Health care companies must cost costs to spur growth, says expert While the heath care industry expanded even during the recession, it is beset with inefficiencies that threaten its profitability and investors' profits. Leading health care fund managers, however, say that some health care companies are improving their business efficiency and are good bets to invest in.

Health care experts assert that companies that offer strategies to contain soaring health care costs are best positioned to achieve robust profits in the short- and long-term. These strategies vary across the industry, but some include insurance providers offering incentives for patients to shift their care from high-cost hospitals to lower-cost rehab facilities and pharmacy benefit managers (PBM) that are in charge of prescription drug plans.

According to Edward Yoon, a manager at Fidelity's Select Medical Equipment and Systems Portfolio, one of the top-four health care funds, improving business efficiency and eliminating waste in supply chains can help health care companies to bridge the gaps they face between costs and income. Yoon told Bloomberg: "We want to own companies that are going to solve these problems and will help bend the cost curve by not just slowing the rate of health-care costs but helping them decline."

Moreover, Yoon asserts that health care companies can achieve cost reductions through the implementation of information technology services, like electronic medical records. Such moves can reduce wasted time and augment efficiency. Ultimately, the fate of the health care industry depends on the implementation of cost-cutting measures and improvements to business efficiency.
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