More than 600 health care executives gathered at the Nashville Health Care Council’s signature event, “Wall Street’s View on Prospects for the Health Care Industry,” to hear top health care industry analysts discuss the investment outlook for the coming year.
The conversation was moderated by Milton Johnson, retired chairman and CEO, HCA Healthcare, and included Frank G. Morgan, managing director, RBC Capital Markets; Ralph Giacobbe, equity research analyst, Citigroup; and A.J. Rice, managing director, Credit Suisse. Collectively the analysts have 73 years of health care experience.
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Photo credit: (c) 2020, Donn Jones
The esteemed analysts predicted the direction of popular health care trends, investment risk and M&A activity with focus on the potential impacts of health care legislation and the outcomes of the 2020 election. Johnson led exploration of various health care topics, including consumerism, telemedicine, drug pricing, home health, and managed care. Overall, analysts agreed the outlook for health care stock performance in 2020 is positive.
Addressing market risk around the current political climate, analysts acknowledged small market responses to changing political headlines, significant interest around the uncertain passage of Medicare for All and the impact of these issues on the market.
“Medicare for All is of key interest to investors,” said Rice. “The candidates promoting it will have their moment in the sun between now and March 3, Super Tuesday. Our period of maximum volatility is probably in the next four to six weeks.”
The panelists identified several trends to watch, including the evolution of telemedicine as a resource for monitoring chronic conditions and the rising value of transparency and education to patients. Panelists agreed lower cost settings of care and increased consumer engagement will be trends that continue for years.
“I agree, there need to be more tools for consumers,” said Giacobbe. “The goal is to focus on transparency and education. The challenge I think about is that consumers shop for the services their physician wants. There are many other health care services that are not shoppable. So, tools that integrate the physician with transparency, rather than just focusing on the consumer, will grow much more.”
Morgan noted that in addition to telemedicine other emerging technologies are improving the quality and efficiency of care. “Technologies like wearable devices may be a growing area of technology helping patients better manage chronic conditions. For example, Dexcom has glucose monitoring technology that can examine someone as young as two years old.”
Johnson asked the panel their opinion on names like Amazon, Google and Walmart entering the health care realm and the impact they might have on the industry. The analysts were in consensus that potential disruption caused by large companies outside of health care is still in the early stages.
“We don’t want to be dismissive of how disruptive these companies can be. But, if you look at what they have done, it looks a lot like what others are doing in managed care. It’s still very early to tell,” said Morgan.
“The mentality of big tech is openness and sharing of information. They’ve been challenged to fully understand HIPAA compliance and the confidentiality of patient information,” said Rice. “Health care has its own culture, and if a company doesn’t grow up around sensitivity to compliance, it’s hard to ingrain that in a different culture.”
Panelists also identified their top sector picks for 2020 some of which include Cigna, UnitedHealth Group, HCA Healthcare and Surgery Partners.
As the Council’s 25th anniversary approaches in 2020, Hayley Hovious, president of the Council commented on the future for Nashville’s health care community.
“Wall Street analysts agree that Nashville is on the front lines of the continued development of the industry and that, with the talent pool that exists here, significant opportunities are ahead. The Council is proud to be involved in this forward-looking conversation and facilitate the collaboration throughout our booming industry,” said Hovious.
Bass, Berry & Sims served as presenting sponsor of the program with Alvarez & Marsal, Cumberland Pharmaceuticals, First Horizon, GE Healthcare, Gresham Smith, and Jarrard Phillips Cate & Hancock as supporting sponsors. The program’s media sponsor was Modern Healthcare.