I'm back in my office from a rainy week in San Francisco where I attended (or, rather, did not attend) the JP Morgan Healthcare conference. Aside from being a little bitter about hotel rates and water-logged shoes, I'd say it was a typical JPM week which, frankly, is somewhat amazing given all the chatter in DC these days about ACA repeal. I'll share my takeaways briefly below and hope to hear yours as well.
First, let me set the context for these thoughts. We on the SSM healthcare team mainly interact with healthcare information technology companies selling solutions to payers and providers. I didn't spend my time last week meeting with payer, provider or pharmaceutical executives (who likely became quite concerned by the President-elect's comments about the pharma industry at his press conference last Wednesday). Nor did I attend the actual JPM Healthcare conference held at the St. Francis. I quit attending several years ago as the "conference" slowly spilled outside the walls of the St. Francis and into the hotels, cafes and coffee shops of the Union Square area. I spent last week meeting with privately-held healthcare IT companies and related service providers and did not canvas the industry to gain a broader perspective. So, what follows below are takeaways from my admittedly limited perspective.
- Surprisingly little conversation about ACA repeal. I really feel like this is the story of the week (at least IMO). JPM week attracts leaders from across the healthcare industry landscape - for-profit and not-for-profit, public and private, payer and provider, technology and services, domestic and international, investor and operator... the list goes on forever. ACA repeal is a really, really big deal to each of these (sub)groups. I had actually very little discussion last week about ACA repeal and its impact. My assumption is some have i) already processed this likelihood and determined its impact on their business and therefore do not find the discussion interesting and/or ii) they have no idea what is to come and are afraid to discuss it for fear of appearing foolish. I think I'm in the latter camp. NO idea what to expect.
- Value-based payment models, Consumerism and Medicare Advantage are good places to be. Okay, I did have a couple of conversations about ACA repeal. Generally speaking, the consensus (albeit small sample size) was that businesses that address the healthcare cost problem are good places to be. Value-based payments, consumerism and Medicare Advantage are examples of these areas. I think this also reflects (wishfully?) the HCIT company I kept during the week as these are favored markets of those companies. Similarly, exchange markets and Medicaid were discussed very... carefully.
- The deal market is still quite good. Bankers, lenders, private investors and entrepreneurs aplenty! Plenty of money and plenty of ideas. Everyone seemed to lament the dearth of dealflow (rather than the fear of portfolio weakness). Of course, the venture market for HCIT has cooled somewhat over the last year or so. And I heard on at least three occasions the phrase "over-funded" used to describe the HCIT venture market. But, in general, whether growth-stage or buyout, the attitude seemed upbeat. The sense was that high-quality, high-growth companies could still garner very attractive valuations. Not exactly what you would expect at a time when ACA repeal is being discussed. And NOTHING like the bleak atmosphere following the Great Recession.
So, is the market in a state of shock? Denial? Or are things really going to be okay? Its hard to say at this point. During my week in SF I learned that investors still want to make investments in the healthcare industry, and I suppose that's a good thing for now.
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