Health care executives from around the country gathered virtually on January 20th for the Nashville Health Care Council’s signature event, “Wall Street’s View on Prospects for the Health Care Industry,” to hear top analysts discuss the investment outlook for the coming year.
The conversation was moderated by Chris Holden, former President and CEO, Envision Healthcare, and included Ann Hynes, managing director, US Equity Research, Mizuho Securities USA; Whit Mayo, managing director, UBS; and Gary Taylor, senior equity research analyst and managing director, JP Morgan.
Major themes from the discussion included policy expectations, emerging trends and the overall strength of the sector. All agreed that the industry weathered the 2020 pandemic better than expected and is poised for gains in the year ahead.
“It is clear that President Biden’s priority is to strengthen the ACA and the Medicaid program, which should be a positive move for providers,” said Hynes. “As far as more progressive measures such as lowering the Medicare age or implementing a public option, I don’t think those will see any traction.”
“There are two things I will be watching in the near future. First, I’m interested in the FTC’s handling of consolidation and whether antitrust actions will be more aggressive under the Biden administration. Second, what will happen to the Medicare trust fund, which is set to go bankrupt in 2024? In the past, Congress has cut rates to deal with this issue, but with the pandemic’s pressure on providers, that will be difficult,” said Taylor.
On the topic of emerging trends, the pandemic accelerated adoption of new models such as telehealth and home care. The panelists were impressed with how providers have been able to adapt their run rates to accommodate enormous changes that occurred during the pandemic. And they are keeping their eyes on payers, such as UnitedHealthcare, who are blurring the lines with providers.
“Payers are encroaching on delivery, acquiring home health and primary care capabilities, and in many cases driving telehealth adoption, so we see lots of interesting transactions in that area,” said Mayo. “They can’t do everything, but vertical integration will continue. We are just in the early stages of this shift.”
Panelists identified HCA, Labcorp and CVS as top companies to watch in 2021. Nashville-based HCA, which operates hospitals and health care facilities across the nation, was lauded for managing the pandemic’s challenges while avoiding layoffs to their employees. Labcorp, among other clinical labs companies, will continue to play a large role in Covid-19 solutions, and has generated significant cash flow to accelerate growth. Finally, CVS was highlighted as a solution to expanding access through testing, clinical trials and vaccine distribution, which will be critical in 2021.
Nashville is headquarters to 17 publicly traded health care companies and an overall industry that employs 570,000 people throughout the world and generates more than $92 billion in annual revenue.
“For decades, Nashville has been known as a center of health care expertise, which is why Wall Street analysts look to our executives as we navigate this ever-changing landscape. The Council is proud to host this important discussion as we strive to inspire global collaboration to improve health care,” said Hayley Hovious, president of the Council.
Bass, Berry & Sims served as presenting sponsor of the program with Alvarez & Marsal, Cumberland Pharmaceuticals, First Horizon Bank, GE Healthcare, Gresham Smith and IMAC Holdings as supporting sponsors. The program’s media sponsor was Modern Healthcare.
For further information on Mizuho, including research-related disclosures, please see https://www.mizuhoamericas.com/market-commentary-disclaimer and https://www.mizuhoamericas.com/disclosures