Capital One’s annual survey of healthcare leaders found that industry executives are doubling down on their already-positive outlook for merger and acquisition activity. The survey of more than 300 senior executives found that exactly half of industry leaders identify M&A as their primary growth strategy for the year ahead. In addition, 99 percent of those surveyed expect their company’s financial performance to match or exceed 2017 performance.
The percentage of executives citing M&A as their top growth strategy rose substantially from last year’s survey, from 38 percent to 50 percent today. Twenty-one percent expect growth to be driven by new segments or lines of business, down from 31 percent last year. Twenty percent anticipate growth through revitalizing and updating their existing offerings.
“All signs point to an increase in acquisitions in 2018, even following a strong year for M&A in 2017,” said Al Aria, Senior Managing Director, Capital One Healthcare. “As liquidity in the market remains high, we’re seeing a continued demand for capital. Barring a significant crisis, we expect another year of strong investment activity in the healthcare industry.”
One in three respondents (33 percent) anticipate an increase in capital needs in 2018, slightly down from 42 percent a year ago. Most executives surveyed (62 percent) expect capital needs to remain steady in the coming year, and only five percent of respondents anticipate their capital needs to decline.
Capital One’s survey also found that regulation and reimbursement challenges pose the greatest concern to the industry. Fifty-two percent pegged this as their top worry for 2018, and an additional 20 percent specified that changes to the Affordable Care Act were their chief concern. The continued transition to value-based care was cited by only 13 percent.
“Healthcare leaders have both eyes focused on robust prospects for growth, and opportunities abound for further consolidation, joint ventures and strategic partnerships,” said Aria. “We look forward to providing our customers with expert advice to help them navigate the changing and growing landscape, allowing them to realize their goals this coming year.”
The Capital One survey, conducted between Nov. 15 and Dec. 6, 2017, asked professionals to provide their industry and company outlook for 2018. Respondents included more than 300 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.