February 13, 2023

Healthcare is the Healthy Thing, Right?

 An article out today in Fierce Healthcare looks at how the downturn in the economy is affecting healthcare funding and investment. Noting that 2022 was a bang-up year for private equity healthcare  deals, Fierce notes the drop in the S&P 500 of nearly 20%. So, what's happening in this rather healthy and "recession-proof" in 2023?

The article cites predictions from economists seeing recession ahead, and quotes Duane Fitch, national healthcare management consultant at Plante Moran as seeing "pretty much every dynamic going in the wrong direction" as a "perfect storm" for hospitals and systems.

I looked to some related reports to find that Bain Capital saw some optimism in January, particularly where "recession-resilient themes" are in investors' crosshairs. Followers of Jim Cramer will remember his December 2022 prediction of a banner year in 2023, and picking some winners: About Danaher (DHR), he says it's "one of the best-run companies in any industry." Cramer also held up Pfizer, United Health Group, Edwards Life Sciences, and he called the Humana the "best-of-breed" for managed healthcare stock.

Of course, no 30,000' overview of the market would be complete without taking a glance over at Motley Fool, where the merry jester noted that it all depends on the tune you're skipping to. Noting last July that, as is the conventional (and verifiable) wisdom, healthcare stocks are "one way for investors to hedge against recession risks." From there they danced through some of the familiar jigs, warning that "it wouldn't be too surprising if the economy actually did end up contracting in the near future," and recommending a fresh assessment of portfolio segments to see which are prepared for Fitch's storm, and which may not be.

The Fool sees continued, if muted, green in pharmaceuticals. Big pharma stocks won't sustain "major damage." Biotech, however, faces continued "headwinds."

CarePrecise is in contact with many technology-based business activities, including consumer-facing health-related applications and various healthcare marketing projects. Fourth-quarter 2022 was a busy time, particularly for marketing to clinics and medical practices. Development in provider management systems has been strong and growing, right up through January of 2023.

In a Chief Healthcare Executive article, Kristin Pothier, global lead, healthcare and life sciences deals advisory at KPMG, is quoted stating that providers have been stretched during the pandemic, and they "are also dealing with massive staff shortages, as staff have gotten sick, or sick of working." She says that hospitals should be using technology to reduce burden on their staffs, including telehealth and automation

A year ago, KaufmannHall pointed to the difficult year for hospitals in 2021, seeing the smaller number of M&A transactions being offset by a larger percentage of higher transactions. The trend has continued on a more-or-less steady roll.

My take-away is that healthcare technology should remain a healthy segment through a recession, though we do see the potential for a growing impact on hospital mergers and acquisitions. 

No comments:

Post a Comment