Last week I attended the 2010 EIA Energy Conference – “Short Term Stresses, Long Term Change” – in Washington DC. The conference was made up of industry types, financial investors and government regulators, which focused on energy-related issues that ranged from US Natural Gas supply to Climate Change policy. The keynote addresses were given by the Secretary of Energy, Steven Chu and the Director of the White House’s National Economic Council, Lawrence Summers.

The EIA (Energy Information Administration) is a non-partisan section of the US Department of Energy that provides statistics, data, analysis on resources, supply, production, and consumption for all energy sources to the public domain. The information provided by the EIA is used for determining pricing and future output of the US and the world and is heavily relied on by the energy industry.

The conference was very informative and I think it would serve investors well to know a few of the key takeaways from the conference.

1. EIA, Global Insight and ExxonMobil’s forecasting methodology for energy sources and production are determined by population growth, GDP growth and transportation demand but do not take into consideration new energy efficiencies and technologies.
2. A main focus of the conference was a potential carbon price in either the form of cap and trade or a carbon tax, however the price of carbon has not been determined.
3. Strategic and growth capital has been flowing into storage device technologies and end-user resources such as advanced battery technologies and advanced meter readers.
4. Asia’s demand for energy is expected to exceed the US and Europe’s combined energy use by 2030.
5. The new energy economy is expected to lead the US into the future as an exporter of efficiency technology.
6. Energy legislation is expected to be released after Tax Day and before Earth Day.
7. Financial regulation reform will have to coincide with energy legislation as government regulators are trying to crack down on energy pricing manipulation.
8. Climate change will have to be addressed within energy legislation, as it is a top priority of the Obama Administration.

In short, there is a tremendous amount of capital and attention being paid to the energy debate and until we solve our energy crisis, money will continue to flow into new technologies and there will continue to be investment opportunities. The energy investment landscape is very similar to the technology investment landscape of the 1990s. It is entirely accurate to declare that not all of the current energy technologies will survive and become a big the next big thing, but some will and the opportunity to invest in the leader should never be disregarded.

It was almost inevitable that healthcare reform would pass under the current administration. As we all know, there has been a lot of hysteria around the great debate for more than a year. It has been a long battle and a hard fought process and yet still, few people actually understand the impact it will have on the economy.

Currently, healthcare costs are a huge burden on small business owners and individuals that pay for their own insurance and healthcare. In addition, hidden costs of healthcare place huge burdens on hospitals struggling to stay afloat, as they have to treat patients in the emergency room, whether or not they have insurance. These hidden costs are ultra visible to healthcare providers but are invisible to the average consumer. Despite all the additional services the healthcare bill will bring to the average American healthcare user, it will probably have the greatest impact on the hospital industry in a positive way.

As it stands today, hospitals have very narrow margins due to several issues 1) Medicare reimbursement rates 2) Insurance reimbursement rates 3) Personal bankruptcies and 4) Emergency room service. These issues often force hospitals to close down or sell to the state, as they cannot generate sufficient cash flow to service their debt. Firstly, a large percentage of hospitals generate most of their revenues from Medicare and the reimbursement rate is the rate at which Medicare will reimburse the hospital for a specific procedure. The remainder of the cost is billed to the patient. As healthcare costs rise, Medicare reimbursement rates have actually decreased and more of the cost has been passed on to the patient. Some doctors have chosen to not accept Medicare patients as a result and it wouldn’t have a significant negative effect on hospitals if medical insurance filled the void and reimbursed hospitals, but that is not the case. Medical insurance reimbursement rates are steadily on the decline as the rate is loosely pegged to Medicare reimbursement rates, which means that less money is spent on a patient’s treatment, which enables the insurance company to increase profits as insurance premiums increase. The third issue is that of personal bankruptcies related to healthcare, which affect more Americans than any other form of bankruptcy. As individuals file for bankruptcy and fail to pay the hospital for their treatment the hospital has to write-down the lack of payment as an expense, which has a direct effect on their cash flow and bottom line. Finally, emergency room service severely affects the profitability of a hospital as patients (even those with insurance) claim to be uninsured and as the hospital has a responsibility not to turn anyone away, the hospital is forced to provide a service and incur a non-billable expense by doing so.

The language in the healthcare bill will prevent more hospitals from going bankrupt and refocus insurance money on the patient instead of insurance company profits. The mandate to purchase insurance will limit the amount of write-downs that the hospital incurs while treating patients in the emergency room. As a result of the healthcare bill hospitals will become better investments and healthcare costs could potentially decline as hospitals won’t be forced to mark-up prices in order to make up for lost revenue.