Healthcare Execs Predict Growth in 2019 Despite Softened M&A Outlook

Healthcare executives anticipate another strong growth year in 2019, according to a new Capital One poll of nearly 300 senior healthcare executives. The latest data from Capital One’s annual survey shows that 97% of those surveyed expect to at least match 2018’s performance in the new year, with 73% signaling that they expect better business performance in the year ahead.

M&A was once again cited by executives as their businesses’ primary growth strategy, continuing a trend seen consistently in the last three years of Capital One’s annual survey. However, 44% of executives cited this as their preferred growth plan in 2019, down from 50% last year. One-quarter of respondents signaled that organic methods—namely, revitalizing and updating existing offerings—would be their primary growth strategy in 2019. Another 21% expect growth to be driven by new segments or lines of business.

“M&A activity remains a driving force in the healthcare industry, but we’re also seeing some additional focus on building out existing lines of business in the year ahead,” said Al Aria, senior managing director, Capital One Healthcare. “There’s a strong demand for capital as we turn into 2019 and we anticipate quite a bit of activity as healthcare organizations progress in their growth plans.”

Expectations for capital needs matched those for growth prospects, with 96% of respondents citing an increased or consistent need for capital in 2019, compared to last year. More than one-third of respondents (35%) anticipate having a higher need for capital than they did in 2018.

When looking towards challenges in the year ahead, regulation and reimbursement concerns led healthcare executives’ list yet again. In addition, recruiting and retaining employees was cited by nearly a quarter (23%) of respondents as their top concern. Executives stated several challenges in recruitment and retention including the lack of skilled applicants (cited by 38% of respondents) and competition from larger companies (25%) being chief among these. Applicants coming in outside of desired pay ranges and competition from startups were also cited by 17 and 14% of respondents, respectively, as the top challenge in this area.

“Growth opportunities have been in no short supply for healthcare organizations over the past several years, and investment in talent is one such area where many leaders will be focused on as competition for skilled talent continues to increase,” said Aria. “Whether it’s a major acquisition or a focus on further establishing existing product or service lines, we look forward to providing our customers with the advice and capital they need to realize their goals.”

Capital One Healthcare is a leading provider of financial services to the industry. Customers across healthcare sectors—including senior housing, healthcare services, pharmaceuticals, medical devices, healthcare IT and medical offices—rely on Capital One Healthcare to finance acquisitions, refinance existing debt, support working capital needs and fund growth initiatives. With in-depth expertise, our team of professionals creates solutions tailored to meet the needs of our customers.

The Capital One survey, conducted between November 15 and December 3, 2018, asked professionals to provide their industry and company outlook for 2018. Respondents included 291 senior executives from healthcare companies, including pharmaceutical, healthcare IT and medical technology companies, hospitals, healthcare service providers and health systems, as well as other industry participants.

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