-- Posted Monday, 26 April 2010 | Digg This Article
| | Source: GoldSeek.com
Rick’s Picks
Monday, April 26, 2010
“Phenomenally accurate forecasts”
We’ve become used to jobless economic recoveries, since, more than anything else, it is the downsizing of payrolls that has caused corporate profits to rebound from recessionary troughs. In theory, this is part of the “creative destruction” that helps the economy get lean and mean: Workers who have lost their jobs migrate to stronger companies, many learning new job skills to meet the demands of emerging businesses. This time around, however, so many key sectors have downsized, especially finance, retail and real estate, that there are not nearly enough emerging growth sectors to take up the slack.
Which sectors of the economy seem likely to grow the most over the next 5-10 years? Unfortunately, signs point to health care above all, since, if Obamacare takes root, that’s where the lion’s share of new federal spending will be going. We say “unfortunately,” because investors chasing all those new Obamacare dollars will tend to misallocate capital so that it finds its way into what promises to be the most expensive and wasteful boondoggle ever undertaken by Big Government.
You can be sure that many companies are preparing for a boom in healthcare and that they will shift their resources into related businesses when the time is right. And just as every corporate Tom, Dick and Harry eventually found its way into some aspect of banking or finance during the boom in real estate and securitized debt, companies with no connection to or knowledge of health care will find pathways into its most promising areas of growth.
Doctors Retiring in Droves
We should like to think that the growth will occur in places that are crucial to the actual health of the population. An example of this would be the training of, say, 5,000 new physicians to practice general medicine, and providing incentives for them to open offices in small cities and towns. In fact, that is most unlikely to occur, since physician reimbursement rates are all but certain to continue lower as the federal government’s role in health care expands. For their part, doctors have already started voting with their feet, retiring from the profession in vastly larger numbers than ever before. It seems predictable that those who remain will be corralled into assembly-line clinics and hospitals designed to achieve the economies of scale necessary to command federal (i.e., taxpayer) subsidies.
Just a tiny change in the government’s priorities will cause tidal waves of money to move from one place in healthcare to another. If, say, Washington should decide to increase the reimbursement for a home visit by an infusion nurse from $180 to $205, a thousand mom-and-pop infusion businesses will spring up in a matter of months. And if the government elects to pay a bit more for physical therapy, then outlets for such treatment will multiply like topsy. Nursing homes and assisted living centers will install their own PT facilities and run them as “profit centers” geared to compete with private practitioners. Aging baby boomers may benefit from an explosion in physical therapy, but the rest of the population will pay dearly for it. The Government is in business to make such mistakes – and now more than ever, since the only imperative driving it at the moment is growth for growth’s sake.
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Information and commentary contained herein comes from sources believed to be reliable, but this cannot be guaranteed. Past performance should not be construed as an indicator of future results, so let the buyer beware. There is a substantial risk of loss in futures and option trading, and even experts can, and sometimes do, lose their proverbial shirts. Rick's Picks does not provide investment advice to individuals, nor act as an investment advisor, nor individually advocate the purchase or sale of any security or investment. From time to time, its editor may hold positions in issues referred to in this service, and he may alter or augment them at any time. Investments recommended herein should be made only after consulting with your investment advisor, and only after reviewing the prospectus or financial statements of the company. Rick's Picks reserves the right to use e-mail endorsements and/or profit claims from its subscribers for marketing purposes. All names will be kept anonymous and only subscribers’ initials will be used unless express written permission has been granted to the contrary. All Contents © 2009, Rick Ackerman. All Rights Reserved. www.rickackerman.com
-- Posted Monday, 26 April 2010 | Digg This Article | Source: GoldSeek.com
