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Show i T l. I 'Ill THE GROWING HOSPITAL SUPPLY INDUSTRY Last year medical care costs increased in-creased 11 percent, three times the growth in the Consumer Price Index. Although the boost in the CPI in 1982 was the smallest in ten years, the expansion ex-pansion in medical costs was the third highest since 1935 and followed a 12.5 percent rise in 1982. Over the last decade health care's share of the Gross National Product has doubled from 5 percent to 10 percent, per-cent, and hospital outlays account for an important percentage of total health care expenditures. The cost of health care in the United States now amounts to about $300 billion annually. It is an obvious fact that people are making more use of doctors, physicians physi-cians are providing more services, and hospitals are demanding more diagnostic tests for their patients. Hospitals now employ an average of two more people per patient than they did 25 years ago. In the future we expect that health care costs will continue to increase despite recent Administration efforts to reduce them. This is because people peo-ple are living longer and require more medical care; technology is advancing rapidly, and the majority of people are more health-conscious than ever before. AN EXPLODING MARKET FOR HOME HEALTH CARE Because home health care costs a great deal less than hospital care, there is currently a boom going on in this area. And the foremost hospital supply companies are profitably serving ser-ving this new growth industry. Formerly it was simply a matter of giving injections to bedridden patients or changing the dressings. Now, however, home health care also includes in-cludes sophisticated services such as kidney dialisis, cancer chemotherapy, intravenous feeding, etc. Obviously, the vast majority of home health care patients are in the over-65 age bracket, and this is one of the fastest-growing age groups. Last year spending on home health care products and services totaled about $2 billion. Our projections are that by the year 1986 the market will rise to between $7 billion and $9 billion. Even hospitals are enlarging their role in home care. Although some have provided the service ser-vice for many years, the number of nonprofit hospitals offering home care programs has jumped more than 600 percent since 1976. The average home care cost $50 compared with an average cost of more than $300 for a one-day stay in the hospital. HOSPITAL SUPPLY FIRMS FARING WELL For the most part, hospital supply companies have experienced excellent gains in recent years due to the booming boom-ing demand for medical services. In the future we anticipate continued good gains. Even last year, when so ,many industries and companies were hurt badly by the recession, the major ma-jor hospital supply firms fared very well. For example, some of the leading companies that are regularly followed follow-ed by the Research Department of Babson's Reports Abbott Laboratories, American Hospital Supply, American Sterilizer, Becton Dickinson, Ipco Corp., Johnson & Johnson, and Medtronic all scored earnings gains over the previous years. Currently the Research Staff recommends that the stocks of those companies be maintained for further progress. Other important hospital supply companies that experienced favorable results last year included Affiliated Hospital Products, C. R. Bard, and Baxter Travenol. Hospital supplies are also produced by many smaller firms that often manufacture one or more specialized items. Additionally, many of the large pharmaceutical firms cater to hospitals, nursing homes, etc. Thus, there is plenty of competition in this important industrial sector. For those wishing to gain representation represen-tation in the hospital supply industry, the Babson's Reports Research Department favors the conservative-grade conservative-grade stock of Abbott Laboratories. The company has a fine growth record and a very promising future. |