Medical and Automotive
Medical Device Production Still Growing Faster
Even though medical care spending has grown at a decelerating rate since late 2015, in August it was still growing at its fastest rate since late 2002. However, premium increases for many plans that are part of the Affordable Care Act were announced just before this column was written. The increases have been significant, and the ACA has come under fire from many as being unaffordable and broken. This column is being written just before the election, but even after November 8, there will be quite a bit of uncertainty in regards to future health care policy. This has the potential to dampen new capital investment in the medical equipment and device industry until the regulatory environment becomes more clear.
Despite all of that, the strong growth in medical care spending has led to rapidly accelerating growth in medical equipment production. The annual rate of growth is the fastest since late 2013 and the second fastest since early 2009. I expect the rate of growth to continue to accelerate through at least the end of 2016.
Also, Gardner Business Media’s medical business index has been a mixed bag in 2016. The index has swung wildly between growth and contraction. From September 2015 to July 2016, the index was trending up overall. However, the index has dropped three straight months and broken down through the previous uptrend.