KELLY PRICE

What’s on the horizon for healthcare companies in terms of mergers and acquisitions (M&A)? How will they adjust their business plans to deal with the approaching tsunami of baby boomers entering Medicare, the growing legions who can’t afford health insurance and a paradigm shift from disease management to health management?

If you are interested in business — and money — in the healthcare marketplace, clearly Nashville was the place to be September 24 and 25.

More than 225 outstanding regional and national leaders in the healthcare industry showed up for two days of seminars at the 5th Annual Healthcare M&A & Corporate Development Conference.

Topics ranged from an insider’s view of the agenda on Capitol Hill to a fireside chat with former presidential candidate and secretary of Health and Human Services, Governor Tommy Thompson.

There were opportunities to hear from outstanding speakers willing to share relevant and focused information on specific business-to-business topics impacting formulation and implementation of strategic decisions.

The conference opened with welcome addresses from Lars Enstrom, managing director, Fortress Investment Group LLC, and Matt Gallivan, president of the Nashville Health Care Council, a media sponsor of the event.

Nashville healthcare guru Jack O. Bovender, Jr., chairman and CEO of HCA, Inc., gave the conference keynote address.

Bovender spoke about his keen interest in proposed legislation for a national Health Coverage Passport, a plan sponsored by the Federation of American Hospitals. The plan would assist uninsured Americans in obtaining coverage and assure all Americans access to the care they need. Bovender has been spending time in Washington presenting the tenets of the proposal to key legislators.

He stressed the importance of universal coverage, individual responsibility and guaranteed portability of coverage, the three key planks that are necessary for an effective and fair system.

In the Q & A period after his speech, Bovender was asked how to entice young, healthy workers to buy healthcare coverage at an early age. He stressed the need to develop a mindset that healthcare coverage is each individual’s responsibility, one that should be required, like auto insurance.

An afternoon panel focused on care for the elderly, in hospitals, nursing homes and independent living.

In 1900, life expectancy was 47 years; today it is 79 years. The 36 million Americans in the United States who are over 65 represent half of all Americans who have ever celebrated their 65th birthday — but not one single baby boomer, a population that has just started to turn 60, at the rate of 15,000 every day, as they will for the next 16 years.

As a group, boomers have always had a strong interest in health and wellness and, because of their numbers, are used to getting their way. As they watch their parents face their healthcare needs, baby boomers will become determined to ensure that they will have a different aging experience. What they decide they want will impact healthcare business plans in a big way.

Healthcare businesses must ask, What’s going to stay the same? What will be the continuous thread, the constant in the human condition relative to aging?

Much of what needs to happen to improve the aging experience involves money. Panelists said capital markets need to get more involved, encouraging investing early in preparation for senior healthcare needs.

Healthcare businesses must get proactive in assessing product needs, including developing proactive steps such as programs for preventing falls, a leading cause of death in people over 65. Healthcare costs relating to falls in people over 65 are expected to be more than $32 billion by 2020.

There are things we don’t know today that will get traction, and funds will be needed to design programs that can serve as a bridge between care and care management programs, combining creative programs to keep people out of nursing homes and finding models of what will work. Hospice has proven to be an effective model to study — the Centers for Medicare and Medicaid Services (CMS) estimate that every dollar invested in hospice programs saves two dollars.

Employers must begin investing in employees based on their behavior, not genetics. To be successful, they will look at what motivates rather than penalizes, and emphasize health and wellness with evidence-based research, such as stressing the link between exercise and good diet in the prevention of Alzheimer’s disease.

The conference included a panel discussion of the recent “meltdown” in the syndicated loan market and a synopsis of its current state, how the recent tightening is likely to impact buyouts, as well as M&A activity going forward. There was a consensus that, after the summer’s massive falloff, the market had not returned to equilibrium yet after a year that saw a strong demand for institutional loans in February and March that was “almost irrational.”

Afternoon sessions included a high-tech panel, “Technology & Healthcare Services of the Future,” with discussion of what disruptive changes should be anticipated given the trajectories of healthcare, biology and technology, and which of today’s business models/approaches will go away, which ones will emerge and how a company can get ahead of those changes

David Osborn, Ph.D., executive director of Health Care Solutions Group, enunciated healthcare’s biggest challenge: the 47 million uninsured and the underinsured, with an analysis of trends, a look at the impact and implications of the current economic environment, a discussion of changing business models to address consumer-driven healthcare and an examination of the opportunities that exist for M & A.



November 2007