Exploring Critical Business and Legal Issues across the Healthcare and Life Sciences Industries
Exploring Critical Business and Legal Issues across the Healthcare and Life Sciences Industries

After the Curve Podcast: Focus on Health Insurance and Coverage

COVID-19 has catalyzed significant changes in the patterns of healthcare delivery, with the potential for long lasting effects on payors as a result. On this episode of the After the Curve podcast, we discuss how the COVID-19 pandemic may shift the healthcare coverage and payment landscape as well as how it may boost integration among payors and providers. McDermott’s Chief Marketing Officer Leslie Tullio is joined by Kate McDonald and Ankur Goel to discuss relevant topics for both payers and the healthcare industry more broadly, including:

  • How COVID-19 is changing healthcare utilization patterns in the US and the impact of that disruption on insurers
  • The reaction from health plans to the financial impact of COVID-19 on providers
  • The impact of telehealth and regulatory waivers at the state and federal levels on the payor market
  • Top lessons that payors have learned from the pandemic and subsequent next steps
  • Opportunities for healthcare leaders to synthesize where we are today
  • Key takeaways for payors moving forward from the pandemic


Policy Outlook: How The 2020 Election Outcomes Will Impact Your Business – Health Policy

In this session, health law policy authorities discussed changes likely in 2021 in a Biden Administration and how these changes will impact business objectives and strategies for health industry stakeholders.

Below are the top takeaways for Policy Outlook: How The 2020 Election Outcomes Will Impact Your Business session: Health, click here to access the full webinar.

Access the PDF here

If Vice President Biden campaigned on anything, it was a more vigorous response to the pandemic. Look for a Biden Administration to make addressing the spread and restoring the economy top priorities early on. Another relief bill is likely, and maybe even in a lame duck session in 2020, but any relief measure will require Republican and Democratic support. Look at both the House-passed HEROES Act and the Senate Republican HEALS Act as likely starting points for discussion.

Affordable Care Act
Vice President Biden campaigned on sustaining and expanding health insurance coverage by enacting a public option to compete with commercial plans in exchange marketplaces. With Republicans likely to retain control of the Senate, legislative expansions of the ACA are unlikely. Instead, look to a Biden Administration to reverse or revise ACA-related regulations and Executive Orders advanced by the Trump Administration. Still, keep an eye on the Supreme Court’s consideration of California v. Texas, which could call the constitutionality of the ACA into question.

Prescription Drug Pricing
Both parties share the goal of addressing the cost of prescription drugs, and there are some solutions that enjoy bipartisan support. It will take bipartisan support to advance any reforms, so certain reforms, e.g., government price negotiation, seem less likely

Surprise Billing
A top priority for Republicans and Democrats in Congress in 2019, momentum behind this bill was overtaken by the pandemic. Desire to pass a solution remains, but the urgency is not there, while other needs are more pressing. Look for this issue to remain on the agenda.

During the COVID-19 pandemic, the Administration implemented waivers that allowed the delivery system to flex to meet the needs of the pandemic. Ranking high in priority are telehealth flexibilities that dramatically expanded access and created a rapid adoption of new technology. While many of these flexibilities are likely to be extended, we expect a series of short-term extensions while Congress gathers data to address concerns about quality, effectiveness, cost, and fraud.

Medicare Reimbursement
Rising federal debt and deficits driven by rising federal spending and lower tax revenues (largely caused by the pandemic) are straining federal entitlement programs, like Medicare. Lawmakers may look to slow or even reduce Medicare spending by dialing back growth adjustments and making targeted spending reductions, but probably not until healthcare providers are in a more stable post-pandemic.

To catch up on all of the webinars in our Policy Outlook series, please click here.

HPE New York 2020: Big Bankers Breakfast Discussion

In this lively panel session, global heads of healthcare at top banks analyzed the current market climate for healthcare services investing and provided their invaluable insights on hot sectors, growth strategies and the dealmaking outlook for 2021. McDermott counsel Charlie Ditkoff moderated this panel featuring Daniel Decelles, global co-head of healthcare investment banking at Jefferies; Matthew McAskin, senior managing director at Evercore; Jim Forbes, vice chairman of Morgan Stanley; Mark Francis, managing director and head of the healthcare group at Houlihan Lokey; and Cheairs Porter, head of the healthcare and life sciences group at Harris Williams.

Below are the top takeaways for HPE New York 2020 half day session: Big Bankers Breakfast Discussion, click here to access the full webinar.

Access the PDF here

The public markets have recovered remarkably from the lows of March and April 2020 and are currently seeing unprecedented deal activity, Mr. McAskin said. However, amid that activity, “there is no one solution that is working,” he said. “We are seeing financing work, we are seeing creative transaction structures work, and we’re seeing a resurgence of initial public offerings and special purpose acquisition companies like we have not seen for years or for decades. It’s a very confusing time for a lot of people, because we’re seeing these micro-cycles occurring very quickly.”

As might be expected in light of the Coronavirus (COVID-19) pandemic, valuations for tech-enabled healthcare businesses have risen significantly this year, and that trend will likely continue into 2021. “I think there’s a fundamental paradigm shift in terms of delivery of care that is getting investors to focus less on EBITDA and more on revenue,” Mr. Forbes said. “That intersection where technology meets healthcare is a fundamental change.” Similarly, public valuations in the home healthcare sector saw dramatic increases. “There is a lot of support, both in the debt and equity markets, for healthcare services businesses that people think are going to be survivors and growers coming out of this environment,” Mr. Decelles said. “It all ties back to value-based care—where are you going to get the most bang for your buck in delivering that care? Some of it’s going to be over the phone, and some of it’s going to be in your home.”

The private market too is seeing strong deal activity, in part due to pent-up demand from the slowdown early in the pandemic. “There is scarcity value for quality assets that have done well through the COVID-19 period,” Mr. Porter said. “A lot of these really great quality business have come to market at the same time in the last 10-week period, and it’s driving a lot of competition. The challenge on our side of the coin is to create the engagement with the right people in the right situations, and to deliver the right certainty for our clients in this market where people are picking their spots.”

Across all of today’s attractively priced deals, the unifying theme is quality and growth, Mr. Francis said. “That’s what people are really focused on today in terms of investment thesis,” he said. “If you look at it from a sponsor perspective, as they look at the landscape, there are just too many deals and not enough time to chase them all. They’ve got to pick their spot, they’ve got to be aggressive, and they’ve got to find an angle or a way to create a competitive advantage.”

To catch up on all of the webinars in our HPE New York 2020 series, please click here.

HPE New York 2020: The Impact of COVID-19: What’s Hot, What’s Not

In the wake of COVID-19 some health sectors have emerged as hot while others are troubled. Our panel of active investors discussed where the dollars are going and offered insights on why in relation to the events of 2020. McDermott partner Jerry Sokol moderated this dynamic panel featuring Paige Daly, partner at Harvest Partners; Chris Gordon, global head of healthcare and co-head of North America private equity at Bain Capital; Geoff Lieberthal, partner at Two Sigma Impact; and Rob Wolfson, executive managing director and head of H.I.G. Advantage Fund and U.S. Healthcare.

Below are the top takeaways for HPE New York 2020 half day session: The Impact of COVID-19: What’s Hot, What’s Not, click here to access the full webinar.

Access the PDF here.

COVID-19 has revealed weaknesses in the healthcare system and in healthcare delivery in particular. “One of the most fundamental things that we as healthcare investors all should be thinking about is investing in businesses that are making things better for the entire system—for patients, for providers and for payors,” Ms. Daly said. “That means we should be both raising quality and lowering costs.” These principles are driving some of the most exciting innovation today, particularly in payor services, physician practice management (PPM) and healthcare IT.

Healthcare IT generally and telemedicine specifically are areas of major investment. Dramatically accelerated patient and payor adoption of telehealth has created growth potential in new areas such as tele-dermatology. At the same time, increased interest can present a threat. “Let’s say you’re the market leader in an area of healthcare,” Mr. Lieberthal said. “Suddenly, your competitors might start picking off patients or experimenting with getting traction in your market through telehealth.”

Pharmaceutical services is a particularly hot sector. “Generally these businesses have done well and might even have had tailwinds during the pandemic,” Ms. Daly said. “Anything that gets drugs, vaccines or treatments to market faster is something that people are pretty excited about.”

According to Mr. Wolfson, PPMs are not only hot, they’re here to stay, While the recent resurgence in PPMs has seen winners and losers, the differentiator is whether it improves care for patients and improves providers’ ability to deliver better care.

Special purpose acquisition companies (SPACs) have become popular. “I think the big question is: Should they be, and are they here to stay?” Mr. Gordon said. For SPACs to have staying power, they will have to add value, rather than simply creating transactions for the sake of transactions, Mr. Wolfson agreed. “SPACs are a more efficient on-ramp in terms of financial visibility, ability to work with sellers, the amount of capital you can exchange and debt limits,” he said. “But there needs to be a value-add. Some of these … will not be happening in a year or certainly five years from now.”

To catch up on all of the webinars in our HPE New York 2020 series, please click here.

HPE New York 2020: Healthcare Private Equity Pioneers

An illustrious group of healthcare private equity pioneers discussed how healthcare investing has evolved from inception to current state and what the future holds. Moderated by Michael Lewis, author of The Big Short, Moneyball, The Blind Side and Liar’s Poker, it featured insights from Senator Bill Frist, MD, founder of Frist Cressey Ventures; Annie Lamont, co-founder and Managing Partner of Oak HC/FT; Curtis Lane, founding partner of WindRose Health Investors; and Ira Coleman, Chairman of McDermott Will & Emery.

Below are the top takeaways for HPE New York 2020 half day session: Healthcare Private Equity Pioneers, click here to access the full webinar.

Access the PDF here.

Investment in healthcare private equity continues to accelerate, even amid disruption. In the past, healthcare made up only a small portion of private equity funds, but pioneers helped make it mainstream. “The amount of infrastructure, commitment and capability focused exclusively on healthcare is becoming commensurate with the size of healthcare relative to the economy,” Mr. Lane said. “I think that’s changed pretty significantly and is continuing to change very quickly.”

One of the most dramatic changes in the field of healthcare private equity since its inception is the ongoing transformation of the healthcare system and the opportunities that transformation has created for entrepreneurs outside of traditional healthcare roles. As virtual health companies and other digital-focused endeavors began to emerge young entrepreneurs started to come into healthcare,” Ms. Lamont said. “You started seeing tech talent attached to healthcare problems.”

The COVID-19 pandemic has dramatically accelerated investment trends. Digital care delivery and virtualization are seeing particularly high growth rates, Ms. Lamont said, in close connection with the sectors of home health, mental health and primary care. “We want to support everyone in the home right now, and we want to do that in the smartest way,” she said. “This is an industry that has been stuck, and there has been very little innovation. All of a sudden, the resources are coming and the payors are thinking differently. It’s incredibly exciting, because we are going to move healthcare forward.”

Venture capital can be a vital means for tackling seemingly insurmountable problems, Dr. Frist said. COVID-19 has forced healthcare to pivot from a historically defensive stance to a more proactive and offensive position. “We have a huge opportunity,” he added. “We now need to solve this problem and address it. We need solutions for the vulnerable population.” Public policy and excellent care alone are often insufficient to tackle big issues. The private sector can help take innovative ideas and solutions and bring them to scale.

To catch up on all of the webinars in our HPE New York 2020 series, please click here.