Experts ID 10 Hot Healthcare Investment Opportunities

Panelists at the Health Industry Council’s recent Southwest Transactions conference in Dallas identified 10 promising areas for health investment:

  • Health insurance exchanges: Dave Eichler, managing member for Psilos Group Managers in New York City, said his company invested six years ago in Medicare exchange company Extend Health, which was sold to Towers Watson. He said Extend Health was successful because Medicare is a guaranteed revenue stream. He said he is unable to predict the impact of exchanges under the Affordable Care Act, but “there will be a big migration.”
  • Consumerism: Christopher Graber, vice president of Waud Capital Partners in Chicago, and Michael McArthur, manager director of Deloitte in Los Angeles, both said healthcare consumers will play bigger roles and firms with customer service skills will be attractive. Graber said there is an opportunity for companies that will help providers collect from patients with high-deductible plans.
  • Value-based insurance design: David Eichler, managing member for Psilos Group Managers in New York City, said the idea of personalizing benefits based on health status is a good idea, but it requires a sophisticated IT platform. About 20 percent of Texas companies said they plan to implement value-based insurance design in 2013 by waiving deductibles, co-pays and co-insurance to encourage treatment compliance, according to a Texas Business Group on Health survey.
  • Risk-bearing companies: Graber called DaVita’s 2012 purchase of HealthCare Partners “landmark” because the California-based physician network was the only truly capitated risk-bearing provider that survived the 1990s. Entering the managed care market led to its business success. The company treated more than one million patients in California, including more than 500,000 capitated commercial patients, 150,000 Medicare Advantage beneficiaries, and 25,000 capitated Medicaid patients. Early entry into managed care enabled the organization to build 25 years of experience managing global capi­tation contracts. Graber warned that companies will need robust IT and scale to succeed.
  • Convergence: McArthur said his company is looking at hospitals, independent physician groups and primary-care physicians who are seeking to create local integrated care groups. He noted that primary-care physicians are getting as much as 10-12 times earnings before interest, taxes, appreciation and amortization (EBITDA), and hospitalists are getting about 6-8 times EBITDA.
  • Post-acute care: Graber said many believe it is early to invest significant capital into this sector because it is unclear whether there is any advantage in assembling distinctively different providers into one company.
  • Telehealth: Eichler said payers are willing to reimburse for this type of care if companies can prove it saves costs.
  • Remote monitoring: McArthur called this area “hot” despite the fact that Medicare is not reimbursing for it. He said commercial payers and accountable care organizations are seeing its value and paying for it. He said the Veterans Health Administration also understands its value.
  • Behavioral health: Panelists noted the ACA has elevated its importance.
  • The intersection of IT and services: Eichler said companies that can show they impact cost and quality of care are attractive.

Steve Jacob is editor of D Healthcare Daily and author of the book Health Care in 2020: Where Uncertain Reform, Bad Habits, Too Few Doctors and Skyrocketing Costs Are Taking Us. He can be reached at


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