Healthcare Private Equity Activity for 2023

There's a lot of speculation about what impact the current economy will have on PE and M&A activity in the healthcare industry. Will there be more consolidation? Less investment in new products and services? More focus on cost containment? What, pray tell, is the "current economy" anyway?

For predicting capital trends in healthcare, the S&P 500 is about as useful a metric as body mass index. When predicting the impact we'll see from the swirling currents of the Inflation Reduction Act, continuing (if slowing) inflation, and the worries about a contracting economy, a few trends do stand out, and many experts are predicting that private equity firms will be cautious in their investments in the next few years even in the traditionally recession-resistant healthcare space. In light of this, we've compiled a list of six trends to watch out for in 2023:

1. More Consolidation Among Healthcare Providers

With healthcare reform bringing so much change to the industry, many providers are looking to consolidate in order to remain competitive. This could lead to more M&A activity among hospitals, health systems, and other provider organizations. Almost every week we read about another major health player reporting a staggering loss. Consolidation is a common salve here, providing a broader footing and scale efficiencies.

2. Increased Focus on Cost Containment

As reimbursement rates continue to decline, investors will be looking for companies that can demonstrate a commitment to cost containment. Benefitting from medical practices and facilities that can still offer returns means finding the organizations that provide innovative solutions for driving down costs, and/or those that offer value-based care models.

3. Fewer New Healthcare Ventures Launching

With uncertainty around healthcare reform, we may see fewer new ventures launching in the space. This could mean less investment in areas like digital health and biotechnology.

4. More Investment in Services that Drive Revenue Growth

In order to offset declining reimbursement rates, investors will likely look for companies that can drive revenue growth through new services and offerings. This could include things like population health management or care coordination services.

5 . A Shift Away from Traditional Private Equity Investors

If traditional private equity firms become more cautious with their investments, we should see a shift towards strategic investors or venture capital firms moving more risk into the healthcare space. These investors are often more willing to invest in startups, emerging technologies, and other riskier investments, and may be less wary of higher interest rates in the market.

6. Continued Focus on Healthcare Consumers

Agile companies that have been successful in developing consumer-facing health technologies for established payers and providers, such as telemedicine, communication portals, remote monitoring, and "find-a-doctor" web applications, are likely to continue multiplying and expanding, driven by cost containment, care quality considerations, an aging population, and the growing market for faster, more immediate responsiveness to patient needs.

No one can dispute the existence of huge healthcare opportunities in a market that's getting older and more frail, and consuming unprecedented volumes of products and services. It remains to be seen exactly what investors will fund in healthcare this year, but one thing is certain: Profits will be made.

Point of Interest Hooks for All U.S. Healthcare Providers

There's a new world of data available from a new class of vendors that can be linked together by the establishment of a universal Point of Interest code that pegs the physical location (the "where") and in some cases even encodes the business name (the "who"). In CarePrecise provider databases, POI-encoded facility information identifies essentially every facility in the U.S. healthcare system, and makes it connectable to other datasets. 

Visitor Traffic Reporting

Want to know how much visitor traffic a given doctor's office gets in a week? That data is available from third party sources, and can be linked in to the CarePrecise provider data using the Placekey™ POI code that CarePrecise appends to almost every* address in the NPI Registry and beyond.

Placekey Integration

CarePrecise invested heavily in creating a system that updates approximately 8 million healthcare provider POI records every month, keeping up with changes in address, new providers, and dropping deactivated providers. Furthermore, CarePrecise keeps historical data for every month, so that location changes can be tracked over time. 

Note: CarePrecise also provides a separate database, Select Geo, that contains latitude and longitude for every geocode-compatible U.S. healthcare provider location in the federal National Provider Identifier registry. This is used in applications that calculate distances and travel time between provider locations, and between patients and prospective providers, such as doctor-finder sites.

The addition of Placekey to CarePrecise data enables a clearer view into healthcare sites — clinics, physician offices, outpatient facilities, hospitals, and the whole panoply of facility types. Because CarePrecise links individual practitioners to their affiliated practice group businesses and the hospitals they are affiliated with, rich patterns emerge when connecting CarePrecise provider networks data to visitor traffic and revenues data. 

Competitive Healthcare, Meet a New Challenge

Whereas the healthcare industry is aggressively competitive, with organizations suppressing intelligence to the fullest extent possible, these new business intelligence pathways represent an unprecedented level of visibility into provider practices vis a vis their patient volumes. Reasonable, actionable assumptions can be made on practices' patient base—despite their closely-held business information—when cross-referenced with the demographic, psychographic, and economic data available on visitor traffic.

*Not all address fields can be parsed to produce a Placekey code or geocode; in particular, street addresses in Puerto Rico use so many non-normalized (GPS readable) addresses. Even CarePrecise's proprietary CoLoCode (uniform address code) has difficulty with many such addresses, though GPS compatibility is not a factor in creation of the CoLoCode.

Artificial Intelligence In Healthcare

The healthcare industry is on the brink of major transformation, thanks to healthcare-related advances in artificial intelligence. Healthcare organizations around the world, and governments, are beginning to integrate AI into their systems and processes. With AI, healthcare providers are able to improve medical diagnostics accuracy and automate administrative tasks, while improving patient care. In this blog post, we will explore how healthcare will change and the potential impact of AI on healthcare.

Advances in Medical Diagnostics

AI has the potential to revolutionize healthcare by greatly improving medical diagnostics accuracy. AI-powered tools are being used to help healthcare professionals diagnose diseases more quickly and accurately, as well as identify healthcare trends that may have previously gone unnoticed. Furthermore, AI technology can be used to monitor patient vitals in real time and detect early warning signs of disease.

Automation of Administrative Processes

The healthcare industry is full of administrative tasks that take up a considerable amount of time and resources, from filing paperwork to scheduling appointments and managing patient records. AI can automate these processes in ways that may not occur to human workers, to free up the humans to provide more focused care on the most complex cases. AI can also provide healthcare organizations with better insights into patient care and help healthcare professionals make more informed decisions.

Improved Patient Care

AI has the potential to drastically improve healthcare outcomes by providing healthcare professionals with improved data about patients, allowing them to take preemptive action or provide targeted healthcare services. AI can also be used to track healthcare trends and identify areas where healthcare quality measures could be improved.

Improved Clinician Workplaces and Opportunities

Physician offices can be made far more efficient with AI in the picture. HCC risk management is one area where AI can be used to find missed opportunities, and to strengthen Medicare reimbursement profiles. AI can often see what humans can't, either because some details just are not apparent, or because clinicians and admin personnel are overburdened with just getting through the day. In the constant struggle to keep patients as the top priority over paperwork, AI-driven systems from companies like Hindsait and MDOps can take on a share of the workload.

Caveats

From the patient's perspective, will AI depersonalize medical services? If workflow streamlining cuts the wrong corners, who will suffer? Artificial intelligence, by its very nature, is a "black box." In many cases, advanced AI is very much like a person, in that it can be difficult or impossible to understand how its "thinking" works. AI needs to develop better "talk back" capability, so that human users can interrogate the system to correct errors - to ask how it is arriving at a given conclusion, and then to correct its "thinking," much as you would reshape a human employee's perceptions to obtain the most desirable outcomes. At present, such capabilities are not present, or are not being adequately utilized by the system's handlers in some environments. Busy practitioners haven't yet "merged" with these systems such that deliberate feedback is part of the clinical workflow. This will take time, and probably a few high profile mistakes. Progress here is a bit like the early progress of the medical profession. We're just now emerging from the blood-letting phase of AI, and we must hone strategies for better control of the new tools.

As HCOs begin to adopt AI-powered tools, healthcare processes, patient care and healthcare outcomes are set to improve significantly. AI will allow practitioners to diagnose diseases more accurately, automate administrative tasks, and gain insights into healthcare trends, enabling them to provide more informed and targeted care to their patients. At the end of the day, AI has the potential to revolutionize healthcare and significantly improve patient outcomes, while the cost of progress is bound to include some failure. All stakeholders, from patients to health systems to government, need to be informed as AI involvement increases, and become girded for the journey.

Healthcare Market Opportunities

The global healthcare market is growing at an unprecedented rate. Over the past decade, advances in technology and medical treatments have revolutionized the industry, allowing for the development of new treatments, therapies, and technologies. As a result, the global healthcare market is expected to grow to a staggering $4.95 trillion by 2026.

Growth Factors

This growth can be attributed to several factors, including increased access to healthcare services in emerging markets and an increasing focus on preventive care. In addition, advancements in digital health technology are also contributing to this growth, as they make it easier for providers to monitor patient data remotely and quickly respond to changes in their conditions or develop treatments that are tailored specifically to them.

Future Expansion

These developments will likely lead to further market expansion in the coming years. To capitalize on this opportunity, stakeholders must ensure that they are actively participating in innovation and leveraging existing trends such as artificial intelligence (AI) integration and big data analytics. As the U.S. population ages, needing more healthcare services, strong market opportunities are emerging for innovative companies, from creating "find a medical service" apps, to caregiver management and inter-organizational information exchange.

Leveraging Opportunities

Of course, companies need to continue investing in research and development efforts related to precision medicine, predictive diagnostics and personalized therapies that can provide better outcomes for patients while simultaneously driving industry growth. But at the same time, consumer-facing technologies, such as patient portals and "find a provider" services need to acquire and deploy accurate healthcare provider information, covering many tens of millions of rows of provider data that is updated constantly.

Companies that sell advanced products to hospitals, physician offices, clinics and other businesses also need provider information to infuse their campaigns with contact information and business intelligence. The U.S. healthcare industry is aggressively competitive, and business intelligence is jealously guarded. The job of finding the information is challenging, and companies like CarePrecise are dedicated to just that task.

Conclusion

To be successful, it is essential to have a comprehensive understanding of the market dynamics and leverage existing trends such as AI integration and big data analytics. Equally important is having accurate healthcare provider information - which can be effectively provided by companies like CarePrecise. Using these resources, businesses will be able to reach out to healthcare decision makers with their messages.

By engaging with these strategies now, stakeholders will be able to take full advantage of the rapidly expanding healthcare market – which is set to become one of the most lucrative industries of our time.

Remarkable U.S. Healthcare Market Growth

The U.S. healthcare market has grown dramatically, and not just as a result of the 2019-2022+ pandemic. Health insurance has grown to a $1.1 trillion market [source: IBISWorld], representing a decade of growth between 2012 and 2021 of 44.7%.

$100b in one year

In just 2021, the hospitals facilities market grew $100 billion, from $1.1 trillion to $1.3trillion. As a result of numerous factors, hospital growth is expected to accelerate through 2030, to over $2 trillion [source: Grand View Research]

More healthcare professionals every month

Despite the reported numbers of front-line healthcare workers leaving the profession due to burn-out and the search for better pay, the number of healthcare providers overall in the U.S. has continued to grow essentially every month since 2005, to more than 7.3 million HIPAA-covered HCP/HCO records currently reported as active in the National Identifier Number registry. 

As the market value has grown, the accuracy of U.S. healthcare data continues to improve. An article explains that several factors are at play in the growth in accuracy of healthcare provider data. These include the migration of solo- and small-practice- practitioners to larger practices, where personnel are in place to assist in maintaining federal records with the most recent information. Another factor is providers' growing savvy about keeping their federal records in sync with the information they report on health insurance claims, with some payers using a mismatch as reason to delay payment of claims.