No matter how it happens, growth in the health-care industry
offers tremendous opportunities for investors willing to risk
government-initiated changes, according to Donald Johnston,
president of Massey Burch Investment Group Inc., a Nashville-based
venture capital company.
The health-care industry is expected to reach 17 percent of the
gross national product within this decade and up to 25 percent
in our lifetime, said Johnston.
Health care now represents about 12 percent of the gross
national product, or $2,600 per capita in 1991 dollars. That is up
from 6 percent or $700 per capita in 1960, he said, in 1991
dollars. Factors contributing to that growth include increased
utilization of services, new technologies and an aging population.
"The rising health-care cost is a very alarming trend and a
major campaign issue," but what the government will do about the
problem is uncertain.
Johnston said investing in the industry in that environment,
though scary, is being done because "that kind of change will
create chaos, which ought to create opportunity."
His comments Wednesday were directed to the Oklahoma Venture
Forum, a group that promotes economic development through education
in the venture capital process.
Health care is one of four industry focuses Massey Burch has in
its $170 million portfolio. The company, the successor to a firm
founded in 1968, is the oldest and largest venture capital firm in
the South. It has 45 active investments in companies that generate
more than $1.8 billion in revenues and have more than 20,000
Johnston, an Ardmore native, said his company's location in
Nashville is one reason for its emphasis on the health-care
industry. Nashville became a regional center of health care because
of Vanderbilt University, which is located there, and the creation
of Hospital Corp. of America (HCA), which owns Presbyterian
Hospital in Oklahoma City.
HCA, which was part of the Massey Burch portfolio before it
went public, gave rise to entrepreneurial managers who created
other health-care delivery companies.
"We provided financing around these budding companies," and as
they grew, a momentum built attracting more health-care companies
to Massey Burch.
He said the initial public offerings of HCA and a spinoff
raised more than $1 billion in capital, which went back into
Nashville and back out of the state again through the funding of
more health-care companies. …