Capital IdeasTM
Investment insights from Capital Group
Health Care
Matt Reynolds
A misaligned delivery model and lack of cure for major diseases are two of the biggest issues plaguing modern health care today.
Most doctors operate in a traditional fee-for-service model, getting paid based on volume. But the more patients they see, the more it reduces the time they can spend on every patient. This could potentially lead to a higher chance of misdiagnosis, mistakes and the tendency to only treat immediate illness or symptoms.
Many diseases come with significant health costs but the strain they place on economies can also be huge. In the US alone, 90% of the nation's US$4.31 trillion annual health care expenditures are for people with chronic2 and mental health conditions.
However, the emergence of value-based systems and advancements in data analytics and artificial intelligence (AI) could just be what the doctor ordered
In this paper, investment director Matt Reynolds outlines some of the key investment opportunities that are being unlocked by technological breakthroughs across a patient’s journey.
Unlocking innovative solutions along a patient’s journey
With global health care spending expected to reach US$10.6 trillion in 20303 (from US$9 trillion in 2022), the amount of resources that could be freed up, if a solution to the sector’s longstanding issues can be found, is potentially staggering. Similarly, the financial benefits could also be huge for companies that are able to conjure innovative solutions to these structural issues.
1. Data as at 15 December 2021. Source: National Health Expenditure Data: Historical. Center for Medicare & Medicaid Services
2. Referring to conditions that last more than a year and require ongoing medical attention
3. Data as at 20 October 2022. Source: Global Health Data Exchange (GHDx)
Our latest insights
RELATED INSIGHTS
Past results are not predictive of results in future periods. It is not possible to invest directly in an index, which is unmanaged. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.
Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.