Kelly Gooch | Becker’s Hospital Review
Top investment analysts came together in Nashville, Tenn., on Thursday to share their 2017 predictions for the healthcare industry.
In a panel at the Nashville Health Care Council’s “Wall Street’s View on Prospects for the Health Care Industry,” analysts discussed a number of topics, including President-elect Donald Trump and congressional Republicans’ promise to repeal and replace the ACA. The panel also discussed the effects of industry trends on the market, including merger and acquisition activity, consumerism, value-based purchasing and emerging technology.
- Whit Mayo, managing director of Robert W. Baird
- A.J. Rice, managing director of UBS
- Chris Rigg, senior managed care and healthcare facilities analyst with Deutsche Bank
- Paula Torch, senior research analyst with Avondale Partners
- Moderated by Wayne T. Smith, chairman and CEO of Franklin, Tenn.-based Community Health Systems
Here are the top soundbites from their discussion, lightly edited for clarity.
On healthcare investments
Ms. Torch said, “We see pockets where we think there’s going to be outperformance and where we think there are some sectors that are a little bit more immune per se to the ACA, and in particular behavioral healthcare and outpatient services.” She provided numerous reasons why behavioral healthcare will outperform in 2017: it’s an area of bipartisan support, there are strong secular trends and it is more immune to the ACA because it wasn’t affected by the health law’s Medicaid expansion.
Mr. Mayo said, “While there’s kind of an uncertain backdrop in terms of the acute care hospital operational performance we’re going to see in the next six to 12 months, I do think that the group is oversold and there are some pockets of opportunity.” Moving forward, he said he also anticipates growth in the areas of ambulatory services and physician practice management.
On the ACA repeal and replacement efforts
Mr. Mayo said, “The soundbites you hear are health savings account, high-deductible health plan, selling insurance across state lines, Medicaid block grants. I honestly don’t know what’s going to happen, but I think we’re probably going to be in for a much softer landing if you will. We’ll have to see something because Republicans have made a commitment to their voting base, but my belief is we’re going to see everything piecemealed over time.”
Mr. Rigg said, “My sense is that at least what the plans are pushing for is to serve a more federalist bent on the program where it’s ‘give it back to the states.’ My sense is that you want to have something that really can get something similar to Medicaid for at least up to 200 percent of the poverty level.”
Ms. Torch said, “I would like to see some type of repair legislation, and I think I would favor certainly a repeal and delay so we can be thoughtful about what we’re trying to do going forward.”
On merger and acquisition activity
Mr. Rice said, “Traditionally it [has] been little guys merging with bigger guys, bigger guys merging with each other. Now we’re starting to see vertical integration. I think that’s going to be something to watch in the next year or two is these nontraditional collaborations and partnerships and how that evolves.”