Notes from the 38th Annual J.P. Morgan Healthcare Conference
Last week healthcare executives, service providers and investors descended upon San Francisco for J.P. Morgan’s (“JPM”) 38th annual Healthcare Conference. In a rare turn of events, the skies in San Francisco were relatively clear after several years of biblical rainstorms during JPM week.
MHT Partners’ Healthcare Services Team was in attendance, hosting several events and numerous meetings with healthcare firms and financial sponsors (thanks to all of you who made the trek over to 101 Montgomery). The general mood of the conference was upbeat, perhaps due to the weather, but a bit more subdued than in prior years. Investors’ appetite for high-quality healthcare businesses, which solve important problems facing the industry (access, cost containment, interoperability, etc.) remains strong.
Here are a few notable observations stemming from our interactions at JPM . . .
Private Equity Investment in Ambulance & Medical Transportation, Part 3: How Ride Sharing and Technology Innovation is Impacting Traditional Ambulance Services
As private equity investment in healthcare services has boomed over the past decade, select funds have turned an eye toward one of the most important and challenging areas of healthcare services: ambulance and medical transportation. In part three of our series on private equity investment in medical transportation, we’ll examine how technology and innovation are altering traditional dynamics in the industry and overhauling existing business models.
Private Equity Investment in Ambulance & Medical Transportation, Part 2: How Private Companies Are Positioned to Improve the Medical Transportation System
As private equity investment in healthcare services has boomed over the past decade, select funds have turned an eye toward one of the most important and challenging areas of healthcare services: ambulance and medical transportation. In part two of our series on private equity investment in medical transportation, we’ll examine how private companies, including those backed by private equity, can contribute to the improvement of care by reducing costs and augmenting quality.
Private Equity Investment in Ambulance & Medical Transportation, Part 1: Why Investors See Opportunity
As private equity investment in healthcare services has boomed over the past decade, select funds have turned an eye toward one of the most important and challenging areas of healthcare services: ambulance and medical transportation. Private equity’s foray into medical transportation has not been without controversy, but MHT Partners believes that private investment can be an agent of positive change in the industry and create value for a wide array of stakeholders with a vested interest in a reliable, high-quality medical transportation system. Over a series of blog posts in the coming weeks, we’ll delve into why private equity is interested in medical transportation, how private equity can help improve care, and what the future holds for the industry.
Big Business in Biologics
What are biologics? As the “bio” prefix suggests, biologics are drugs derived from living organisms, rather than traditional chemically synthesized drugs. They are also big business, representing six of the top eight drugs by total revenue and generating over $219 billion globally in 2016.
Considering that the first real biologic came to market with human insulin in 1982, these therapies’ rise has been nothing short of meteoric.
The Rise of Consumer IV Therapy Clinics
Intravenous (“IV”) therapies, which deliver medicines or fluids through a needle or tube inserted into a vein, a mainstay of hospitals and doctors’ offices globally, have entered American living rooms, strip malls, and hotel lobbies. On-demand IV infusions of saline, vitamins and prescription drugs can now easily be ordered to your home or accessed at ambulatory clinics – known as “drip bars” – across the country. Originally made popular as a quick hangover cure, the trend has been adopted by health-conscious consumers seeking a pick-me-up. While IV therapy can be a shortcut to hydration and can leave customers feeling great, the benefits may be limited. Nonetheless, demand for easily accessible drip therapy is rapidly growing, and the fragmented market presents vast opportunity for new entrants.
Private Equity Investment in ENT Practices
Private Equity’s love affair with specialty physician practices continues, as sponsors with an interest in healthcare investments seek opportunities to partner with leading otolaryngology practices.
Attractive Specialty – Large, Dynamic Market
Otolaryngology, or “ENT” is a medical specialty which is focused on the ears, nose, and throat. It is also called otolaryngology-head and neck surgery because specialists are trained in both medicine and surgery.
The otolaryngology industry is dynamic and expansive, covering a broad range of medical, surgical, and cosmetic procedures, such as tonsillectomy, head and neck cancer treatments, and rhinoplasties. Many of the procedures treated by otolaryngologists, such as asthma and seasonal allergies, hearing loss and tinnitus, and sleep apnea and snoring, affect multitudes of the U.S. population, resulting in a large, diverse potential patient base. Due to the wide range of procedures performed by ear, nose, and throat specialists, most practices report that no single class of procedures account for more than 10% of revenues. Industry growth is forecasted to be steady over the coming years; key catalysts of industry expansion include an increasing population of citizens age 65 and older (one in four Americans over age 65 suffer disabling hearing loss; the rate doubles to one in two by age 75), and expanding discretionary income, enabling more Americans to choose elective procedures.
Technology and Home Health Trends Impacting the Diagnostic Device Industry
The introduction of new technology in the healthcare industry has steadily improved patient care. Recently, increasing consumer demand for more convenient healthcare options is bringing a new wave of medical diagnostic devices that are more patient-friendly than ever before.
Taking Stock of Reimbursement Dynamics in Telehealth
In recent years, as technology and acceptance of telehealth solutions as a reliable, verified medium for the delivery of certain types of care have grown, demand for telehealth services has surged. Investment, innovation, and entrepreneurship in telehealth have kept pace, rapidly improving the quality of electronic healthcare delivery. Nevertheless, the ultimate facilitator of widespread adoption of telehealth as a means of care delivery are the twin gatekeepers of the healthcare dollar: commercial and government payors. Without buy-in from Centers for Medicare & Medicaid Services (“CMS”) and commercial insurers, the ability to deploy telehealth solutions to more cases will be limited. Therefore, as we survey the telehealth universe to identify new opportunities and emerging trends, it is imperative that we take stock of existing reimbursement dynamics for telehealth.
Long-Term Demographic Trends Impacting Home Health Care
There are currently 1.3 million Americans in long-term nursing facilities, but despite increases in demand for long-term nursing care, that number is shrinking. Between 2000 and 2009, the number of nursing facilities in the U.S. decreased by 9%, and in the years since, new construction of nursing home units has decreased by 33%. This decrease in nursing homes largely stems from modern reimbursement paradigms: on average, 90% of nursing home revenues come from Medicare and Medicaid, but at the current federal reimbursement rates for nursing home care, it is not profitable for nursing facilities to continue to operate. So what other option do senior citizens have when they need full-time care?