Based on their extensive experience advising health care industry clients, Epstein Becker Green attorneys and strategic advisors from EBG Advisors are predicting the “hot” health care sectors for investment, growth, and consolidation in 2020. These predictions for 2020 are largely based on the increasing confluence of the following three key “drivers” of health industry transformation that is substantially underway:
- The ongoing national imperative of reducing the cost of health care, via disease prevention and detection, and cost-effective, quality treatment, including more efficient care in ambulatory and retail settings;
- Extraordinary advances in technologies which enhance disease prevention, detection and cost-effective treatment (e.g., artificial intelligence (AI)-driven diagnosis and treatment, virtual care, electronic medical record (EMR) systems, medical devices, gene therapy, and precision medicine); and
- The aging baby-boomer population, with tens of millions of Americans entering into their 70s, 80s, and above.
- Health Care Information Technology: Advances in analytics and science are key to aiding health care providers in the early detection and treatment of health care conditions and to safely delivering quality, lower-cost care. This includes, for example:
- Advanced, interoperable EMR systems;
- AI and data analytic technologies that improve diagnostics and early detection, enhance the speed of research, development and clinical trials, and guide more effective treatments;
- Virtual care (telemedicine) platforms that enhance access to care and treatment in the ever-increasing digital, personal device, and consumer-driven health care economy;
- Mobile apps and IT “connected” medical devices that enhance prevention and detection of illnesses, and can guide care for individuals managing chronic diseases; and
- Cybersecurity to protect our health information and technology-dependent health care delivery system.
- Medical Device and Pharmaceutical: New scientific discoveries are being developed at a fast pace, all of which are geared to more effectively treating health care conditions with an eye towards lower costs (and which are being accelerated by many of the IT advances described above), such as:
- Gene therapies, based on research of the human genome;
- Precision (personalized) medical treatments; and
- New biological drugs based on advanced, AI-driven clinical research and trials.
- Physician Services: Physicians are key “quarterbacks” in controlling health care costs, but they require the support of advanced EMR, data analytics, and a vast infrastructure, all of which require substantial capital and the management capabilities of larger organizations. This dynamic is drumming up demand for physicians and competitive offers from the following:
- Large national health care companies, both public and private (e.g., Optum, Cigna, Envision, Mednax, etc.)
- Physician organizations focused of primary care and managing population health (e.g., Iora, Village MD, Adelaide, etc.);
- Large hospital and health care systems;
- Mega-groups and specialty platforms backed by private equity (PE) investors; and
- Health plans (including HMOs, Medicare Advantage (MA) plans, and clinically integrated IPAs).
- Hospitals & Health Systems: Hospital systems, both nonprofit and publicly owned, will get even bigger—both regionally and nationally—in order to increase their available capital and generate economies of scale in connection with their investments in new patient-friendly facilities with advanced ICU and acute care services in addition to capabilities to manage care efficiently. These capabilities include advanced EMR, data analytics, virtual care, urgent care locations, physicians, clinical integration, population health, social determinant initiatives, cutting-edge technologies, and other strategic, scaled corporate infrastructure.
- Long-Term Care Services: With the aging baby-boomer demographic, there is increasing demand for all components along the continuum of long-term care services, with a particular focus on providing care at either the patient’s homes (via home health agencies) or at the least costly care setting (e.g., adult day care vs. assisted living vs. skilled nursing facilities).
- Behavioral Health Services: There has been increasing awareness of, and funding for, the treatment of the entire range of behavioral health services, including patients within the autism spectrum, with mental health illnesses (e.g., depression, anxiety, etc.), as well as substance use disorders (opioids, alcohol, etc.) and other addiction disorders.
- Medicare Advantage Plans: As the number of Medicare enrollees skyrockets and the Medicare program continues to pivot to “accountable” models of care (bundled payments and other risk-based initiatives), more and more Medicare beneficiaries are participating in MA plans. Increased MA plan enrollment is also being driven by regulatory changes governing benefit design that now allow MA plans to provide enhanced benefits to insureds, including prescriptions, eye care, transportation and much more. MA plans—which receive risk-based reimbursement—will utilize many of the advanced technologies described above to assist in controlling the cost of their enrollees’ care (through, for example, prevention initiatives and chronic care management).