In late January, top investment analysts gathered to discuss 2015 industry predictions as part of the Nashville Health Care Council’s annual Wall Street panel.
More than 500 healthcare executives gathered for the discussion moderated by Wayne T. Smith, chairman and CEO of Community Health Systems. Panelists included Darren Lehrich, managing director, Deutsche Bank; Josh Raskin, managing director, Barclays; A.J. Rice, managing director, UBS; and Paula Torch, senior research analyst, Avondale Partners.
The analysts identified acute care, behavioral health, physician services and ambulatory surgery centers as top sectors for growth in 2015.
“Healthcare facilities have recently excelled in the marketplace, and as the ACA is implemented, growth could continue as more people gain coverage and the amount of bad debt for hospitals declines,” said Lehrich.
Rice added, “As long as hospitals are able to control costs and better manage readmissions, they can expect positive growth under the new reimbursement models that are emerging as a result of the Affordable Care Act.”
Continued consolidation across the industry also was an ongoing theme. Raskin said passage of the ACA in March 2010 arguable created the biggest change in the healthcare landscape since 1965 and has led to what would have previously been considered ‘strange bedfellows.’ He noted the industry has recently seen surgery centers come together with staffing companies, acute care providers buy home health agencies, and dialysis companies acquire delegated provider groups, among other interesting M&A activity. “I think that will continue as providers expand their reach across the entire continuum of health delivery,” Raskin predicted.
Torch noted she also expects to see consolidation continue in 2015. “An area of continued potential is the behavioral space, and much of that momentum is occurring right here in Nashville, home to interesting players in that niche,” said Torch.
In addition to discussing the Affordable Care Act’s impact on the market, speakers offered insights on the upcoming Supreme Court Case of King v. Burwell. The case is challenging the use of tax subsidies on the federal exchange. “The industry as a whole, as well as consumers, could be hit with higher costs if tax incentives are taken away as a result of King v. Burwell so investors are keeping a close eye on the case,” said Torch.
