In a watershed demographic moment, baby boomers are set to lose their title as America’s largest living adult generation to millenials at some point in 2019. But that doesn’t mean the boomers aren’t an economic force: Numbering around 72 million Americans, they make up a significant portion of the population and, as this group ages, they’re making their economic impact felt in new ways.
One industry feeling the impact acutely is the acute care industry, which has seen significant growth over the last few years, fed also by a strong economic backdrop and labor market. So why are these factors responsible for growth in the sector? Healthcare analyst Ann Hynes helps break down the underlying elements and examines the key to the industry’s continued success.
Acute care, a branch of healthcare that specializes in the short-term treatment for severe illnesses or injury and other circumstances that require rapid response, plays a key role in the prevention of death and disability. Aging populations are the most at risk for such acute conditions, but this type of treatment is not commonly addressed within primary care systems today. The World Health Organization explains that acute care also commonly serves as an entry point to healthcare for individuals with both worsening and urgent conditions. As a result, acute care centers are often seen as a one-stop-shop for older patients, able to treat any and all issues an individual may have.
While age might come with wisdom, it also comes with more frequent visits to the doctor, meaning the aging baby boomer population is putting increased pressure on healthcare services. Acute care systems, in particular, will become more prevalent across the United States as the industry leverages the “steady macro train known as the aging of baby boomers,” Ann writes in her 2019 healthcare services preview.
More than Demand
Beyond the growing demand, a robust economic backdrop and labor market have set a solid backbone for healthcare services over the last few months, although there is still significant room for improvement. For acute care centers where capacity has been bolstered by the economy and strong job force, accelerated admissions growth is one way in which companies are able to set themselves apart.
Good pricing trends for both commercial insurance and Medicare also help to support strong earnings figures in the acute care industry. This rings particularly true for companies that operate hospital networks in urban areas with good population growth dynamics.
Hynes also highlights what makes hospital companies unique in the world of healthcare: their limited international exposure. Paired with the factors above, this should position these companies well, especially in an environment where global economic concerns are prevalent.
While no one can predict what circumstances the healthcare industry will face month-to-month, there is no doubt the acute care industry is serving a growing need in the United States, and strong demand bodes well for the sector.
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