Investing in Health Care — A Story of Political Clout, Successful Niches and Recurring Cycles

The U.S. health care industry is an estimated $1.8 trillion industry and accounts for more than $1 of every $7 spent in the nation’s economy. Investment in health care companies can be a very good bet over the long term for a number of reasons, particularly in certain sectors within healthcare. Investment in certain healthcare sections is much riskier.

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Certain niches, such as the hospitals and dialysis industry are characterized by lower price to earning ratios, and moderate growth prospects but greater stability and higher market capitalizations. Other sectors have slightly higher growth rates such as long term care and ambulatory surgery centers but lower size and stability. Finally a few areas, such as large device companies and large specialty pharmaceuticals, at least for the time being, enjoy each high growth and high capitalization. This article provides a brief overview of investment background in several different sectors within health care.

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