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Healthcare

4 takeaways from the J.P. Morgan Healthcare Summit

Healthcare executives, industry experts and investors discussed key topics driving the sector, including innovation, collaboration and value-based care.


Nashville is known around the world for its vibrant music scene. But it’s also becoming the healthcare services center of the United States.

The city is home to leading health systems, tech companies, medical schools and research centers. And just as singers and songwriters collaborate to create a Top 10 hit, healthcare leaders are working together in Nashville to drive innovation in the sector. 

The inaugural J.P. Morgan Nashville Healthcare Leadership Summit brought together healthcare executives, investors and industry experts to discuss key industry topics. Here are four takeaways from the event:

 

1. Volatility is here, but capital isn’t slowing down

Between inflation, global events and the influence of recent rate hikes, there’s plenty of uncertainty in the market. But capital remains available, with an increased focus on cost and structure.

  • Private investors are using tighter structures to bridge the valuation gap between public and private markets.
  • Volatility and devaluation in the public market may ultimately impact private markets, with similar resetting occurring there, as well—often six to 12 months later. 
  • While crossover investors are more selective in private deals right now, growth equity and family offices are picking up the slack.
  • With the biggest IPO pipeline in years, companies are looking to private markets and existing investors to provide capital amid a market rout. But be prepared, markets can reopen as quickly as they shut down.
  • Venture capitalists are still actively deploying capital given longer investment horizons. Valuations have yet to soften, especially for differentiated platforms.
  • Direct lending is an increasingly sought-after financing solution in the current environment given its speed and certainty. Traditional bank market financing remains active, as well.

 

2. Innovation requires flexibility

The pandemic forced the healthcare industry to innovate overnight. Continuing to foster that innovation requires a move away from rigidity.

  • Committees and bureaucracy can derail innovative ideas. Pursue an executive sponsor who can clear roadblocks for innovators in your organization. 
  • Consider internal branding of an innovative solution to accelerate adoption, and keep talent motivated by removing barriers and making capital accessible.
  • In a constrained labor environment, focus on getting the most out of the talent you have. Create an environment that supports fresh thinking and look to automation to gain efficiencies.
  • Identify the big picture objective and the steps to achieve it.
  • HCIT platforms should be mindful not to overly customize for one client when getting started. Variety and agility are key.

 

3. Value-based care should be holistic, continuous and individualized

These models are gaining traction and a broader understanding of how to make them successful:

  • After years of focus, value-based care is reflected more notably in key numbers. Medicare Advantage enrollment is growing and will likely become the majority of Medicare enrollments in the coming years. Likewise, value-based national reimbursement contracts are also growing in usage, and the majority of physicians nationally participate in at least one accountable care organization.
  • Employer-sponsored plans are advancing value-based care arrangements via benefit design, directly negotiated rates and narrow networks. This has led to an increased focus on employee affordability and a shift into the home for higher acuity care, which is critical for better access.
  • This type of model focuses on addressing the patient as a whole, and it requires a more granular understanding of social determinants of health to be successful. 
  • Organizations should closely monitor care delivery details and outcomes monitoring for accountability. 

 

4. Investors want to back experienced entrepreneurs

Patients and consumers have access to more digital tools and healthcare resources than ever. And venture and investment dollars aren’t slowing down anytime soon. Investors are open and available for opportunities, looking for experienced CEOs and entrepreneurs who can weather a downturn and pivot in an uncertain market. 

  • Healthcare is more insulated than other sectors, and experienced investors will buy through the cycle.
  • Repricing of growth has been material in public markets, so expect take-private activity to pick up. Within growth equity, there’s a shift toward investing earlier to shape the strategy and build a foundation ahead of scaling.
  • In today’s up-and-down market, strong operating partners are crucial to help management teams succeed.
  • Founders remain interested in selling despite the market backdrop. There’s a need for professional management teams, operational support and strategic capital. 
  • More investors are interested in environmental, societal and governance (ESG) initiatives. They’re looking to make meaningful impacts and not “check the box” contributions. 
  • Sufficient time and investment is required to tangibly improve access, quality and consistency of care to the underserved.

 

Collaboration is key, now and in the future

We’re living in a digital ecosystem in which healthcare must be delivered at scale—and with a tech mindset. Healthcare in itself is too big for any single company to change. But by working together—much like singers, songwriters and musicians—healthcare executives, tech entrepreneurs and investors can help reshape the sector.

And that might be the biggest takeaway of all from Nashville: True transformation can only happen with collaboration.

We’re here to help

J.P. Morgan has years of experience in the healthcare sector, and we can help you navigate the shifting business landscape. Contact one of our bankers to learn more.

© 2022 JPMorgan Chase & Co. All rights reserved. JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/cb-disclaimer for disclosures and disclaimers related to this content.

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