Council News

January 27, 2011

Analysts forecast more hospital consolidation ahead (Healthcare Finance News)

Analysts forecast more hospital consolidation ahead (Healthcare Finance News)
by Larry McClain, Healthcare Finance News | Jan 27, 2011

Analysts speaking at the Nashville Health Care Council this week said the nation should expect to see more hospital consolidation and more patients in the healthcare system in the future.

“The long-term trend is our friend because I foresee a big spike in utilization when the newly insured enter the system,” said Adam Feinstein, managing director at Barclays Capital in New York, one of four analysts invited to the council to discuss anticipated trends in healthcare markets. “But for 2011, I think hospitals will experience just 1 percent volume growth. I’m still bullish on hospital stocks because there’s so much opportunity for consolidation.”

“There’s still a robust M&A environment,” said Kemp Dolliver, Boston-based managing director at Avondale Partners. “I think there will be a lot of hospital acquisition opportunities this year.”

The panel also tackled the topic of looming state budget crises.

“Medicaid reimbursement accounts for nearly 10 percent of hospital revenue, so state budget problems could obviously be a drag on performance this year,” said Frank Morgan, managing director at RBC Capital Markets in Nashville. “I think there are good tailwinds this year for post-acute care providers like renal clinics and rehab facilities. Companies with predictable volumes should also do well, especially dialysis clinics and behavioral health providers. On the negative side, home healthcare still faces formidable challenges this year.”

“The medical device sector got hit hard in 2010, and there’s still a lot of uncertainty going forward,” said Christopher Cooley, managing director at Stephens, Inc. in Little Rock, Ark. “But I’m very bullish on medical device manufacturers in two markets: Diabetes treatment and ophthalmology.”

As for the repeal of last year’s healthcare reform legislation, the analysts agreed it is highly unlikely, despite the heated rhetoric on Capitol Hill.

Back to News

Purpose Statement

We exist to strengthen and elevate Nashville as the Healthcare City.

View Purpose