April 30, 2014

Own a health care company and looking to sell? Times look good for you.

That was one of the takeaways from the Nashville Health Care Council’s annual “Financing the Deal” panel Wednesday, during which financial experts shared their take on the biggest trends in health care deal flow with more than 300 members of Nashville’s health care community.

“It’s a very robust market,” said Richard Harding, managing director of investment bank Moelis and Company. “It’s a great time to be a seller.”
Among other examples, panelists cited robust, growing M&A transaction volume, a red-hot IPO market and consistent double-digit multiples for deals as signs that the health care market, which was already plenty active in 2013, is continuing to accelerate and churn out big deals.
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Here are a few of more key takeaways from Wednesday’s event:
On reform and new payment models: Much of the discussion about the effects health care reform is having on the industry actually touches on issues related to, but separate from, the Affordable Care Act itself, said Chris Gordon, managing director at Bain Capital. While the ACA will provide some “predictability” for providers in terms of patient coverage, there are plenty of other exciting, interesting dynamics driving the market, including further investments in advanced technology and the emergence of accountable care organizations and other types of risk-bearing provider structures, Gordon said.

For now, Gordon added, it’s exciting to consider a future world with capitation, bundled payments or other outcomes-based payment structures, but fee-for-service is still the reality for now and the near future. To cope, companies need to find ways to prepare for new models down the road while still bringing in money now, Gordon said.
On sectors that are hot, and those that are not: When moderator Tom Wylly, senior partner at Brentwood Capital Advisors, asked panelists what industry sectors they’re most excited about, most discussed technology and other outsourced services as particular areas of interest. Joey Jacobs and behavioral health provider Acadia also got their usual shout-out for strong, proven performance, as Wylly and other panelists noted the company’s strong first-quarter earnings, released Tuesday, and Jacobs’ team’s track record of success.