Healthcare utilisation is experiencing a sustained and meaningful uplift globally, driven by powerful demographic forces, evolving patient behaviour and the continued clearing of pandemic-era backlogs. Higher utilisation is fuelling revenue growth and encouraging developments in areas such as the way in which healthcare is delivered and the take-up of preventative medicine. For long-term investors in healthcare, these trends provide a durable foundation for growth across pharmaceuticals, medical technologies, healthcare facilities and services.

Demographics: The most predictable growth driver in global healthcare

Ageing populations remain the core structural force shaping healthcare demand. Developed markets are witnessing rapid increases in the proportion of older citizens, who consume more care for chronic and degenerative conditions such as cardiovascular disease, diabetes and Alzheimer’s.

The UK illustrates this clearly: Alzheimer’s cases are expected to rise from one million today to around 1.4 million by 2040. Similar patterns can be observed across Europe, North America and advanced Asian economies. As populations age, demand intensifies for both high-value pharmaceuticals and the medical technologies required to diagnose, monitor and treat chronic disease.

More broadly, in the US – the highest-spending market for healthcare – 2025 marks the ‘Peak 65’ year, when a record number of Americans reach retirement age. This peak will echo for decades, setting the stage for structurally rising healthcare consumption as the Baby Boomers move deeper into high-need years.

Using UK data as a point of reference, from the age of 75, cost of healthcare increases dramatically (see the chart below).

Healthcare spending over the life of an individual

Source: Gov.UK. OBR, 29 January 2019

Emerging markets: An expanding base of new healthcare consumers

Emerging markets add another layer of opportunity. Rising incomes and expanding middle classes are increasing access to branded drugs and advanced medical technologies. This shift is not just about volume; it is about the adoption of higher-value therapies and devices, creating attractive revenue streams for companies with global reach.

How the pandemic reshaped healthcare utilisation

While demographic dynamics have shaped long-term trends, the pandemic created unprecedented distortions. Outpatient visits, elective procedures and routine care all collapsed during 2020–21. Yet the rebound has been uneven and remains incomplete, with meaningful implications for investors.

One of the most significant yet underappreciated drivers of utilisation is the clearing of waiting lists. In the UK, the NHS typically carried a queue of two to four million patients awaiting consultant-led elective care for the decade leading up to 2020. Today that backlog is estimated at eight million, with some forecasts as high as 11 million.

Number of patients waiting for consultant-led elective care (NHS England)

Source: NHS England, August 2025. Statistics » Consultant-led Referral to Treatment Waiting Times Data 2025-26

This is unlikely to be unique to the UK: most developed healthcare systems are probably facing similar constraints. As these patients re-enter the system, they are fuelling sustained demand for diagnostics, surgical interventions, physician services and follow-up care. This pent-up demand is expected to support revenue growth across healthcare providers and suppliers for several years as it is leading to structural changes in healthcare delivery. Providers are increasingly shifting treatments away from hospitals towards outpatient or home-based environments. This evolution is driven by both patient preference and payer pressure to improve efficiency.

Technologies enabling this transition – wearables, sensors, AI-based diagnostic tools, remote patient monitoring and digital care platforms – continue to attract investment and M&A interest. Biopharma and medical device M&A activity has been particularly robust, reflecting both strong balance sheets and the imperatives of pipeline expansion.

Innovation, efficiency and the push to lower-cost care settings

Key post-pandemic patterns include:

• A shift from acute care to outpatient and specialist settings: More procedures are being performed in surgery day centres and ambulatory surgery centres, reflecting system-wide efforts to deliver care in lower-cost environments.
  
  
• A lasting increase in telehealth: Initially a necessity, remote consultations have become a standard expectation for chronic disease management and elderly patients.
  
  
• Rapid growth in home health and community-based care: Enabled by digital health, AI-driven tools and remote monitoring technologies, home healthcare saw 9.4% year-on-year spending growth in 2024.
  
  
• Overall utilisation remains structurally higher: As of December 2024, total utilisation sat 4.1% above the prior year yet had still not fully returned to pre-pandemic trends, suggesting a long-term behavioural shift.

These changes are underpinning divergent sector performance and driving innovation across care delivery platforms.

What this means for investors

Taken together, demographic ageing, emerging market expansion, backlog recovery and evolving care models are creating a durable environment for elevated utilisation. The beneficiaries include:

• Medical device and equipment companies
• Healthcare facilities and outpatient providers
• Biopharmaceutical innovators
• Digital health and remote care platforms

Across 2023 and 2024, healthcare utilisation rose meaningfully, initially as systems recovered from Covid-related disruptions and increasingly due to persistent demand dynamics. This elevated utilisation has proven more durable than expected, with signs that the industry may have entered a higher baseline of patient activity.

This prompted us to increase allocation (although the Fund is underweight relative to the index) to medical equipment and device companies, particularly those benefiting from new product cycles or where valuations undervalued medium-term earnings potential. Healthcare facilities and service providers have also been beneficiaries of strong patient flows.

Conversely, the rise in utilisation has been negative for managed care organisations (MCOs), whose medical loss ratios (MLRs) increase when more people access care. We have maintained an underweight view on the managed care sector. Policy uncertainty – including potential reductions to Medicaid funding, reforms around pharmacy benefit managers and the unwinding of enhanced insurance subsidies – have added further pressure.