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Healthcare Investment Opportunities in 2022 and Beyond

Healthcare Investment Opportunities in 2022 and Beyond

The healthcare sector offers many investment opportunities for individuals looking to enter one of the global economy’s most dynamic industries. With healthcare innovations constantly on the horizon, we’re seeing vast improvements across healthcare systems that produce better patient experiences. Through these innovations, we’re witnessing an uptick in healthcare investment opportunities, allowing investors to generate substantial long-term returns across public and private markets.

Is Healthcare a Good Investment Now?

Healthcare systems in the United States are due for a massive restructuring as healthcare costs continue to rise. One-third of working Americans say their healthcare costs have increased in 2021 alone, and as the over-65 population is set to surpass one billion by 2030, financial analysts expect healthcare spending to continue to outpace gross domestic product (GDP) expansion.

Currently, the United States spends more than 17% of its GDP on healthcare costs, yet its life expectancy is lower than its Western peers. Although higher spending has shown improved health outcomes, significant increases in life expectancy tend to average out at higher spending levels. But why?

The answer lies within the inefficiency of many American healthcare systems. A large proportion of spending is wasted on unnecessary, low-value healthcare—25% of total national health spending in 2019 according to the American Medical Association. Due to constrained government budgets, healthcare costs will also likely be pushed onto individuals. As this responsibility shifts to the general public, a change in healthcare delivery will be necessary to transform healthcare from an unpredictable service to a lifelong maintenance and management process.

Is Telehealth a Good Investment?

Due to the impact of the COVID-19 pandemic, 30% of all patients used telemedicine to attend healthcare appointments during the pandemic. A Citi Research survey suggests that telemedicine use has tripled since the start of the pandemic, and it’s managed to hold firm even as economies begin to reopen. 

Despite the recent surge in popularity, the use of telemedicine services is still relatively low; however, the scope for growth is substantial. According to Frost & Sullivan, investors can anticipate a steady 17% year-over-year growth across the total telemedicine market in the United States between 2019 and 2024. 

Does Telemedicine Have a Future?

Telemedicine offers many advantages for patients and physicians alike, including lower overall costs for the healthcare system, more efficient utilization of the physician’s time, and expanded access to care in remote or rural areas.

By providing remote interventions, hospitals can reduce admissions and expand alternatives to traditional healthcare services, slowing the growth of the total cost for healthcare services. Hospitals will remain the primary destination for patients with severe conditions and those requiring surgical procedures; however, a shift to more minimally invasive robotic and digital procedures will be expected to follow within the next few years. 

The benefits of robotic surgical procedures include more predictable outcomes to complex surgeries and faster recovery times that will allow patients to recover at home rather than at the hospital. Greater access to connectivity health services could also enable robotic procedures to take place without the physical presence of the surgeon operating the robot. Only about 2% of applicable surgical procedures are currently performed robotically, but the expansion of telemedicine and remote monitoring capabilities are looking to change that. 

Entering the Metaverse

Healthcare has also seen promising developments involving virtual reality (VR). The same technology used to entertain millions is being used to revolutionize the way doctors interact with their colleagues and patients in a variety of healthcare processes.

VR devices allow surgeons to enter into the Metaverse, a virtual common space or area of augmented reality that can be shared with multiple individuals at once without the risks of in-person exposure to serious communicable diseases. 

Through the use of the Metaverse, doctors will be able to examine patients with the same accuracy available with in-office visits. They can confer with colleagues and specialists across the world from the comfort of a shared virtual office space. 

Additionally, surgeons will be able to use data interpreted by medical VR technology to get a clear, accurate view of patient anatomy without the need for complicated, highly invasive procedures, which will, ideally, minimize recovery times.

As we continue to make advances in Metaverse technology, the potential for this new technology is ever-expanding. Healthcare investors should keep a close eye on developments in medical VR technology in terms of potential investment opportunities

What Are Good Investments in 2022?

There are four other areas in healthcare that can serve as great investment opportunities: pharmaceuticals, mental health services, medical clinics, and biotechnology are just a few.

Major pharmaceutical companies produce and market prescription and over-the-counter drugs, creating a revenue stream from sales. These companies also perform thorough research in the development of new drugs used in clinical trials for approval for use. As a result of these efforts, some companies have produced blockbuster drugs that generate annual sales exceeding $1B for many years. 

Mental health services, digital or otherwise, have seen a recent rise in profitability since the onset of the COVID-19 pandemic. In the United States, roughly 50 million people suffer from some form of mental illness; this number is only rising as people continue to struggle with the sociological and psychological impacts of the pandemic. The growth of this industry sector could provide a unique opportunity for interested investors. 

Urgent care clinics are profitable, in part, because of their ability to be discerning about the patients they treat, taking into account treatment availability and facility capabilities, as well as strategically examining patients’ insurance coverage. However, hospitals, which are fully equipped at all times, are required to treat all patients, regardless of insurance coverage. This has given hospitals a bad-debt ratio that may negatively affect profitability. Working with educated investors and industry experts can be helpful in implementing cost control measures, allowing hospitals to streamline their processes and increase profitability for investors.

Biotechnology also includes conducting research to create new drugs and therapies; however, their studies concentrate on creating bio-engineered products for treating rare diseases and producing COVID-19 related drugs and vaccines. Biotech firms include small startups and more established drug manufacturers, such as BioNTech, which partnered with Pfizer to develop the COVID-19 vaccine.

High Risk and High Reward

It is important to note that entering into healthcare investments should be considered a “high-risk, high-reward” opportunity. The healthcare industry has undergone, and will continue to undergo, many changes that can cause investor returns to rise and fall, sometimes at an alarming rate. However, for those who are willing to take the risk, alongside investment advisors they trust, the return on investment can be well worth the occasional doubt.

Top 3 Positive Trends in the Healthcare Market

With modern technology further permeating all industry market sectors, a surge of new trends are expected to make way into the healthcare industry within the next few years, including the following:

Artificial Intelligence (AI):

A continued rise in telehealth capabilities is expected to be the biggest trend in this market. As the world experienced virtual healthcare visits on a mass scale for the first time due to the pandemic, many found the process easier, faster, and as effective as in-person care. We should expect to see AI add-ons across telemedicine platforms, including chatbots, triage tools, robotic-assisted therapy for stroke patients, and software that assists in capturing quality images and videos. 

Additionally, the industry anticipates that Medicare and other health insurance providers will expand telemedicine coverage as we continue to observe a rise in AI-assisted telehealth services.

Big Data

To manage healthcare data more efficiently, the use of state-of-the-art technology for healthcare analytics, or big data, is another top trend expected to hit the healthcare market in the coming years. A significant component of big data analytics is that it makes crucial health information secure, transparent, and mobile—which could not be more important as the digital landscape continues to encompass more and more of our daily activities. 

Digital Healthcare Applications

Along with other telemedicine services, digital health apps will also help drive patient growth and create value for investors by allowing physicians to render their services to patients in remote locations who may be unable to visit a hospital. With these resources, healthcare workers will have the necessary components to monitor patients, provide support, and track behaviors without needing to meet with their clients in person.

Healthcare Investment Opportunities—A Better Future Starts Today

The healthcare market is constantly expanding and creating private equity healthcare investment opportunities for seasoned and novice investors alike.

In addition to providing vulnerable populations with better access to healthcare, these investment opportunities also open the possibilities for ground-breaking innovations within the healthcare sector, leading to lower medical costs for patients. Through determination, effort, and focus, we will enable future generations to access healthcare in new and advanced ways.

Azhar Hirani blog author
Azhar Hirani

Azhar Hirani manages the private equity sales team, which involves relationship management, advising and educating retail clients on new private investments, analyzing private equity portfolios, and oversight of clients’ invested capital in internal private projects. Passionate about business, marketing, and sales, Mr. Hirani maintains deep expertise in high ticket sales and has a record of success in sourcing capital and acquiring new customers.

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