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Healthcare Alpha

Discerning luck from skill can be hard. Baseball has 162 games per season. Boring for some but more than enough games for randomness to average out. How telling is one game? How telling is one case study? It could be random or just cherry picked. It's the consistent rate attributable to skill that we're after, whether in money management, baseball managers, healthcare, or other domains. It's the alpha. Investopedia describes alpha as "a term used in investing to describe a strategy's ability t ...

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Will Software Eat Healthcare?

In 2011, the legendary venture capitalist Mark Andreessen wrote why software is eating the world. Efficiency and scale could cut the costs of servers and development by 100x+. Entertainment (Netflix, Disney), cars (all), retail (Amazon), job hunting (LinkedIn), and more, all have software as integral parts of the product and value. This view has held. Software has devoured Sears, Borders, Blockbuster and others. It's added layers of analytics, cheaper travel, better communication, higher click r ...

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China’s Healthcare 3.0

The lines start early. At 4,500 beds, the Sichuan Provincial Hospital in Chengdu is 10-20x the size of a typical US hospital. It's not only huge but busy. Imagine a busy train station with queues and the bustle of a city. Hospitals in China have bed utilization over 100%, where beds spill into hallways. In the US it's close to 60%, and probably overstated. Healthcare as % of GDP in China is around 7%, sandwiched between Singapore's and Australia's rates, but growing at 2-3x the rate of its econ ...

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Surprise Bills Shake Firms’ Debt

Bond markets, while boring and somewhat aloof for most people, are a source of early signals and key news. When bond investors make big moves to discount a specific bond's price, be careful (as they say in Mexico, aguas). Such is the fate of a few private equity owned healthcare companies. This week the FT rant a great story here on some early troubles in the bond market for some firms. One is Envision Healthcare, the nation's largest physician services company. Last fall, KKR took Envision pri ...