Our Favorite Healthcare Stocks of 2022Dec 21, 2021
While we don't write about healthcare stocks often, they are extremely important to watch out for. The healthcare sector in the United States alone represents over 3 trillion dollars and makes up over 17% of the United States GDP! Beyond that, this number is projected to grow up to 25% by the year 2030!
What this means is that healthcare is projected to become the biggest market in the United States and therefore the opportunity to invest in its future cannot be ignored.
What's an even bigger driver for this trend is that we're in the middle of a fundamental shift in the way investors are investing (see when we first talked about this happening earlier this year).
Rates are due to rise, inflation may be peaking and fiscal policy is becoming less accommodative.
Add this all together and 2022 will be VERY DIFFERENT than the last decade of investing (see our guide for 2022).
As we discussed in our guide for 2022, healthcare is a big theme we're looking at with specifically healthcare services being our focus. These defensive stocks should fare very well in what is likely a very choppy 2022!
So with that context, let's get into the best healthcare stocks to invest in this upcoming year ⬇️
Our Top 2 Healthcare Stocks:
1) United Healthcare (UNH) Stock:
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United Healthcare is an absolute monster! Since we wrote about them earlier this year (see it here), UNH has been on an absolute tear -- up 40% this year.
With UNH crossing our price target earlier this month, we think that this growth should continue into next year. The main reason is due to their largest subsidiary: Optum
Optum is UNH's health care delivery arm which oversees OptumHealth (care services), OptumInsight (tech services) and OptumRx (pharmacy). Optum accounts for over 45% of UNH's profits and has revenues over $100 billion!
But going forward we specifically are looking at the OptumHealth stock for the context of this continued investment. OptumHealth is dominating healthcare services by focusing on Value Based Care (VBC), Medicare Advantage Plans (MA) and a network of doctors encompassing primary care at its core.
This picture shows the list of OptumHealth's physician groups across the US
Without boring you of the details, the future of medicine is in the value based care model.
Historically, most doctors have worked under a fee for service plan -- aka they perform some sort of service and get compensated for it. But this model led to many physicians overprescribing patients with more exams, medicines and otherwise costly care for the sake of getting paid.
This model is slowly flipping and instead is compensating doctors for keeping patients healthy and reducing the overhead on the health system (aka by providing value) -- thus the Value Based Care model. Optum and UNH are at the core of this, leading the charge, and getting compensated highly while helping patients too!
What's even more is that Optum has the largest doctor network in the United States. But it's their approach that so interesting! By focusing on expanding their footprint with primary doctors, Optum is literally owning the lead-gen funnel where patients go to their main doctor before getting "recommended" to go to certain specialists.
By owning the core of the doctor-patient relationship, Optum is ensuring the future of who and where patients go see!
Long story short: the combo of Optum and UNH is literally transforming the future of healthcare in real time.
Pair this with an environment set up for healthcare to do well in 2022, and UNH continues to be one of our favorite healthcare stocks and a top healthcare stock to invest in!