Healthcare Industry Update - Q1 2018 - Amherst Partners
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Healthcare Industry Update – Q1 2018

Healthcare Industry Update – Q1 2018

Much has been written in recent years about the impact of a burdensome regulatory environment on innovation. The focus more recently has been on the potential impact (positive or negative, depending on the political views of the commentator) of the current U.S. administration’s push to reduce regulatory burden on various industries. With respect to healthcare, the regulatory environment is pervasive, encompassing life sciences, medical technology, and healthcare services. However, given the industry’s ultimate goal of preserving and enhancing human life, people seem to be generally more favorably disposed toward regulation in healthcare than in other sectors of business.

That said, the cost of dealing with regulations in product development or regarding compliance with mandates associated with the delivery of healthcare services, to name but a few, can significantly reduce returns and make investing in particular businesses or products less attractive. It seems reasonable to assume that, on the margin, the regulatory burden on healthcare has a somewhat depressive effect on innovation; however, the fact remains that with the intellectual horsepower available in this country, incentives in place to reward success and capital to implement, innovation continues to thrive. Much like the flowers beginning to push up through the early spring snow, new products and services, and new ways of attacking long-standing issues seem to shrug off the burdens — justifiable or not — placed on businesses by governments.

Interestingly, with respect to healthcare services, despite the turbulence the industry has been subjected to recently (ACA, transition to value based reimbursement, DOJ opposition to significant M&A transactions, etc.), business leaders continue to explore ways to connect assets in unique ways that address the issues of cost, quality, and patient satisfaction. While it’s unlikely that all of recent transactions in the healthcare sector will fully achieve their stated objectives, progress will be made. There are too many bright people, too much available capital and too much incentive for it not to. The prize is greater access to care, quality, and patient satisfaction, which, when combined with sustainable cost containment, will yield solid financial performance for industry participants able to achieve these broad metrics.

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