Healthcare Industry Update Dave Seaton

The Healthcare care industry is a dynamic industry made up of many different individual segments such as:
Biotechnology
Diagnostic Substances
Drug Delivery
Drug Manufacturers - Major
Drug Manufacturers - Other
Drug Related Products
Drugs - Generic
Health Care Plans
Home Health Care
Hospitals
Long-Term Care Facilities
Medical Appliances & Equipment
Medical Instruments & Supplies
Medical Laboratories & Research
Medical Practitioners
Specialized Health Services


One of the areas that I would like to focus on is Long-Term Care facilities. This is a segment of the healthcare industry that will inevitably be a direct play on baby boomers. The top players in long term care on Market Cap alone are Manor Cadre New (HCR), Brookdale Senior Living (BKD), Sunrise Senior Living (Srz), and Kindred Healthcare (KND).

Just this past week Kindred Healthcare, Inc announced the opening of Kindred Hospital in Pittsburgh, Pennsylvania, and the acquisition of a skilled nursing center and assisted living residence formerly operated by The Greens Communities. I believe that we will see much more consolidation in the coming years when it comes to long term care providers.
Beyond long-term care there was other news which occurred this past week in other areas of the Health Care Industry.

On July 17, 2007 -- Working together with Chatsworth, CA-based Competition, Inc. and San Diego, CA-based Skylight Healthcare Systems, Scottsdale Healthcare is piloting the healthcare industry's first clinically validated digital room service meal ordering. This first-in-class application delivers a valid clinical dietary menu to patients who may then self-order meals directly from the bedside. This will be a service that will surely be desired by patients and may ultimately catch on if it can reduce long term costs, and increase efficiency.

On July 19, 2007 -- Strategic Initiatives In Healthcare®, LLC (SIH), a New Jersey based research consulting firm, announced today that it will begin marketing its portfolio of concepts effective August 1, 2007.
After devoting more than 36,000 hours of research and development toward the creation of innovative solutions to reconfigure and realign operating mechanisms of the nation's 4,000+ not-for-profit hospitals. Many of these initiatives involve overhauling many of the previous outdated efficiencies which have been common in the healthcare industry.

McKesson, the world’s largest healthcare services, automation and information technology company, t announced the successful implementation of its Horizon Prenatal Care™ solution at St. Luke’s Hospital-Allentown, Campus, part of St. Luke’s Hospital & Health Network, in northeastern Pennsylvania. The solution is the first obstetrics (OB)/prenatal information system designed to support continuity of care between the labor and delivery (L&D) department and other hospital departments and units. The system enables interaction with enterprise clinical systems to provide ready access to historical patient information and eliminate redundant charting in support of providing safer, more efficient care to baby and mother.

Healthcare REITS

Another interesting segment has been Healthcare RIETS (Real Estate Investment Trusts). These are companies primarily focused on investing in medical office buildings and other real estate related assets that have a direct relation to the healthcare industry.
While the whole healthcare REIT group has taken a beating his year It may be a good time to reconsider taking a look at healthcare REITS again. Towards the end of last year they got hot really shot too high. It was the new, big asset class and expectations exceed their fundamentals. However, with the beating in which they have taken over the previous couple of months, now may be a good time to reconsider.
One which may be of interest is Healthcare Realty Trust (HR) , a real estate investment trust that focuses on medical office buildings. The company began last year to divest its interests in other markets such as skilled nursing and senior housing.

Private Equity

On the private equity side Water Street Healthcare Partners, a Chicago private-equity firm focused exclusively on the healthcare industry, announced last week that it has completed a two-part investment, in which it has acquired majority ownership in Alpine Biomed to support the company's purchase of the neurology diagnostic product line from Medtronic, Inc. The transaction creates a global leader in specialty diagnostic devices and marks Water Street's fifth investment in the past year.
Alpine Biomed will now be the market leader in producing diagnostic products used for gastro esophageal reflux disease (GERD), commonly referred to as acid reflux disease, a condition afflicting more than 60 million Americans, as well as neurology diagnostic products used for conditions such as carpal tunnel syndrome and sleep disorders. Headquartered in Fountain Valley, California, Alpine Biomed has manufacturing facilities in Denmark, the United States and Vietnam.

International

Taking a more international perspective, healthcare in emerging countries will inevitably become incredibly valuable as countries begin to get other priorities in line.
One country is South Korea. The country overhauled its healthcare industry with the introduction of healthcare insurance and other such reforms after the Asian economic downturn of 1997 in order to cut costs and increase competition. The Government has actively supported and participated in the industry by declaring investor-friendly policies and tax incentives to attract foreign investors. It also encourages health promotion activities and provision of healthcare services to the poor and vulnerable sections of the rural population. This industry could witness tremendous growth in the next five to ten years, as the Government's promise to increase its healthcare as well as drug and pharmaceuticals R&D expenditure will bring in new drug development projects to the country. The Government's decision to reduce the reimbursement of branded drugs by 20.0 percent upon patent expiration will further drive drug development.