An increasing demand for healthcare due to rising chronic diseases and the aging population has been supporting the growth of the healthcare industry over the past two years. The COVID-19 pandemic has brought significant changes to the healthcare sector. It has led to a digital transformation in healthcare systems, including the evolution of telehealth, innovations in personalized medicine, and other technologies. The increased availability of digital options for healthcare services has further accelerated the consumption of these services.
According to a Centers for Medicare & Medicaid Services (CMS) report, U.S. health spending is projected to reach $6.80 trillion by 2030. Furthermore, the healthcare industry is expected to account for 19.6% of GDP by 2030. And because the stock market is expected to remain highly volatile in the near term, healthcare stocks are considered attractive investments due to their ability to hedge against market fluctuations, given the inelastic demand for healthcare products and services. Investors’ bullish sentiment surrounding the industry is evident in the Health Care Select Sector SPDR's (XLV) 7.6% gains over the past year.
