COVID-19 Pandemic Could Accelerate Recent U.S. Healthcare Growth Trends
One hundred years after the 1918 Spanish Flu, the world is facing another pandemic: COVID-19. Government and healthcare officials are working around the clock to flatten the curve and slow the spread of coronavirus.
In the United States, the number of infected patients continues to rise as regulators enable more test availability and capacity to frontline healthcare workers. To help accelerate the availability of tests, the Food & Drug Administration (FDA) announced a new policy last Monday that makes diagnostic tests developed by commercial manufacturers more widely available in laboratories. This solves a critical need as the number of positive coronavirus cases in the U.S. grows daily, putting additional pressures on the healthcare system.
In response to the outbreak, researchers developing COVID-19 vaccines are progressing through clinical trials on an accelerated basis as numerous regulatory changes aim to streamline life sciences protocols. President Donald Trump also invoked the Defense Production Act, which, if the full authority of the law were to be used, would allow the government to direct companies to manufacture necessary equipment and offer financial incentives and assistance to expand private industry production. Additionally, Centers for Medicare & Medicaid Services (CMS) took action—last week CMS lifted Medicare telehealth regulations permitting doctors to practice across state lines, if they have an equivalent active license from another state, expanding patient access to telehealth services.
Impediments, of course, still exist. While testing capacity has expanded, hurdles remain in the test kit and component supply availability, as well as kit distribution, and biospecimen collection and logistics. Though telehealth services and other remote patient engagement and access solutions may now have a broader mandate and operational flexibility, their success hinges on their ability to scale in a way that ensures seamless care coordination. The safety and health security of all healthcare professionals is paramount to meeting the rapidly escalating demands for care the world is encountering.
As the world battles the pandemic, M&A activity in many sectors has slowed. Yet private equity groups (PE) have an opportunity to consider select healthcare segments with accelerated growth drivers, deploying their dry powder into industries which may see unprecedented demand during the crisis—and potentially permanently shift the way Americans receive medical care in a post-COVID-19 world. Consolidators interested in healthcare should take note of the following six drivers and themes:
1) Critical Diagnostic Tests or Components, and Pharmaceutical Ingredients
2) Unique Lab Testing Infrastructure
3) Telehealth & Remote Care
4) Patient Centricity & Specimen Logistics
5) Patient Engagement and Healthcare Consumerism
6) Patient-Directed Home Care Providers
COVID-19 is rapidly changing how clinicians and other members of the healthcare ecosystem provide patient care, and in the process, the entire healthcare landscape. Regulatory changes implemented during the pandemic may lead to permanent changes in how people receive and interact with their healthcare. At a minimum, these changes will inform discussions about regulations that need to be updated via a more engaged and knowledgeable voting public. In the process, new opportunities in healthcare could arise, encouraging deals in segments in the coming months.
Lincoln International Managing Directors share perspectives on what the COVID-19 pandemic has illuminated in recent healthcare trends. Outlining healthcare segments with accelerated growth drivers and themes worthy of note for the middle market:
1. Critical Diagnostic Tests or Components, and Pharmaceutical Ingredients
2. Unique Lab Testing Infrastructure
3. Telehealth & Remote Care
4. Patient Centricity & Specimen Logistics
5. Patient Engagement and Healthcare Consumerism
6. Patient-Directed Home Care Providers
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