DEVELOPED WORLD HEALTH CARE EXPENDITURES TO REACH $3.3 TRILLION IN 2004.

Developed world health expenditures will increase nearly 6 percent annually to $3.3 trillion in 2004. Prescription drugs will account for the fastest growth in spending based on changing patient treatment strategies favoring the substitution of medication for primary health care services. Hospital

care will continue to absorb the largest share of expenditures due to rising inpatient admissions and the more intensive and expensive nature of inpatient care. Physicians' services will grow at about the average pace as private practice doctors broaden the range of available in-office procedures. Strong increases in long-term care outlays will occur as aging population patterns increase the base of nursing home patients. The expanding availability of private insurance will foster steady gains in dental care spending. These and other trends are presented in World Health Care I (Developed Countries), a new study from The Freedonia Group, Inc., a Cleveland-based industrial market research firm.

Government outlays for medical education and preventive medicine activities in the developed world will advance steadily. Medical research funding will see moderate gains as public agencies and private industry support investigations into major health problems. Allocations to health administrative functions and capital health projects will increase sluggishly as most developed countries will not implement major health care expansion projects.

Developed world private health spending will grow faster than public health spending as government benefit plans raise patient copayments and restrict access to specialist services. The US will continue to lead the developed world in health spending, absorbing over half of expenditures through 2004. Fixed global hospital budgets, prospective physicians' fee schedules and heavily regulated drug prices will keep health expenditures under reasonable control in Canada and throughout most of Western Europe and developed Asia/Pacific.

The United States will remain the dominant market due to its high pricing structure and massive level of health care activity. Japan, Germany, France, Italy, the United Kingdom and Spain will account for the largest demand among other developed countries, but will hold weaker profit potential for most medical products due to regulated drug prices and the widespread use of bid and tender procurement systems for purchasing medical supplies, devices and equipment.