Health care providers can expect to see a few more patients this year as the economy improves and more Americans go back to work, but they’ll continue to be squeezed by declining reimbursements and an increasingly tough regulatory environment.
That was the consensus of Wall Street analysts who spoke today at a luncheon organized by the Nashville Health Care Council. Moderated by Community Health Systems Inc. CEO Wayne Smith, the panel covered a wide range of topics impacting Nashville’s $30 billion health care industry. Here’s a breakdown of what they said:
On patient volumes:
High unemployment rates translated to fewer patients and lower revenues for health care providers through the economic recession. Patient volumes should remain flat or improve slightly in 2011 as more Americans regain employer-sponsored health insurance.
“To see volumes really come back, you need to see employers provide more generous health benefits or less cost sharing. Or at the same time, with health care reform coming, that will be a catalyst for people to utilize more health care,” said Adam Feinstein, managing director at Barclays Capital.
On efforts to repeal health care reform:
Not likely, analysts agreed. Referencing President Obama’s State of the Union address on Wednesday night, RBC Capital Markets analyst Frank Morgan said certain aspects of the legislation can be improved, but he doesn’t think it will be repealed altogether.
And while there’s talk of Republicans using their newfound power in the House of Representatives to starve the legislation of funding, Morgan said that sentiment will likely diminish as time passes. Recent polls show that the number of people who oppose reform is declining, while acceptance is on the rise, he said.
“I think we move ahead with it largely intact with some tweaks in things that obviously need to be fixed,” Morgan said.
On mergers and acquisitions:
Expect continued activity in 2011, with large, for-profit hospital chains snapping up standalone hospitals and smaller health systems. Bigger deals could also materialize, such as CHS’ hostile takeover attempt of Texas-based Tenet Healthcare Corp.
CHS’ Smith prodded Feinstein about his thoughts on deals in the hospital space. Feinstein’s firm, Barclays Capital, is acting as financial advisor to Tenet as it attempts to fend off CHS’ advances. Feinstein wasn’t biting.
“For me, the hospitals continue to be a big area of focus this year. I like the whole space, especially those that are buying assets,” he said. “Those companies that are buying assets will be in a very good spot.”
On health care information technology:
Promises from the federal government to pay out $27 billion in incentives to hospitals and physicians who adopt electronic health records could be delayed or scaled back, analysts said.
“Every IT initiative on the planet seems like it’s always had a bad ending. But it seems like it ought to make sense. Something’s got to be done,” Morgan said. “I don’t have a good view on whether or not this gets delayed or extended, but it seems like whenever there’s money involved, you get people to act.”
Christopher Cooley, managing director Stephens Inc., said IT provides some benefits to physicians, such as allowing them to view patients’ records remotely via a computer. But he’s not certain that will translate into seeing more patients, quicker.
“Clearly, there’s going to be some aspects where you benefit from IT, but to be a utopia now, I don’t agree with that,” Cooley said.