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Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008
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Is the Health and Wellness Industry 'Recession Proof'? A Zpryme Market Research and Insights Perspective 2008

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An examination of leading economic indicators that provide a preeminent reflection of the health and wellness industries historical significance in the U.S. economy and the health and wellness …

An examination of leading economic indicators that provide a preeminent reflection of the health and wellness industries historical significance in the U.S. economy and the health and wellness industries stability in times of recession for 2008.

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  • 1. Is the Health & Wellness Industry ‗Recession Proof‘? An examination of leading economic indicators that provide a preeminent reflection of the health and wellness industries historical significance in the U.S. economy and the health and wellness industries stability in times of recession. Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved. Abstract: An examination of leading economic indicators that provide a preeminent reflection of the health and wellness industries historical significance in the U.S. economy and the health and wellness industries stability in times of recession for 2008. FOR MORE INFORMATION March 2008 www.zpryme.com
  • 2. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 Table of Contents The link between the Retail Industry, Health Care Industry and the Health and Wellness Industry ............... 3 Health Care‘s Consistent Contribution to GDP ............................................................................................... 4 Health Care Employment Exceeds Retail Employment in December 2007 .................................................... 5 Health Care Spending and Spending on Prescription and non-Prescription Drugs ........................................ 5 Health & Wellness Employment Growth ........................................................................................................ 6 Health Care‘s Impact on the Retail Industry – Statistical Model .................................................................... 7 Health Care Drivers: State Level Analysis...................................................................................................... 8 Retail Drivers: Metropolitan Statistical Area (M.S.A.) Analysis ...................................................................... 8 Health Care‘s Impact on Change Retail Economic Activity: State Level Analysis ............................................ 9 Health Care‘s Impact on Change Retail Economic Activity: M.S.A. Analysis ................................................. 10 Modeling Considerations ............................................................................................................................. 11 Conclusions ................................................................................................................................................... 12 About Zpryme Zpryme is a research-based advisory firm with services performed in two vital areas - business and consumer insights. With hundreds of coverage areas, Zpryme is your go-to for delivering relevant, actionable insight and consultation specific to each client‘s individual needs, helping organizations solve immediate business problems and achieve long-term success. Learn More @ www.zpryme.com | +1 (888) ZPRYME.1 | info@zpryme.com Health & Wellness Practice | www.zpryme.com 1 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 3. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 Is the Health and Wellness Industry ‘Recession Proof’? Finding stability in unstable times, the state of the current U.S. economy is unpredictable to say the least. However, while most U.S. industries have burrowed their own holes in an effort to sit out prior and subsequent economic storms, the health and wellness industry has instead taken these dejected points in time as a mechanism for opportunity. The principle of this analysis is to consider and analyze the proposed question ―Is the Health and Wellness Industry Recession Proof?‖ The above question is examined using the comprehensive analysis described below. 1) Examine the History of the health care industry 2) Examine the relationship between the health care and health and wellness industry 3) Examine the relationship between the retail industry and the health and wellness industry 4) Examine the projected employment of health and wellness positions 5) Econometric analysis of the drivers of the health care and retail across states and major cities 6) Econometric analysis of the impact of the health care industry on the retail industry Generally, the health and wellness industry is comprised of providers of preventive, remedial, and therapeutic products and services focused on the healthy balance of mind, body and/or spirit that results in an overall feeling of well-being. For this analysis, the health and wellness industry would not be recession proof if the health and wellness industry experienced zero or negative growth when the overall U.S. economy experiences a recession as defined by the Federal Reserve. Generally, a U.S. recession is a period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters. Thus, if the health and wellness industry experienced two consecutive quarters of decline because the broader general economy was also declining, then it would not be considered recession proof. Generally, the health and wellness industry comprises of providers of preventive, remedial, and therapeutic products and services for an individual‘s healthy balance of the mind, body and/or spirit that results in an overall feeling of well-being. For this analysis, the health and wellness industry would not be recession proof if the health and wellness industry experienced zero or negative growth when the overall U.S. economy experiences a recession as defined by the Federal Reserve. Generally, a U.S. recession is a period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters. Thus, if the health and wellness industry experienced two consecutive quarters of decline because the broader general economy was also declining, then it would not be considered recession proof. Health & Wellness Practice | www.zpryme.com 2 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 4. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 The link between the Retail Industry, Health Care Industry and the Health and Wellness Industry Critical to this analysis is the assertion that the health and wellness industry is strongly related to the performance and growth of the health care industry. However, this assertion is based on basic economic principles that can be commonly observed in the daily market place. In making this connection, we can further gain insight into the behavior of the health and wellness industry by observing the historical performance of the health care industry in periods overall U.S. economic hardship. We could probably go on for 100 pages about why there is a high correlation between these industries, but for the purposes of this analysis, we will only touch on this topic briefly before going into further analysis. Since 2001, the health and wellness Industry has increased its share of its total contribution to the U.S. Retail Industry, growing from 8.0% of the retail industry in 2001 to 10.7% of retail industry by 2006. Additionally, the health and wellness industry has grown at a much faster rate than the retail industry showing impressive year-over-year growth in 2005 and 2006. Table 1. Health and Wellness Industry, Retail, and Health Care Market in the U.S. 2001 - 2006 Industry 2001 2002 2003 2004 2005 2006 Health & Wellness $55.0 $59.0 $63.2 $68.0 $79.0 $91.0 Retail $691.6 $719.6 $751.5 $776.9 $812.7 $848.0 Health Care $654.2 $706.3 $757.2 $808.0 $847.6 $901.4 Health & Wellness as a % of the Retail Industry 8.0% 8.2% 8.4% 8.8% 9.7% 10.7% Annual Growth Health & Wellness 7.3% 7.1% 7.6% 16.2% 15.2% Retail 4.0% 4.4% 3.4% 4.6% 4.3% Health Care 8.0% 7.2% 6.7% 4.9% 6.3% Source: Natural Marketing Institute and the U.S. Bureau of Economic Analysis In fact, Table 1 shows that the health and wellness industries annual growth from 2001 to 2004 seemed to be more closely related to the growth of the U.S. health care industry. This should come as no surprise since the fundamental drivers of both the health care industry and health and wellness industry are closely related. Both industries are largely driven by the aging U.S. population which is riddled with many well document health problems such as obesity, diabetes, heart disease and asthma, etc. The data in Table 1 clearly support the statements above, and help further explain the aggressive growth in the health and wellness industry. The consumer logic is very similar to dental hygiene, where consumers who purchase toothpaste are more likely to purchase mouthwash. Thus, these two goods are complimentary because an increase in the demand for toothpaste will lead to an increase in mouthwash sales. Health & Wellness Practice | www.zpryme.com 3 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 5. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 TOP DRIVERS: Healthcare’s Impact on the Retail Industry DRIVER EXPLANATION Health-care designs and competitors are gaining ground, with low-cost walk-in health-care centers for common ailments — at one end of the Government Policy, Legislation and Regulation continuum, and highly personalized ―concierge care‖ at the other. Another example without the FDA approval, a prescription drug would never enter a pharmacy. Consumers acquire prescription drugs with their Complimentary Goods physician‘s authorization. The same consumer may also obtain vitamins and herbal supplements as a preventive measure for their wellbeing. The healthcare industry has created and filled more high-skilled careers than any other industry. Healthcare Creates High-Skilled Jobs This in effect has created a large pool of consumers that have access to an ever increasing pocket of discretionary income – the majority in which is spent on retail products and services. A strong health care sector directly impacts the retail sector by creating high skilled jobs, and by driving complementary good sales at the retail level (as described above). As the health care sector expands, this will create more of the high paying jobs, and thus create more consumers who have higher discretionary incomes. In the end, all activities of economic stimulus in the economy as it relate to the health and wellness industry is driven by government policy, legislation and regulation. Health Care’s Consistent Contribution to GDP The U.S. Gross Domestic Product (GDP) has a large impact on each person within the U.S. economy; in consequence the gross domestic product is the most commonly economic indicator used to measure the economic growth of the U.S. An investigation of the contributions to percent change in real gross domestic product by the health care and retail industry revealed that even during U.S. economic hardship the health care industry continued to sustain growth, while the retail sector experienced mild forms of decline. The U.S. retail industry is correlated with the health and wellness industry as the health and wellness industry has a substantial stake in retail products and services. Health & Wellness Practice | www.zpryme.com 4 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 6. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 Health Care Employment Exceeds Retail Employment in December 2007 18,000 Another variable fostering Chart 1. Retail and Health Care Employment, 1970 - 2007 Source: Bureau of Labor Statistics this growth in the health care 16,000 sector, and as of this past 14,000 December 2007, the health 12,000 care industry has even eclipsed the dominant retail 10,000 industry in total number of 8,000 employees with more than 15 6,000 Retail million active health related careers. 4,000 Health Care 2,000 0 1970 1972 1973 1975 1976 1978 1979 1981 1982 1984 1985 1987 1989 1990 1992 1993 1995 1996 1998 1999 2001 2002 2004 2005 2006 2007 1971 1974 1977 1980 1983 1986 1988 1991 1994 1997 2000 2003 Health Care Spending and Spending on Prescription and non-Prescription Drugs $3,000 In the U.S. the average Chart 2. Average U.S. Consumer Expenditures on Health Care and expenditures on health care Prescription and Non-Prescription Source: Bureau of Labor Statistics Consumer Expenditures Survey and on prescription and non- $2,500 Health Care Expenditures prescription drugs has experienced aggressive $2,000 Presecription and Non-Prescription Drug growth from 1984 to 2006. Expeditures $1,500 Average annual health care expenditures increased by $1,000 163.7% from 2000 to 2006, reaching $2,766 in 2006. $500 Prescription and non- prescription drugs $0 expenditures increased by 207.8% from 2000 to 2006, 1985 1986 1987 1988 1990 1991 1993 1994 1995 1996 1998 1999 2001 2002 2003 2004 2006 1984 1989 1992 1997 2000 2005 reaching $514 in 2006. Health care is becoming more expensive for people. Broken down by age groups: 25-34, 35-44, 45-54 are under the cumulative growth rate for income per unit while, the other age groups: under 25, 55-64, 65-74, and 75 and over, experienced cumulative growth rates higher than income per unit. Health care spending for those over 75 increased the greatest, while those under 25 experienced growths in their health care spending that exceeded the income per unit growth rate. Income per unit increases and Health & Wellness Practice | www.zpryme.com 5 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 7. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 decreases over time do not seem to have an effect on spending. Those under 25 seem to experience the highest fluctuations in spending increases/ decreases, which can likely be attributed to smaller rates of people seeking health care, less preventative medicine, as well as enjoying lower health maintenance costs compared to the older groups. The 65-74 year old age group has the highest current level of health care expenditure. This can be attributed to higher health care costs, increased medical procedures and medications, etc. at this age. For the past 23 years, prescription and non prescription drug expenditures have risen from $167 of the total $1,049 spent on health care per person in 1984, to $514 of the $2,766 spent on health care per person in 2007. The average drug expenditure rate in relation to total expenditures on health care is 17.82%, ranging from a low of 15.9% in 1984 to a high of 20.7% in 2002. These rates vary greater than those of the amount of income per unit spent on health care. This means that the costs of drugs are growing at a higher rate than both the income per unit as well as the total health care expenditure. The cumulative growth rate for drug expenditures across all age groups in relation to overall health care is 117.8% for the 23 years. Age groups under 25, 25-34. , 35-44 are clearly below this rate, while those in the age group of 45-54 are close to the same rate. The cumulative growth rate for those in age groups 55-64, 65-74, and 75 and above is higher than the overall rate. The correlation between decreases in total health care spending and drug expenditures is clear. As the spending on health care decreases, so will the spending on drugs. This is a logical result as medications are a portion of health care, and are dependent on its spending. In recent years, there has been a decrease in proportions of health care spending on prescription and non prescription drugs which could be explained by the use of alternative methods of treatment, holistic approaches gaining popularity as well as an increase of individuals across all age groups living a healthier life style. Health & Wellness Employment Growth An analysis of data pertaining to employment growth per industry has exposed insightful suggestions of the financial viability contiguous to the health care industry. Extending from 1996 thru 2006, the health care had realized an average occupational growth rate of 2.5% per year- which is nothing less than impressive, ranking it 3nd overall when compared to all other industries. Furthermore, an economic investigation of the forecasted data based on a methodology derived from the U.S. Bureau of Labor Statistics, reveals that an equivalent trend will persist into 2016. Further analysis demonstrated that the prediction models offered support for future growth of the health care industry occupations from 2008 - 2016 - preserving their position in close proximity to the top when growth rates are compared to all other high growth industries. Historical data has also revealed that even in slow economic times, more specifically, existing Federal Reserve confirmed recessions in our nation‘s past; the health care industry still continued to provide stable employment and new innovations in occupational efficiency. This evidence was cross referenced and obtained in a breakdown of all occupational segments of the health care industry. Another central finding was considered; upon studying the historical data of the occupational growth of the top 6 segments of the health care industry leads one to believe this industry is as close to recession proof as any one industry could be. The health care occupations that are the least susceptible to recession are: Home Health Aides, Medical Assistants, Mental Health and Substance Abuse Social Workers, Physical Therapists, Health Care Support, and Health Educators. All 6 of these ―sub-industries‖ have experienced Health & Wellness Practice | www.zpryme.com 6 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 8. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 substantial rates of occupational growth in the past decade, and are predicted to sustain these high levels of growth from 2008 - 2016. For example, home health aides are expected to grow by 48.73% in the next ten years, while medical assistant positions are expected to grow by 35.42%; followed by Mental Health and Substance Abuse Social Workers, Physical Therapists, Health Care Support Occupations, and Health Educators- growing at 29.91%, 27.06%, 26.78%, and 26.19% respectively. A clear distinction in positive growth was drawn when the health care industry was compared to that of all other industries - the dissimilarity in industry growth further corroborates that the health care industry is inelastic to times of recession. From 2008 thru 2016 the Health Care Industry is forecasted to have an average occupational growth rate of 2.45% per year. When compared to the occupational growth rates of all other industries, the health care industry ranks in 1st place. This is remarkable considering the health care industry occupational growth rate ranked 3rd when compared to all others from 1996-2006. Moreover, this mark in increase has occurred during the presence of a recession, while all but a few industries have substantial drops in employment and intensified levels of layoffs. For example, the retail industry average occupational growth rate is expected to fall from 0.8 % per year during 1996-2006 to 0.4% from 2008 - 2016. The average growth rate (per year) of occupations for every industry during the period 1996-2006 was 1.16% and plunged to 1.05% with the health care industry removed from the calculation – another optimistic indication of the economic strength of the health care industry. Each individual segment of the health care industry is showing inherited signs of exceptionally strong future occupational growth rates. Ranked 2nd and 3rd among the 30 industries with the largest growing occupational opportunities are; Personal Home Care and Health Aid Markets- which have forecasted improvements in absolute employment growth of 50.6% and 48.7%- for 2008-2016. These are behind only the Network systems and data communications analysts market. These same segments also maintain the same standings when ranked among the top 30 Fastest Growing Occupations/Industries from 2008 to 2016. As a result, the health care industry could quite possibly show no signs of recession symptoms and continue to provide new opportunities for new occupations, stable employment opportunities, and a consistent environment for investing and generating unwavering cash flows - even when recession rears its ugly head. Health Care’s Impact on the Retail Industry – Statistical Model This analysis has established the following thus far: 1. In the U.S. the average expenditures on health care and on prescription and non-prescription drugs has experienced aggressive growth from 1984 to 2006 2. From 1970 to 2006, the health care industry has always made a positive contribution to GDP. 3. For the first time in U.S. history, in December of 2007, the health care industry employed more persons in the U.S. than the retail industry. Our final analysis tries to tie all these findings together by examining the impact the health care industry has on the retail sector. Health & Wellness Practice | www.zpryme.com 7 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 9. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 Health Care Drivers: State Level Analysis State level data was used in this analysis because the data included all 50 states and the District of Columbia whereas the Metropolitan Statistical Area, MSA data was only available for 136 MSA‘s meaning that just under half of the population would not be accounted for in the MSA analysis. Eight cross sectional models were used to examine how age, education, per-capita income, and total employment impact the level of health care economic activity (output in millions of dollars) at the state level for every year from 1999 to 2006. Table 2. Key Driver Statistical Analysis by Year and State, 1999 - 2006 Economic Driver 1999 2000 2001 2002 2003 2004 2005 2006 Size of Population Age 18 to 24 + + + + + + + + Size of Population Age 25 to 39 - - - - - - - - Size of Population Age 40 to 69 + + + + + + + + Size of Population Age70+ - - - - - - - + Total Population with a BA Degree or Higher + + + + + + + + Total Persons Employed - - - - - - - - Per Capita Income in 1999 + + + + + + + + Source: U.S. Census Bureau 2000 Census and the U.S. Bureau of Economic Analysis Note: Shaded blue cells in table 2 represent that the variable was statistically significant at the .05 level of probability. A ―+‖ indicates the variable made a positive contribution to the level of health care economic activity while a ―-― means the variable made a negative contribution to the level of health care economic activity. Key Findings: 1. Educational level of the 18 to 24, 25 to 39, and 40 to 69 age groups significantly and positively contributed to the amount of health care economic activity from 1999 to 2004. 2. Educational level of the 25 to 39 and 40 to 69 age groups all significantly and positively contributed to the amount of health care economic activity from 2005 to 2006. Interpretation: On average, states with large populations of people 18 to 24, 25 to 39, and 40 to 69 are expected to have higher health care output. Additionally, education is important because possibly, being educated raised the state level of employment, and thus access to general health care. Retail Drivers: Metropolitan Statistical Area (M.S.A.) Analysis MSA level data was used in this analysis because the data compared 252 MSA‘s, and thus allowed for much more variation to be considered in the analysis, and account for a good majority of the U.S. population. Five cross sectional models were used to examine how age, education, household income, and total employment impact the level of retail economic activity (output in millions of dollars) at the MSA level for every year from 2001 to 2005. Health & Wellness Practice | www.zpryme.com 8 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 10. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 Table 3. Key Driver Statistical Analysis by Year and MSA/Market, 2001 - 2005 Economic Driver 2001 2002 2003 2004 2005 Size of Population Age 18 to 24 - - - - - Size of Population Age 25 to 39 + + + + + Size of Population Age 40 to 69 - - - - - Size of Population Age70+ + + + + + Total Households Making $75,000 to $124,999 + + + + + Total Households Making $125,000+ - - - - - Total Population with a BA Degree or Higher + + + + + Total Persons Employed - - - - - Source: U.S. Census Bureau 2000 Census and the U.S. Bureau of Economic Analysis Note: Shaded blue cells in table 3 represent that the variable was statistically significant at the .05 level of probability. A ―+‖ indicates the variable made a positive contribution to the level of retail economic activity while a ―-― means the variable made a negative contribution to the level of retail economic activity. Key Findings: 1. Educational level of the 25 to 39 and 70+ age groups all significantly and positively contributed to the amount of retail economic activity from 2001 to 2005. The age group 70+ was not significant in 2002. 2. From 2001 to 2005, the age group 18 to 24 made a significant and negative contribution to the level of retail economic activity. Interpretation: On average, MSA’s/markets with large populations of people 18 to 24 relative to other age groups, are expected to have lower overall retail sales. This is likely explained by the fact that this age group is likely to spend less at the retail level because their overall incomes are lower compared to their peers who are older and have more work experience. Additionally, education is important because it raised the level of income, and thus their discretionary income. Health Care’s Impact on Change Retail Economic Activity: State Level Analysis State level data was used in this analysis to capture the entire U.S. population, and to identify if the outcomes are consistent with the results of the MSA level model discussed below. Seven cross sectional models were used to examine how health care output (% change from previous year), age, education, income, and total employment, impacted the change in the level of retail economic activity (output in millions of dollars) at the MSA level for every year from 1999 to 2006. Key Findings: 1. Across states, holding all the variables mentioned above equal, an annual percentage increase in the health care industry had a positive and significant impact on the annual percentage increase Health & Wellness Practice | www.zpryme.com 9 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 11. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 on the retail industry in 2002, 2004, and 2005. These findings are consistent with the MSA level analysis below. 2. The change from 1999 to 2000 showed a negative and significant impact, but this was the only year that such an instance was observed. Interpretation: On average, growth in the health care industry contributes to economic growth in the retail industry. States with growing health care industries are more likely to experience growth in their respective retail sectors. Chart 1. State Level Analysis of Health Care Impact on Percent Change in Retail Economic Activity Interpretation: Results reported as average percent change in retail annual growth given a 1% increase/growth in the health care market. For example, from 01 to 02, in a given market, if health care output grew by 1%, we would expect a 0.36% increase in the retail economic output for that respective market. That is only the contribution of the health care industry. Other factors taken in aggregate would be used to predict the total growth, but this analysis is focused on the contribution to retail growth attributed to the health care sector. 1.00% 0.80% 0.80% 0.66% 0.60% 0.36% 0.40% 0.22% 0.20% 0.13% 0.07% 0.00% -0.20% -0.40% -0.60% -0.47% 99 to 00 Pct 00 to 01 Pct 01 to 02 Pct 02 to 03 Pct 03 to 04 Pct 04 to 05 Pct 05 to 06 Pct Change* Change Change* Change Change* Change* Change Source: U.S. Census Bureau 2000 Census and the U.S. Bureau of Economic Analysis *Indicates that health care variable was significant in impacting the percent change in retail economic activity. Significant variables are also shaded in red with a black outline. Health Care’s Impact on Change Retail Economic Activity: M.S.A. Analysis MSA level data was used in this analysis because the data comprised 136 MSA‘s that had both retail and health care data available from 2001 to 2005. Four cross sectional models were used to examine how health care output (% change from previous year), age, education, income, and total employment impacted the change in the level of retail economic activity (output in millions of dollars) at the MSA level for every year from 2001 to 2005. Health & Wellness Practice | www.zpryme.com 10 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 12. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 Key Findings: 1. Across markets (MSA‘s), holding all the variables mentioned above equal, an annual percentage increase in the health care industry had a positive and significant impact on the annual percentage increase on the retail industry in 2002, 2004, and 2005. 2. The MSA level findings show that the impact of the health care industry on the retail industry is a bit smaller when compared to the state level analysis. Interpretation: On average, growth in the health care industry can contributes to economic growth in the retail industry. Markets or MSA’s with expanding health care industries are more likely to experience growth in their respective retail sectors. Chart 2. MSA/Market Analysis of Health Care Impact on Percent Change in Retail Economic Activity Interpretation: Results reported as average percent change in retail annual growth (percent change) given a 1% increase/growth in the health care market. For example, from 2001to 2002, in a given market, if health care output grew by 1%, we would expect a 0.20% increase in the retail economic output for that respective market. That is only the contribution of the health care industry and other factors, taken in aggregate, would need to be used to predict the total growth. This analysis is focused on the contribution to retail growth attributed to the health care sector. 0.40% 0.38% 0.35% 0.30% 0.28% 0.25% 0.20% 0.20% 0.15% 0.10% 0.05% 0.00% -0.05% -0.10% -0.08% 01 to 02 Pct Change 02 to 03 Pct Change 03 to 04 Pct Change 04 to 05 Pct Change Source: U.S. Census Bureau 2000 Census and the U.S. Bureau of Economic Analysis *Indicates that health care variable was significant in impacting the percent change in retail economic activity. Significant variables are also shaded in red with a black outline. Modeling Considerations In a perfect world, we would have historical employment and sales data from the health and wellness industry to investigate, but that data is not available to the public, and we suspect that private corporations would not release the data even if they had it. In this report, we have made the case that the health and wellness and health care industries are in fact highly correlated, and this analysis does a good job of capturing the health and wellness industry‘s recession resiliency. Health & Wellness Practice | www.zpryme.com 11 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 13. Is the Health & Wellness Industry ‗Recession Proof‘? Published March 2008 Conclusions There exists substantial economic and statistical evidence to support the claim that the health and wellness industry is ‗recession proof‘. As long as the health care sector in the U.S. continues its current course, then so will the demand for health and wellness complimentary products. There is much more to be addressed regarding this subject, and this analysis is a starting point rather than an ending point in regards to this dynamic topic. Today‘s markets are assiduous, and globally integrated and thus careful attention should be warranted when implementing strategies based on the historical performance of an industry. We recommend a constant monitoring and evaluation system to each respective agent in the health and wellness industry that can be used to gauge current market performance. Many times, decision and policy makers act upon their gut feeling or years of industry experience, however, without accurate information, such a decision can be very unsafe. Now, if this same decision is combined with timely and accurate information on market performance, then the more likely the profit maximizing (or cost minimizing) course of action will be taken. It is our sincere belief that inaction is much more likely to cause a decline in any market player‘s or industry‘s performance rather than the overall general economy. In time of general economic decline, a solution could be simply broadening one‘s product line, diversifying one‘s customer base, or entering global markets that have a rising middle-class with a stable upper-class as a buffer, to absorb growth until the market in question returns to a period of economic growth. Disclaimer These materials and the information contained herein are provided by Zpryme Research & Consulting, LLC and are intended to provide general information on a particular subject or subjects and is not an exhaustive treatment of such subject(s). Accordingly, the information in these materials is not intended to constitute accounting, tax, legal, investment, consulting or other professional advice or services. The information is not intended to be relied upon as the sole basis for any decision which may affect you or your business. Before making any decision or taking any action that might affect your personal finances or business, you should consult a qualified professional adviser. These materials and the information contained herein is provided as is, and Zpryme Research & Consulting, LLC makes no express or implied representations or warranties regarding these materials and the information herein. Without limiting the foregoing, Zpryme Research & Consulting, LLC does not warrant that the materials or information contained herein will be error-free or will meet any particular criteria of performance or quality. Zpryme Research & Consulting, LLC expressly disclaims all implied warranties, including, without limitation, warranties of merchantability, title, fitness for a particular purpose, noninfringement, compatibility, security, and accuracy. Prediction of future events is inherently subject to both known and unknown risks, uncertainties and other factors that may cause actual results to vary materially. Your use of these and the information contained herein is at your own risk and you assume full responsibility and risk of loss resulting from the use thereof. Zpryme Research & Consulting, LLC will not be liable for any special, indirect, incidental, consequential, or punitive damages or any other damages whatsoever, whether in an action of contract, statute, tort (including, without limitation, negligence), or otherwise, relating to the use of these materials and the information contained herein. Health & Wellness Practice | www.zpryme.com 12 Copyright © 2008 Zpryme Research & Consulting, LLC All rights reserved.
  • 14. Zpryme delivers relevant, actionable insight and consultation specific to each client’s individual needs, helping organizations solve immediate business problems and achieve long-term success. Market Research & Consulting Has Evolved… Services: Advisory, Business Plans, Buzz Research, Consumer Insights, Market Research Practices: Branding Solutions, Generational Insights, Going Green, Multicultural Insights, Mobile Insights, Social Media Insights Contact: +1 888.ZPRYME.1 | info@zpryme.com | www.zpryme.com Copyright © 2009 Zpryme Research & Consulting, LLC All rights reserved

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