Opportunities for healthcare investors in an evolving market
Opportunities for healthcare investors in an evolving market

Opportunities for healthcare investors in an evolving market

Despite disruption, healthcare and life sciences spending expected to grow.

Key disruptors, prevailing market trends and evolving policies could impact the 2019 healthcare and life sciences (HCLS) investment arena. Investment growth in HCLS subsectors aligns with the industry’s evolution toward more accessible and lower-cost delivery sites, pricing transparency, and value-based care (which will continue as payers and providers move away from fee-for-service payment and delivery models).

Dependent upon their interest level, HCLS investment professionals filter into three categories:

The new frontier: Health care information technology and care management solutions for risk bearing providers – including many businesses that are emerging or growing in utilization – have the highest level of investment interest.

The scale seekers: Home health, retail-centric medical groups, primary care physician medical groups, and specialty physician medical groups – which have the opportunity to drive down their operational costs with consolidation and scale – garner a moderate level of investment interest.

The foundation: Health plans and hospitals – which are the necessary traditional pillars of the health care industry and are searching for new ways to transform themselves in an evolving health care ecosystem – have the lowest level of investment interest.

Significant HCLS investment activity is expected to continue through 2019. Despite ongoing Affordable Care Act challenges and the evolution of regulations, reimbursement policies and delivery models, the HCLS industry plays a critical role in the U.S. economy. Projected health care spending is projected to rise from nearly 18 percent of GDP in 2017 to 19.7 percent by 2026.

What’s more, reliable demand for patient care by an aging population with a significant and growing disease burden makes the HCLS industry more resilient than others. Potential investors should take steps to differentiate between inflated expectations and appropriate pricing by monitoring policy, regulatory, and market developments, and evaluate opportunities in the context of disruption.

Learn more about the state of the HCLS industry in the 2019 KPMG/Leavitt Partners Healthcare & Life Sciences Investment Outlook.

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