How Breakthrough Medical Technology Investors Dodged a Bullet
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For now, enjoy transformational technology guru Patrick Cox as he explains how health care reform could negatively impact startups and small-caps…
The tiny startups and small caps that we invest in have just dodged a bullet.
Because American consumers are free to buy the health care they want, they currently fund most of the world’s medical innovations. Those innovations are not, by the way, coming from Big Pharma. Like any established industry, Big Pharma resists change and protects the status quo. It fears new technologies and changes only when forced to. That’s why it has signed onto government health care, which would institutionalize its lead positions and slow innovation.
Choice in health care leads to the funding of new technologies. Many innovators, ironically, have no idea that this is the case. Scientists absorbed by the details of their fields rarely have any interest in the macroeconomic forces that determine investment trends. In that, they are not alone. Regardless, I’m extremely pleased to see that the people who run the Post Office and “cash for clunkers” are not going to be making our medical choices.
It’s August again in South Florida. This means that everybody I know starts the day by checking the National Hurricane Center’s storm updates with their morning coffee. Currently, Hurricane Bill is emulating the million or so Canadians who winter here every year and heading north.
As I recall, Florida’s Canadian inflow accounts for about one in six retired Canadians. That, using the term my Canadian grandmother used, is a lot of Canucks. Florida is more than glad to host Canadian snowbirds. Those of us who winter down here in the hurricane zone are always a little relieved to see them go, however. It means, among other things, that we don’t have to stand in lines to get into good restaurants. It also means we can get a doctor’s appointment a lot easier. Canadians, you see, are big consumers of American health care down here in the subtropics.
I certainly don’t blame them. Dr. Anne Doig, the incoming president of the Canadian Medical Association, recently described the Canadian health system as “imploding.” Waiting times for critical procedures are increasing dramatically. Treatments available in the U.S. are now denied in Canada. Older citizens, who account for more than two-thirds of all medical expenditures, are impacted most.
Doig said, “We’re all running flat out. We’re all just trying to stay ahead of the immediate day-to-day demands.” In fact, we know they’re not able to “stay ahead.” If they were, so many Canadians would not be paying so much for U.S. health care down here.
I don’t say this to criticize Canadians, or even those Americans who dream of imposing government health care. My point is simply that statistics about the Canadian health system don’t reflect one simple fact. About 15% of their most-intensive health care consumers are every winter here in Florida, where they freely buy the health care they need. Having lived near the Canadian border in Idaho and Montana, I know that Canadians also buy significant quantities of medical services there. The same is true across the northern U.S. states.
And it looks as if it will stay that way. The political pendulum, as I predicted, is accelerating back to the center. Something called “health care reform” will probably pass, but it won’t be the complete bureaucratization of medicine that was the goal. This is enormously good news for investors.
For transformational profits,
August 20, 2009
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