Annual Outlook

THE FUTURE OF HEALTHCARE: INVESTING IN A POST-REFORM WORLD

Published by Psilos Group, April 17, 2013

EDITOR’S NOTE: This paper is the fifth Annual Outlook published by healthcare investment firm Psilos Group. The Psilos Annual Outlook is intended to provide investors, analysts, businesses, and policymakers with a guide to the issues and trends that will shape healthcare investing in 2013 and beyond. Since 1998, Psilos has fueled the development of healthcare companies, driving innovations that reduce cost, improve quality, and align incentives across payers, providers, and patients.

Private Healthcare Exchanges on the Rise

Healthcare Insurance Providers Embrace Innovation

Consumers Will Assume Responsibility for Their Healthcare Purchases

New Technology Platforms Take Healthcare into the 21st Century

Huge Opportunities to Reduce Waste and Error

Love it or hate it, healthcare reform is here to stay. But the healthcare crisis in this country is far from over. While reform focuses primarily on providing healthcare coverage to 32 million uninsured Americans, the core problem remains: controlling costs and improving quality.

The numbers speak for themselves. The CommonWealth Fund projects that in 2013, healthcare costs alone will eat up 24% of median family income, and by 2021, those costs will rise to 31%. Additionally, The Kaiser Family Foundation reports that family healthcare insurance premiums increased 272%: from $5,791 in 1999 to $15,745 in 2012. Meanwhile, inflation in the U.S. is rising at just 2% annually, while overall healthcare costs are rising at 8%.

Perhaps most staggering of all, the U.S. healthcare system squanders approximately $800 billion a year or roughly 30 cents of every medical dollar through unneeded care, errors, fraud, and other wasteful practices, according to The Institute of Medicine.

Though healthcare reform does not address the cost issues head-on, it does shine an indirect light on the problem. As a leading investor in the healthcare market, Psilos Group believes that removing costs from the system while improving quality is the best way to make a positive difference in today’s healthcare system.

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