Industry Insights

September 26, 2011

LHC Delegation to Wall Street: ‘We need a sense of where we are going’ (Post Business)

LHC Delegation to Wall Street: ‘We need a sense of where we are going’ (Post Business)
by Nashville Health Care Council | Sep 26, 2011

Editor’s note: This is the third in a series of posts from the Nashville Health Care Council’s Leadership Health Care Delegation to Wall Street. Look for more information from the trip later today and click here for previous posts.

Confidence, market volatility and uncertainty are current factors shaping the future of the health care industry, according to financial experts who closed the Nashville Health Care Council’s Leadership Health Care Delegation to Wall Street on Friday.

Robert Teitelman, editor-in-chief of The Deal, summed up the environment: “Uncertainty seems to be the mantra of the moment. And this is nowhere more profound than in the health care industry. The ground is literally shaking with all the change – real and potential.”

The unique two-day event ended with a series of speakers and panelists who covered the state of the public markets, partnerships between for-profit and not-for-profit health care entities, exit strategies in private equity, and debt financing.

Jeff Rosichan of Deutsche Bank Securities attributed significant volatility in the public markets to growth and the sovereign debt crisis. However, Rosichan was quick to pinpoint differences between the current market situation and the crisis experienced in 2008, noting strength in corporate earnings today and citing confidence as the primary challenge facing the market. “Growth is not the problem,” he said. “It’s confidence in that growth that is the issue.”

The panel discussions that followed echoed Rosichan’s themes. In a discussion led by Bass Berry & Sims member Angela Humphreys about exit strategies for investors in the current economy, Kevin O’Brien, managing director of CCMP Capital Advisors, said, “No one knows what 2012 holds and that is part of the problem. We need direction – a sense of where we are going.”

O’Brien’s co-panelists, directors from EDG Partners, Metalmark Capital and Credit Suisse agreed that some investors are waiting on the sidelines as the future of the economy, health care regulation and reimbursement becomes clear. Still, investors were positive about the potential for health care companies to succeed.

“A good company that provides good products or services and has a good team will do well,” said Michael Gaffney, managing partner of EDG Partners.

A debt financing panel led by Robert Harris, a partner at Waller Lansden Dortch & Davis, and featuring leaders from Warburg Pincus, GE Healthcare Financial Services, Barclays Capital and CIT Healthcare further underscored the uncertain climate and unclear reimbursement forecast.

Despite the unknowns, there are unique opportunities for health care growth in the current environment. Trey Crabb of Health Strategy Partners led a discussion on partnerships between for-profit and not-for-profit companies that featured leaders from Ascension Health Care Network, Citigroup Investment Banking, Oak Hill Capital Partners and Alliance Health Care Services.

Experts shared that for-profit and not-for-profit partnerships benefit both entities. For-profits can enter new markets, while not-for-profits gain access to capital and other resources to help them make needed investments. These partnerships also allow companies to share vital best practices in quality care and operations.

Teitelman closed the event with a hopeful sentiment about Nashville’s leading industry: “For all the doom and gloom, Nashville does have a robust infrastructure, not only for deal making but also to support the science, technology and academia sectors – all of which are vital to the growth of the health care industry.”

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