Health Care Is Ripe for Investing

A 30-hour ordeal in a Delaware hospital... The eye-popping bill that came about a month later... Our country's health care is wildly complex... Health care is ripe for investing... The corners of the industry we're watching today...

My healthy existence was about to get turned upside down – and cost me a lot...

It was a Thursday morning in August. The weather was warm, humid, and drizzly. I could smell the ocean in the air. My family and I were at our Delaware seaside home. I was up early, looking for coffee.

However, this morning felt different. I awoke feeling out of sorts. Not a cold. Not indigestion. Not a hangover. This was different, and I couldn't quite place the feeling.

My left arm felt numb. No pain. Just discomfort. Probably nothing.

An hour later, the numbness in my left arm spread to my entire left side. Very strange. My wife demanded that we take a trip to the emergency room.

So on this random Thursday during the summer, about 100 miles from home, I was admitted to a hospital for the first time at age 44.

I should introduce myself...

My name is Thomas Carroll.

I'm Stansberry Research's newest analyst. But I'm not a new analyst. I've spent more than 20 years analyzing the health care sector. I've worked all across the health care landscape...

After graduate school at the Johns Hopkins Bloomberg School of Public Health, I was recruited to a Wall Street job. My background set me apart from the competition. I spent the next 18 years analyzing companies and picking stocks.

When it comes to navigating the health care system, I consider myself an educated consumer. Not only has my entire professional career been in health care, but much of the dinner-table talk during my childhood involved health care, too. My Mum was a nurse-turned-health-care-executive in this crazy system.

And my first experience as a hospital patient met every expectation I had...

It was awful.

The staff of the small community hospital rushed me in the door and ushered me into a room...

But after figuring out I wasn't in danger of dropping dead on the spot... my visit transformed into an inefficient, expensive, and annoying 30-hour ordeal.

In other words... the sale was great, but once I became a customer – not so much.

After the initial burst of efficiency, the nurses and hospital workers subjected me to a battery of tests – heart tests, a CT scan, an MRI, blood work, and more. They attached a bulky heart monitor to me... and inserted an IV line.

Then, I waited. And waited. "So this is what I'm in for in the future," I thought as I imagined myself requiring the litany of treatments we commonly foist on older folks. "This is what we are ALL in for."

I politely pleaded as brightly attired hospital workers shuffled in and out...

"Miss... excuse me... hello... nurse?" I said, trying to gain some attention. "Could you let me know when a doctor might be by to tell me something?"

All I got were apologies. "We don't know when the doctors come by," one nurse said.

"Do you think I could I have a cup of coffee?"

"Oh, dear God, no. You are a heart patient."

About 20 hours into this experience, the first actual doctor appeared at the side of my bed...

He looked at me curiously. "What may I do for you?" he said.

What can you do for me? How about telling me something about the tests I've endured over the past day? As I began to tell him the story from beginning to end, he quickly cut me off. He told me he was a neurologist and asked again, "Why am I seeing you?"

I told him I had some numbness in my arm and leg. "Ah!" he said. "That's why!" He then glanced at the CT scan of my spine and told me everything looks great. "Have a nice day."

The doctor spent a total of five minutes with me.

I only saw one other doctor... the one who signed my discharge papers. And of course, that interaction doesn't really count. It was purely administrative.

After the first doctor left my room, I began to wonder how much this experience would cost. I was then visited by both a physical therapist and an occupational therapist... They both said they were there to "get me on my feet again." I didn't need any of this. I just wanted some answers about why I felt this way.

But no answers or opinion were ever provided to me... just a perfunctory discharge.

It wasn't until a month later that my personal doctor made the diagnosis...

I had a severe deficiency of vitamin B12. As it turns out, vitamin B12 is very important. And not having enough of it can mimic all kinds of neurological diseases. I immediately went on B12 injections and supplements.

Just like that... problem solved.

About a month later, the bill from my hospital visit appeared in the mail...

"Guess how much?" I asked my wife.

"Oh, I don't know – $5,000," she said.

Total bill – $18,895.

That covered 30 hours in the hospital. No surgery. No heroics. And no answers. I was also charged for both the physical and occupational therapists who did nothing to me other than say hello. They didn't "get me on my feet again"... They didn't need to.

We all know the U.S. health care system is a mess...

But most of us don't understand how all the pieces interact with one another. We can exploit that knowledge to better navigate the system – and for financial gain.

Let me explain...

For example, if publicly traded hospitals have good earnings, then the insurers may see profit margins shrink. The insurers pay for those hospital services.

Did you know that every February, Medicare announces what it will pay to insurance companies for the upcoming year? The stocks of Medicare-focused health insurance companies react quickly to this news. But only sophisticated investors know this.

How about this? When the government becomes concerned about the price of prescription drugs, the stocks of pharmaceutical companies and pharmacy-benefit managers are going to be pressured. We're seeing this right now.

Do you know what "Medicare for All" is? Do you know how it could impact you? Do you know which stocks will benefit... and which will suffer?

Let us help you be a better consumer – and a much better investor.

The system is wildly complex...

It is costly. It is unpredictable. It is incredibly frustrating when you are a patient. It also produces less-than-stellar results.

But it is also full of money. A lot of money. And nothing on the horizon suggests that will slow down.

Currently, health care spending makes up about 18% of the total economy. It's forecast to grow to close to 20% by 2027. That is an increase of $2.4 trillion on top of what we're spending today. That increase alone is roughly as much as the total economies of Mexico and Australia combined.

This makes the U.S. health care system a huge opportunity for investors...

Entire hedge funds are devoted just to health care. You should better understand the system and benefit from it... especially now as we approach the next presidential election.

In 2020, health care will again be a front-and-center political issue. Candidates and commentators will expend a lot of energy discussing what the next solution will look like. That will lead to speculation about the winners and losers. Stocks will move up and down.

And for perhaps the first time in my career, we've reached the tipping point...

Since my career in health care began, a consistent theme from mentors, bosses, and customers has been "current trends cannot continue."

Yet they have continued... for decades. Sky-high costs. Mediocre quality. Bad laws.

Until today. Now, things are changing. I believe we've finally reached the point where the old way really can't continue. And investment opportunities will be created.

Innovative providers are reacting...

Today, a new wave of mergers is reshaping the industry.

Insurance company Aetna and drugstore chain CVS Health (CVS) have merged. The deal was completed in November. We've never seen this type of combination before.

This merger represents a big step toward the industry treating health care as the ultimate consumer product.

You can expect CVS stores to change dramatically in the next few years...

Imagine walking into your local CVS store to get your annual physical – and a flu shot. At the same time, a young girl is sitting near the back of the store getting tested for a peanut allergy, while a young athlete is in another room getting an X-ray. Access will be easy – 9,900 stores with approximately 1,100 clinics. And even better, prices will be transparent.

Similarly, in December, insurance firm Cigna (CI) completed its deal for pharmacy-benefits manager Express Scripts. Pharmacy-benefit managers are the "middlemen" between the pharmaceutical companies and your medications.

Cigna made this move so it can control a bigger part of the medical dollar – prescription drugs. The data it can get from this change will also support the company in predicting future health care costs of its members. That will help support its earnings growth.

And maybe you've heard about a new venture between Amazon (AMZN), Berkshire Hathaway (BRK-B), and JPMorgan Chase (JPM)... It has been named "Haven." These organizations will be breaking the mold of health care in our country... And technology will be a huge part of it.

Since 'Obamacare' became law in 2010, we've seen all types of innovative health care efforts...

They've reached across a broad spectrum of ideas.

The seven companies I mentioned above are all examples. Their sheer size and influence on how we live raises the conversation to a national level – if not a global level.

But similar changes are taking place in all corners of the industry, including in the areas of...

Technology – Startups are all over health care. Take, for instance, Cardiogram... a company that uses your Apple Watch to monitor your heart. Or Everseat... a company that lets you schedule your doctor appointments online. Or Emocha Mobile Health... a company that uses your smartphone to help you take your medicine.

These three solutions are giving individuals the tools to more efficiently manage their health care. Just as important, they all add to the growing amount of big data in health care. In turn, these data will help us analyze what works and what doesn't.

Health insurance – Frustrations with health insurance have led to the creation of companies like Oscar Health in New York. It's a health insurance company that you will actually enjoy interacting with...

Oscar lets you do everything you need in the palm of your hand. It has redesigned many parts of how you interact with your insurer. You can even have a "virtual" doctor visit over your phone. Imagine this... Your kid spikes a 103-degree fever. You need answers now. "Doctor on Call" is right there for you. And as an Oscar customer, it's free to use.

Alternative therapies – Medical marijuana has been both applauded and criticized across the country. Medicinal cannabis offers solutions for pain management, along with many other uses. And it works without a lot of the side effects and complications (such as addiction) that come with other "conventional" pain drugs.

I am an angel investor in a start-up medical-cannabis company... And the investing implications of this emerging market are the biggest I've seen.

(This is one of the first investment opportunities I'm exploring here at Stansberry Research. On March 27, at 8 p.m. Eastern time, we're hosting our first-ever special event on what's in store for the growing cannabis industry... whether now is the ideal time to invest the space... and much more. Sign up for our mailing list and register for the event right here.)

Is Amazon going to be late to this party? – No way. Amazon will be a driver of innovation in health care. It will be disruptive.

Besides the Haven project with Berkshire Hathaway and JPMorgan Chase, Amazon recently bought PillPack. This company customizes your medications and delivers them to your front door. Each pill is conveniently packaged and comes with instructions on when to take it.

More deals like this are inevitable. We can use them as consumers and invest in them.

What will come of all this?

Stuff is indeed happening... And it will be for the good.

We can invest in many of these companies today. We can exploit the impending system changes for our financial gain. And many of the startups we've seen in recent years will go public.

It will all lead to great new things for us as health care customers. It will also create a robust investment environment.

And most important, we'll be watching all of it here at Stansberry Research.

New 52-week highs (as of 3/14/19): Essex Property Trust (ESS), Ionis Pharmaceuticals (IONS), Nestlé (NSRGY), Procter & Gamble (PG), and Vanguard Real Estate Fund (VNQ).

What did you think of today's Digest? Tell us about your experiences – and frustrations – with the U.S. health care system. As always, you can send your notes to feedback@stansberryresearch.com.

Good investing,

Thomas Carroll
Baltimore, Maryland
March 15, 2019

Editor's note: As we go to press, Stansberry Research-sponsored professional golfer Kevin Kisner is just two strokes off the lead in the second round of the Players Championship in Ponte Vedra Beach, Florida.

For those who aren't familiar, "The Players" is often considered the "fifth major" of the PGA Tour. It offers the largest purse of any tournament in golf.

We hope you'll join us in cheering on "Kiz" this weekend. If you're on social media network Twitter, you can follow him and show your support right here.