Health Care Execs Bullish on 2016 Financial Performance

Just under half of U.S. health care industry leaders expect mergers and acquisitions to be their preferred methods of growth in 2016, according to a new survey from Capital One (NYSE: COF). A vast majority also are feeling good about financial performance this coming year.

Specifically, 41% of U.S. healthcare industry leaders anticipate that mergers and acquisition transactions will be their preferred growth strategy this year, outnumbering the 35% who expect to prefer organic growth through updating and revitalizing existing offerings.

The third annual Capital One survey, conducted this year in anticipation of the J.P. Morgan 34th Annual Healthcare Conference in San Francisco, asked professionals about their company and industry outlook for 2016. Respondents included over 250 senior executives from health care companies, including pharmaceutical, healthcare IT and medical technology companies, health care service providers, hospitals and health systems, in addition to other industry participants.

Advertisement

The professionals polled were confident in their position in the industry overall, with 95% of them saying they expect their businesses to deliver financial performance in 2016 that equals or surpasses results from the past year. By comparison, just 77% of respondents surveyed in 2014 expected to see stronger industry performance in future years.

The survey also found 60% of respondents anticipate stronger performance from their businesses in 2016, while 35% anticipate performance that equals last year’s results. 

According to the professionals polled, access to capital will remain a priority in the health care industry, with 89% of respondents anticipating that their capital needs will be higher or the same in 2016.

Advertisement

The biggest challenge facing the health care industry? Implementing the Affordable Care Act (ACA), according to 33% of professionals. In 2015, 43% of survey respondents said implementing the ACA would be their biggest challenge.

The ACA isn’t the only challenge. This year, 32% and 16% of respondents identified regulatory scrutiny and the U.S. economy as the biggest challenges facing the health care industry, respectively.

Respondents were divided on the expected impact of the ACA in 2016, with 38% expecting no benefit from the law and 36% believing they will benefit.

Recommended SHN+ Exclusives

“2016 should be another dynamic year for the health care industry as we expect to see further consolidation and deal making activity,” Capital One Healthcare President Darren Alcus said in a prepared statement. “We see new opportunities to support clients with financial solutions as they adapt and grow in this evolving market.” 

Written by Mary Kate Nelson

Companies featured in this article: