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January 21, 2015

The consumer as ‘disruptor’ and other trends to watch from the Nashville Health Care Council’s Wall Street panel

The consumer as ‘disruptor’ and other trends to watch from the Nashville Health Care Council’s Wall Street panel
by Eleanor Kennedy | Nashville Business Journal | Jan 21, 2015
Tennessee may be readying for a possibly contentious special session over a unique state plan to expand Medicaid, but Wayne Smith, CEO of Franklin-based Community Health Systems, is confident the issue will be settled nationwide by the end of this decade.

“Our view is every state will expand within four to five years,” Smith said while moderating the Nashville Health Care Council’s annual “Wall Street” panel Wednesday.

Smith was agreeing with the event’s panelists, a group of four health care industry analysts, who all included continued Medicaid expansion in their list of predictions and expected surprises for 2015 and beyond.

After a fairly lengthy discussion of the potential impact of the Supreme Court’s upcoming ruling on insurance subsidies, Smith and the panelists covered a range of topics expected to have an impact on health care in the coming year, including continued consolidation, an increased consumer focus and more. Here’s a look at the highlights:

• “Access points” will continue to rule, as the consumer becomes a bigger “disruptor.” Darren Lehrich, a managing director with Deutshe Bank Securities, cited 2014 buzzword “access points” – meaning reaching consumers in more ways than just traditional acute care hospitals – would continue to be an important theme in 2015. Paula Torch, a Nashville-based analyst with Avondale Partners, agreed, adding that she expects a continued consumer focus in the industry will force traditional providers to evolve. The consumer will be “a bigger disrupter” going forward, Torch said.

• Consolidation will continue, often in unusual ways. The term “strange bedfellows” popped up multiple times when Smith pressed the panelists on their consolidation predictions for 2015, as many of the analysts cited partnerships between a variety of related but not traditionally connected groups (like Nashville-based AmSurg’s 2014 acquisition of physician group Sheridan). The group also predicted more “horizontal”partnerships between unusual allies like for-profit and non-profit providers (say Duke LifePoint, a partnership Smith begrudgingly – in jest – praised more than once).

• If you’re looking to bet on stocks, Nashville companies run the gamut. He may have been reading the room, but when asked by Smith to suggest an investment portfolio, A.J. Rice of UBS Financial Services said the Nashville hospital companies cover all the major flashpoints: acquiring rural community-based hospitals (LifePoint), major company consolidation (CHS’ recent purchase of Health Management Associates) and strong operational story with cash flow available (HCA). Torch also called out behavioral health care as a sector with promise. While Smith questioned Torch’s pick since it came shortly after Franklin-based Acadia Healthcare CEO Joey Jacobs reentered the room, she cited Acadia’s expansion into the United Kingdom and its soon-to-close $1.2 billion acquisition of CRC Health Group as signs of the “exciting” times for behavioral health care.

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