As I waded through tons of information about the healthcare/medical sector, I remarked it might be easier to take castor oil. Cora never had the pleasure of tasting this fine liquid, so she asked me what castor oil was, what it did, and why it tasted so awful.

Since I couldn't remember the exact details about this medicinal oil, we looked it up. The more we read about castor oil, the more we understood medicine is supposed to be mysterious, medical machines are supposed to be complicated, and the words and regulations involved in this sector were designed for difficulty.

Once we realized this sector was oiled by intimidation, we felt less overwhelmed. This sector, like all other sectors in the U.S. market, is divided by numerous subsectors. These include - but aren't limited to - healthcare facilities, services and information systems, insurance, biotechnology and genetics, pharmaceuticals and drugs, research and development (R&D), testing and equipment. Not all companies within these subsectors are included in public markets, and every subsector is subject to government regulation and/or scrutiny.

We realized we could pick and choose among the subsectors to create diversity in our portfolio; however, we still needed to decipher the current viability and future potential of each subsector. Our dilemma reminded us of those little plastic day-of-the-week pill containers. If we break these big chunks of medical/healthcare information down into more digestible bits of information and dish it out in small doses, it might be better for our health. With this in mind, we offer seven days of health(y) information about this sector, including a diagnosis for further research:

Day #1: We found most figures and estimates for this sector stop at 2001. In 2001, the U.S. market was the largest in pharmaceuticals, prescription and over the counter drugs, insurance, and healthcare. Japan was second, and the Western European market was third. These market ratings were based on new drug development, higher purchasing power, and huge demands for quality healthcare and drugs. This figure was up 12% from 2000, and up over 31% from a decade ago.

In 2001, money for R&D was at an all-time high, leading to new risks and proposals from research labs and biotechnology. This funding enabled many companies to endure timeframes needed to pass new drugs and technology through the FDA (Food and Drug Administration) before each new item could be made available to the general public. Diagnosis: Our research depends on news about this sector and its subsectors since 2001. We were reminded to take our "read between the lines" medicine.

Day #2: We've allowed our government to regulate much of our healthcare. Some information can be found at the FDA site. They even have a kid's section, so you and your children can learn together how the FDA conducts business. Our sense of food and drug ingredients relies solely on labels, and on government assurance that each nationwide laboratory offers consistent testing standards. Diagnosis: There are always two sides to every story, so read more about problems inherent with government regulation. The FDA is going through a restructuring process, so we need to keep an eye on their future direction.

Day #3: We know drug companies sell to doctors, and doctors sell themselves to healthcare facilities (and visa-versa). We also know each subsector is dependent on internal marketing of each item once it's passed through the FDA. Cora and I found little about this sector's B2B (business to business) capabilities on the Internet, and the reason was logical?it stems from government regulation. What we did find was information on soaring equipment, drug, and healthcare service costs within this sector. Diagnosis: These soaring internal costs are eventually passed on to the consumer. Our focus, then, is to find companies bent on curbing these expenses through more efficient services and less waste.

Day #4: There is a New Economy - it just isn't the one we expected two years ago. In order to survive, businesses need to change the way they do business, including those in this sector. Government support may be beneficial, but it also created a false sense of security for some companies within the past decade. These businesses are scrambling to create new methods to fight bad debt and new competition, and increase efficiency and market coverage. We discovered new service business development centered on helping this sector recover and move forward in a more efficient manner. Diagnosis: Look beyond the outer layer to the inner workings of your subsector interest. Are there leaders? How are they maintaining their lead, and what are future plans?

Day #5: No one seems to have answers to rising costs, an aging society, and the huge lack of health care coverage. More employers are looking at employee programs centered on preventative care. Some insurance companies are joining this measure by offering preventative information and cutting costs by supplying customer services through the Internet. Diagnosis: The survivors will be the most efficient, with the ability to foster trust among customers who can afford their services. Keep your eye on the most public companies, and scrutinize their financials.

Day #6: Since the government is so involved in this sector, it's hard to keep international politics out of the picture. Diagnosis: We only have three words for today: Private sector biosecurity.

Day #7: There is no day of rest for this sector. We need to take our medicine so we can live healthy lives. Whether this medicine is prescription, preventative, or alternative, we discovered there are new methods involved in testing each phase. For instance, we discovered our blood can be tested for future heart problems. This is cool - testing to predict and prevent. Diagnosis: The next time you visit your doctor (or you run into one at a backyard BBQ), ask them about these preventative tests. Ask about reliability and trust in these companies, and - because no one else can do it for you - dig up more information on your own.

Your portfolio may live a longer life because of your own diagnosis.

Here's to your health,
Linda Goin