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 The healthcare industry is the largest segment in the United States economy, representing $1.2 trillion. It has risen at a rate approximately twice that of inflation over the last decade, and as aging baby boomers continue to drive volume, industry growth is expected to continue. In 1999, working taxpayers outnumbered nonworking pensioners in the developed world (North America, Japan, Europe, Australia, and New Zealand) by 3 to 1. However, by 2030, the ratio will fall to 1.5 to 1. Healthcare budgets of these nations are being revisited and all sectors of the health system – payers, providers and patients – are expected to evolve with the demographic shift. Based on industry sources, there are fewer than 1,000 office-based healthcare practices in the United States with more than 25 providers. The fragmented nature of the industry, regulatory concerns, in addition to the rise of managed care, has had a tremendous impact on the way providers conduct their business. Many providers now participate in complex reimbursement arrangements, resulting in multiple transactions, information exchanges and other communications with payers for each patient visit. Many have struggled with this new impact on the industry, and consolidation has become increasingly attractive. While the current healthcare environment is rife with uncertainty, opportunities to capitalize on strong long-term trends are available. Healthcare information technologies and consolidated provider services (assuming stable reimbursement dynamics) are two attractive industry segments for potential investment at this time. We will continue to utilize our healthcare experience and expertise to aggressively seek such opportunities.
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