Some of the best ways to make a quick turn on an investment is through the health care industry and related exchange traded funds (ETFs). Biotech companies that churn out new drugs meant a big payday for investors. Now that the health care bill has passed, investing may not rely solely on the outcome of the FDA’s rulings but more so on executive decisions.
The current health care plan doesn’t do much to quell health care costs, remarks Marc Lichtenfield for Investment U. Health care costs are expected to slow in 2010, but they’ll continue to rise by 9% and prices of specialty drugs are estimated to increase by 15%. However, the free market should be able to provide competitive products and services that make patients healthier at a lower cost. [Health Care Reform ETF Winners and Losers.]
For instance, Rochester Medical (NASDAQ: ROCM) is helping to reduce hospital-related infections – around 10% of all patients contract a hospital-infection during their stay. A recent Medicare ruling specified that Medicare and some insurance companies will no longer reimburse hospitals for the care of the infection, so hospitals are now liable for costs of treating such infections.
Lichtenfeld suggests following two strategies when investing in the health care sector:
- Look for companies creating novel treatments for cancer and other diseases.
- Pay attention to companies that are trying to reduce health care costs, one of the biggest problems in the sector. [Biotech ETFs to Watch as Patent Reform Bill Heats Up.]
For more information on the health care sector, visit our health care category.
- iShares Dow Jones U.S. Healthcare Providers Index Fund (NYSEArca: IHF)
- Health Care Select Sector SPDR (NYSEArca: XLV)
- iShares Dow Jones U.S. Health Care Sector Index (NYSEArca: IYH)
- SPDR S&P Bioetch (NYSEArca: XBI)
- iShares Nasdaq Biotechnology (NASDAQ: IBB)
- First Trust Amex Biotechnology Fund (NYSEArca: FBT)
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.