Q: How should a smart investor play the Affordable Care Act?

A: A big tailwind for health care has been revolutionary innovation. Another has been the ongoing shift from a fee-for-service to a fee-for-outcome system. It will be a slow and gradual switch, but one with many winners and losers. Among the long-term winners will be managed care companies, as they will play an integral part in changing the country over to a fee-for-outcome mindset.

http://online.barrons.com/news/articles/SB50001424053111904255004580035640519189352?mod=BOL_hp_highlight_1

Wait you mean we are actually going to pay for performance instead of useless procedures? Damn.... that's socialist! WTF!?  

Many of them seem to desire that those in the healthcare industry be paid on outcomes, rather than for showing up and performing their jobs ............ but they will often be among the first in line to scream when it is suggested that the compensation for educators be based on outcomes ....... preferring that teachers be paid for showing up and doing their jobs rather than for outcomes.  

The truth is that a shift towards being paid for results is likely not to work so well when coupled with increased government control.  Many of us do not have an issue with increased outcome-based compensation, but recognize the inverse relationship between government control and productivity, innovation, and improvement.  The ACA not only adds layers of regulation to the healthcare industry, it is changing the structure of delivery, and not always for the better.  We are facing decreased options, less choice, and less responsiveness to the individual patient's wishes.  Hospital groups, like many public schools, will manage to "teach to the test", if one will.  They will find ways to meet government standards by manipulating actual admissions versus being kept for observation, managing time-frames wrt treatments, and other bookkeeping maneuvering.  More people may have insurance, but the quality of healthcare will not likely improve for them, even as it decreases for most of the rest of us.

Yes, some on Wall Street will be able to see how to make a profit from the ACA.  Unfortunately, few are so bullish on the ACA improving healthcare in our nation.