Nashville Health Council: Deal Making Trends and Strategies for Health Care Companies

“The market is over health care reform, it’s in the rearview mirror,” said Rob DiGia, Global Head of Healthcare Banking, UBS Investment Bank
at a healthcare investor event held earlier this week.  DiGia was joined by other panelist from Morgan Stanley, Oak Investment Partners, Goldman Sachs, and a moderator from Brentwood Capital Advisors on May 10th for Nashville Health Care Council’s event “Financing the Deal:
Deal-making trends and strategies for health care companies.” DiGia continued his comments on the impact of health care reform stating it will
continue to be in the headlines for its political sensitivity, but that overall the managed care market has evolved to move past the noise and get down to the
business of delivering solutions to meet the new mandates.  “Americans are becoming active purchasers of health care, like in other countries,” he said.
He compared the new ACO model to the old failed practice management and MCO models, stating this time it should be successful as the stakeholders will
be accountable in new model.  He and other panelists placed strong emphasis on a movement to a provider centric model of care vs. a payer centric model.
Annie Lamont, Managing Partner, Oak Investment Partners reiterated the change in the market, “It was business to business, now it’s business to
consumer.”  Greater involvement by patients brings a new dynamic to the market.

The panel commented on the recent flurry of readily available
capital in the market for health care ventures with a particular focus on
companies that are service-based and leverage technology.  Andrew Bhak, Managing Director, Healthcare
Investment Banking, Morgan Stanley estimated $37billion in U.S. M&A
activity year-to-date with about half of that being in services based
companies.  Bhak sees a robust channel of
funding for health care firms continuing through the next year plus.  An interesting component of many deals is
that once announced, both entities are seeing a stock ‘bump’.  In the past it was usually a one-sided
gain.    Raz Zia, Managing Director, Merchant Banking
Division, Goldman Sachs identified another trend he’s seeing in partnerships
and deals – shared risk.  Zia says he
believes the health care winners will be the services companies and he sees
good success already with those companies that are in deals where each side
shares in a risk/reward model.  Provider
engagement in these models, Zia says, will create sustainable new businesses.

Moderated by Tom Wylly, Senior Partner, Brentwood Capital Advisors,
the panel is one in an ongoing series of events sponsored by the Nashville
Health Care Council.

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