.wikipedia.org/wiki/Fellowship_\(medicine\)) for doctors
Most of the top-tier providers are doctors, and most of them are [specialized](https://en.wikipedia.org/wiki/Medical_specialty) like the psychiatrist above. The career can pay well but the required educational investment results in a mountain of debt and years of lost earning potential that is difficult to make up for. Many other careers have a better ROI with less stress. And healthcare is a stressful environment with constant legal threats, attacks from patients, political intrusions into care (especially anything related to reproduction), and fights with insurance and Medicare over treatment approvals and payments. This discourages potential students from enrolling and causes long-term labor shortages. [International medical graduates](https://en.wikipedia.org/wiki/International_medical_graduate#United_States) could fill some of the gap but that's not a popular option lately.
The labor shortage results in high stress, high costs, and low care quality from overwork. Lower-skill providers are pressured to move into roles they're not suited for and experienced staff retire early. Patients encounter appointment delays, long wait times, more misdiagnoses, excessive lab tests, and referrals to specialists for anything that isn't trivial to diagnose.
Another major factor is how health care is paid for. Most people use insurance of some sort and many procedures require pre-approval, a major point of conflict between the insurer, provider, and patient. In general, Medicare is easier to get approval from but reimbursement rates are low. Private insurance pays better but fights every approval. Look up the video "How to Get an MRI" by comedian Dr. Glaucomflecken for a humorous but not inaccurate take on this. These battles are also a growing area of AI usage with insurers using it to reject claims and providers using it to automate appeals. But many patients don't have any insurance at all. If they can't get charitable care they wait until severely ill then go to an emergency room where the Emergency Medical Treatment & Labor Act (EMTALA) requires the hospital to examine and possibly treat them for free. The cost of this falls upon everyone else.
Because of these problems many urban and rural hospitals are barely surviving. Out of desperation many get into sale-leaseback private equity (PE) schemes which works until it doesn't and they close. For the people who were once served by that hospital it means traveling to a more distant one and if that results in not getting emergency care within the medical "golden hour" then they'll just have to plan their emergencies better next time. The market favors large suburban hospitals with a hub-and-spoke structure where front line care outside of the suburbs is minimalist and focused on supplying patients to the central hospital. Thus there are stand-alone emergency rooms without on-site doctors - the staff are directed remotely on how to stabilize a patient enough for transport. EMS transport companies love this trend (like GMR Solutions which recently had an IPO).
Front line providers like the typical "family doctor" face the same pressure as hospitals but with fewer resources. They are under immense pressure to reduce visitation times which causes patient conflict and reduces care. Patients relying on a free annual wellness visit will show up with a years worth of health complaints that are impossible for the provider to diagnose and treat in a 10-15 minute visitation. So providers start ramming patients through their schedules in a refer, refill, repeat cycle. They eventually have to either increase their fees, join larger groups (often PE-backed), or change their business models. Two popular alternative business models are concierge care, essentially paying more for a provider with lower patient load on a retainer basis (what the wealthy use), or direct primary care where providers don't accept insurance and patients pay per visit or through some form of a subscription (often in combination with a health savings account). An HSA does have an advantage that after age 65 it acts like a normal IRA without a penalty on non-medical withdrawals.
As a whole the US health care system has also become inelastic with very little reserve capacity. Any time there is a new disease spreading, like a worse than average flu, the emergency rooms quickly overflow and patients are stuck in hallways or ambulances waiting to be examined. The many health care grifters and vaccine conspiracies aren't helping with this. It can take a week or more to get an appointment at a family practice clinic and there's a good chance of having appointments canceled or rescheduled because the provider is unavailable and can't find anyone to cover for them (aka. locum). Urgent care costs twice as much just to see a NP, or a PA if you're lucky. Nor is this entirely a US problem - the health care systems of many western countries are also having trouble but perhaps not as systemically severe as the US.
In short, the health care system is failing and is not likely to recover anytime soon. Taking these problems into account reveals a few trends.
**Predictions**
1. Telehealth replacing most non-emergency visits. High speed Internet access is improving, even in remote rural areas, and most everyone has a smartphone. As long as the provider is licensed in the location of the patient they can provide care and reside most anywhere on the planet, like a place with a low cost of living and a functional health care system. Providers don't have to worry about patients assaulting them. It pays less but they can work from home with less stress and utilize the licenses they worked for. Many providers already do this as a side gig. This isn't what patients want but they're not going to be able to afford or access direct care from a doctor.
2. Direct-to-consumer (D2C) health services, i.e. bypassing intermediate provider visits and referral requirements. The obvious one is lab tests but it could spread to other routine services like endoscopy for colonoscopies.
3. Increasingly high insurance costs, both through premiums and denied claims, causing more people drop it entirely. Medicare is an option but due to low reimbursement rates many providers don't accept it. So patients pay cash out of their personal savings or solicit donations (GoFundMe). Cash has an advantage in that many healthcare services offer discounts, often around 40%, for not having to deal with insurers. Hospitals are required to provide lists of standard charges for their services. These are massive spreadsheets and it can be difficult to identify specific procedures because the many variations of them but they show the cash prices vs. what is billed to each insurer they accept. The insurance problem also spills over to pharmaceuticals where there are multiple middle-men and anti-competitive behavior between manufacturers that keep prices high.
4. Standalone specialty services replacing non-emergency hospital services, especially radiology. This will reduce the utilization of hospital equipment investments and the increased overhead will add to their financial woes as patients seek cheaper services elsewhere.
5. Suppliers of equipment and medical devices will be less affected if they're not overly exposed to hospital fortunes (or tariffs). People still need implants or joint replacements and many of those can be done in stand-alone surgical centers.
Here is analysis of related business segments and companies poised to make gains.
**Opportunities**
1. Telemedicine for physical health care has high demand, good insurance coverage, and good labor availability (often burned-out doctors looking for an easier career) but also an inherent problem with performing physical exams remotely. Technology is improving on that front with digital stethoscopes and otoscopes, or integrated solutions like those of TytoCare, which are better suited for inserting into orifices than the average smartphone. But many conditions still can't be diagnosed remotely so patients may be directed to see a local doctor anyways. Most patients understand this and are good at self-selecting for telemedicine vs. in-person care. There are many telehealth companies in this space, often private, and mergers and acquisitions are common. I'm personally invested in TelaDoc (TDOC) because they have good brand name recognition and I've used their service. Alternatives include Doximity (DOCS) and Amwell (AMWL). Amazon has been trying to enter this space but with mixed results.
2. Telemental health has many of the the opposite problems of telemedicine. Sessions are much longer, typically 1-2 hours. Insurance coverage is poor. Demand is ridiculously high but there's a severe labor shortage. There's been some government attempts to get more students interested in mental health care, California in particular, but it's a slow process. Patients have to develop a rapport with a provider before they can be helped and often try several before finding a good match. Most patients can do this remotely but some need it in combination with in-person visits. Some sufferers turn to AI out of desperation but that tends to be an echo chamber that won't prod a patient to take the often difficult steps towards healing. The labor shortage also has a compounding negative effect on companies because there are many bad providers in mental healthcare. The good ones, often those who entered the field to figure their own problems out, can separate therapy from their personal biases but there are others who have intolerant beliefs or personal agendas that result in abuse of patients. What happens is the good therapists get fully booked and new patients encounter mostly bad therapists because those have the highest patient turnover and thus the most availability. So the negative reviews pile up. This labor problem is a major drag on the performance of these companies and many are acquisition targets by telemedicine and traditional healthcare companies who have more stable finances. For example, I invested in Talkspace and they're being acquired by Universal Health Services (UHS). Amwell's psychiatric care business was acquired by Avel eCare. Teladoc acquired UpLift to add to BetterHelp which they previously acquired. There's many more private mental health companies with PE and VC backing so expect to see more IPOs of future acquisition targets.
3. D2C lab services allow patients to closely monitor their health by eliminating the need for an order from their regular provider. There is also more competition so it's not unusual to encounter discounts and package deals. I usually get a series of common tests done prior to my annual physical wellness visit in case my provider needs the info for a diagnosis. This reduces follow-up visits and treatment delays. Quest Diagnostics (DGX) has the most presence in my area, often walk-in labs located in hospitals and other clinics, so that's who I use and invest in. Labcorp (LH) is their major competitor. Many other D2C lab services are merely using these two for analysis. I suggest investing in whichever you use because you'll have a better feel for the patient experience that way.
4. While the insurance cost problem is difficult to work around, other than switching to cash and HSA, there are more options with pharmaceuticals. There are many discount cards and online pharmacies but they're mostly private. I've used Amazon Pharmacy and CostPlusDrugs but what I use most and invest in GoodRx. They are well known in my area and their discounts are the most consistent for the drugs I use. That said, drug prices vary wildly so it pays to check prices with every refill even with GoodRx. Constantly transferring a prescription between pharmacies is a hassle but with expensive drugs it pays off. GoodRx recently added telehealth services through their "Companion" subscription. I haven't used it but wouldn't be surprised if competitors followed suit.
5. Radiology is a service that can high overhead costs depending on the equipment maintenance costs (especially MRI) and utilization. Independent radiology providers can undercut that substantially. A few years ago I needed an MRI. The local hospital charged over $2K cash, a different hospital in a different chain charged a little over $1K, and an independent radiology group charged around $500. Obviously in an emergency it's hard to shop around but outside of that there's major savings to be had. While the radiology service I used is private I have invested in RadNet (RDNT) which operates in several states. There is also an AI play here. AI is integrating into general business use in hospitals as much as any other business. For providers, in addition to the niche insurance pre-auth/claim fights I mentioned above, it's commonly used for language translation and transcription. While there are other areas where it may help directly with patient care, radiology is a hot area for development because there is ample hard data to train on for finding tumors, fractures, and other problems.
6. As I said above, medical device providers are less directly exposed to hospital fortunes. I'm invested in Stryker (SYK) because they're large provider of medical devices and other healthcare equipment like beds. They're also based in Michigan, the same state I'm in, so can always drive there and berate management personally if they screw up. There may also be some opportunities in manufacturers of medical provider equipment such as portable ultrasound probes which use cloud-based computation instead of a connected cart. These aren't for patient self care though because it takes training to properly use one. I once had a small investment in Butterfly (BFLY) who makes some but closed it after a big price drop because I didn't fully understand their business vs. competitors (there are several).
So that's my perspective of the US health care situation and investment opportunities. Thanks for reading through all that if you made it this far. And if you want to control your health care costs then take care of yourself. Stop eating so much crap and get some exercise, though as the saying goes "talk to your doctor to see if getting off your ass is right for you".
**TL; DR edit:** Generally it will be products and services that bypass parts of or even replace traditional in-person health care and insurance, and companies who are not entirely dependent on it yet have products with high demand. That means reducing dependence on a primary care physician and avoiding insurance billing except for emergencies. So telehealth virtual care, direct lab tests, drug discount cards, independent radiology and possibly endoscopy services, and medical implant manufacturers. I have invested in TDOC, TALK, DGX, GDRX, RDNT, and SYK accordingly.
Edit: Cleaned up formatting