On May 3, 2017, Nixon Peabody LLP hosted a Hot Topics in the Middle Market event entitled Private Equity Investing Outlook: What is Next for Investing in Health Care in its Manchester office. NP partners Andrew Share and Allan Cohen moderated a discussion featuring the following speakers:
·Charles L. Anderson, MD, Co-Founder and Principal,Exaltare Capital Partners
·Gray Chynoweth, Advanced Regenerative Manufacturing Institute
·Troy Dayon, Senior Director, Marketing, Medtronic Advanced Energy
·Daniel Head, Senior Vice President, Corporate Advisory & Banking, Brown Brothers Harriman
A summary of the panelists’ observations on the current state of the health care industry and investment opportunities is as follows:
·Trends and Opportunities: The panelists agreed that, as in many industries, consumers are seeking lower costs and increase transparency in the way services are provided. As a result, services and technologies that drive value for consumers are ripe for investment. Examples of the push for lower cost care are the proliferation of urgent care centers, the number of which increased 10% over 2016.When compared to emergency room visits, urgent care centers can provide services at a lower cost and with quicker access to physicians. Similarly, patients are also turning to ambulatory surgical centers for procedures that once required hospital stays.Advances in technologies have allowed these centers to provide services once only available at hospitals, and at lower costs due to significantly lower overhead expenses.
On the provider side, panelists saw a need for services that decrease waste and the cost of patient care. Services that allow for the sharing of patient data between providers will lead to decreased costs of care. Investment opportunities also exist in companies offering genetic risk profiling, which in many cases allows providers to predict future illnesses, leading to a proactive approach to care.
·Data Sharing: As the value-based healthcare model expands, the need for more accurate patient data increases.Providers will need patient data to report performance metrics to payers in order to demonstrate patient improvement, and payers will require data to justify reimbursements to providers. As a result, data security issues will remain a key issue as data is shared between these parties. Organizations will need to determine the proper allocation of risk in sharing patient data and complying with data security laws. The use of devices and other new (and often unsecure) technologies that collect patient data also complicates things.Working through these issues, however, could lead to lower costs for patients, providers and payers.
·Health Care Reform: The panel agreed that healthcare is often not as patient-centric as it could be. An example provided is the high rate in which patients receive the wrong medication during hospital stays. An anomaly highlighted by the panel is that health care costs per capita in the US are 30% higher than those in Europe, but Americans are no healthier as a result.Bloated costs are often attributed to fraud, abuse and miscoding errors. In light of these issues, the panel agreed that there are a plethora of investment opportunities in patient-centric services in technologies that may lead to reduced costs and waste from a provider perspective.