Cardinal Health, Inc. (CAH), CVS Caremark Corporation (CVS), Walgreen Company (NYSE:WAG) (WAG): Companies That Are Keeping Patients Out Of Hospitals

Medical care is expensive, and the best way to lower costs is to keep patients out of hospitals. There are a few companies positioning

themselves through acquisitions to do just that, including Nestle and Cardinal Health, Inc. (NYSE:CAH).

The Most Expensive Care Around

Being in a hospital is probably the most expensive way to receive medical care. This is partly because a trip to the hospital usually involves a grave illness or major procedure. However, the actual cause of the visit isn’t what’s so expensive. The doctors, nurses, and other staff all cost a lot to pay, and the medical devices, from high-tech beds to monitoring devices, are all expensive to buy and maintain.

Frequent hospital visits are largely why the last year or so of a person’s life is the most expensive, medically speaking. While many people benefit from being kept alive, hospital care add up–particularly so if there are multiple episodes.

Chronic Illnesses and Kicking People Out

Many chronic illnesses eventually send people to the hospital. Untreated diabetes, for example, can lead to amputations. That’s not something that can be taken care of in a doctor’s office. So, keeping people out of hospitals is a bigger effort that has to encompass keeping people healthy with ongoing treatment. This, invariably, means treating people in their own homes for as long as possible.

Treating people in their homes, however, can also take place after a medical episode. Indeed, keeping people out of hospitals is good. But so, too, is getting people out of a hospital as soon as possible. That means less invasive surgery and providing the tools that patients need to mend in their own homes.

Two Mergers

Nestle and Cardinal Health, Inc. (NYSE:CAH) have both made recent acquisitions to position themselves to benefit from the trend toward treating people in their own homes.

Nestle

Nestle, best known for its massive food empire, has been bulking up its recently-created Health Science division. The most recent purchase was of privately held U.S. Pamlab. That company makes prescription pills, probably best thought of as vitamins, that help patients with diabetic peripheral neuropathy, depression, schizophrenia, pregnancy, and mild cognitive impairment.

And this isn’t the only deal Nestle has made–others include Prometheus Laboratories, Vitaflo, and Accera. This is clearly a business for which the company sees a big future. Nestle is a great company based solely on its industry-leading brands. The Health Science unit is icing on the cake, but a treat that could pay dividends for years to come.