{"id":13293,"date":"2023-01-18T21:51:55","date_gmt":"2023-01-18T21:51:55","guid":{"rendered":"https:\/\/sage-growth.com\/?p=13293"},"modified":"2023-07-21T14:35:15","modified_gmt":"2023-07-21T14:35:15","slug":"its-the-end-of-the-world-as-we-know-it-but-healthcare-feels-fine","status":"publish","type":"post","link":"https:\/\/sage-growth.com\/critical-thinking\/blog\/its-the-end-of-the-world-as-we-know-it-but-healthcare-feels-fine\/","title":{"rendered":"It\u2019s the End of the World as We Know It But Healthcare Feels Fine"},"content":{"rendered":"

[et_pb_section fb_built=”1″ _builder_version=”4.21.0″ custom_padding=”0px|||||” global_colors_info=”{}”][et_pb_row column_structure=”3_4,1_4″ _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” custom_padding=”0px|||||” global_colors_info=”{}”][et_pb_column type=”3_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_image src=”https:\/\/sage-growth.com\/wp-content\/uploads\/2023\/01\/TAKEAWAYS-2023-1.png” title_text=”TAKEAWAYS-2023-1″ align=”center” _builder_version=”4.21.0″ _module_preset=”default” custom_padding=”0px|||||” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″][\/et_pb_image][et_pb_post_title categories=”off” comments=”off” featured_image=”off” _builder_version=”4.21.0″ _module_preset=”default” title_font=”||||||||” title_font_size=”32px” meta_font_size=”15px” meta_line_height=”2.2em” custom_margin=”-9px||33px|||” global_colors_info=”{}”][\/et_pb_post_title][et_pb_text _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” min_height=”1107px” custom_margin=”-20px|||||” custom_padding=”0px|||||” global_colors_info=”{}”]<\/p>\n

Every healthcare conference should have its own soundtrack.<\/strong><\/em><\/p>\n

I borrowed a Gen X favorite from\u00a0<\/span>REM<\/a>\u00a0<\/span>for this blog\u2019s headline, which pretty much summed up the vibe at JPMorgan Health \u2014 at least for healthcare companies and the PE firms that (still) love them. \u201cThank god I\u2019m in healthcare with rest of world on fire\u201d was my general takeaway. Not bad for a conference that some\u00a0<\/span>HLTH 2022<\/a>\u00a0<\/span>attendees were dreading back in November.<\/p>\n

That said, what\u2019s an on-the-fly market analysis without a few caveats? Here\u2019s three that Sage\u2019s COO David Sheehy and I took away from JPM.<\/p>\n

    \n
  1. It\u2019s time to re-evaluate valuation.<\/strong><\/li>\n<\/ol>\n

    Coming out of HLTH 2022, the deal environment was still tight and slow, with fewer companies coming to market and debt hard to access. Investors are waiting for the books to come in \u2014 the dossiers companies use to shop their businesses. The market hates uncertainty and is looking to make valuations that are truly based on performance. Which leads me to my next point\u2026<\/p>\n

      \n
    1. It\u2019s time for companies to get their house in order.<\/strong><\/li>\n<\/ol>\n

      As David says: The market is not going to reward the way it did over the past few years. Or as I put it: It\u2019s time for capabilities to stop masquerading as companies. Instead of growth at all costs, companies need to take a step back and focus on how they function \u2014 not just on fundraising.<\/p>\n

      Does anyone even remember what a healthcare SPAC or IPO looked like? No. Get your unit economics right. Optimize. And listen to PE: Don\u2019t come to market now unless you\u2019ve bothered to create a great company.<\/p>\n

        \n
      1. It\u2019s time for Greater Fools to meet their Better Angels.<\/strong><\/li>\n<\/ol>\n

        The Greater Fools theory suggest there\u2019s always a new idiot ready to buy a meh company. This has (largely) stopped in healthcare. A new sobriety has set in, with Better Angels making better decisions as new set points set in.<\/p>\n

        In other words, the irrational exuberance of 2020-2021 has given way to the rational pragmatism of 2022. David and I agree that that\u2019s a good thing. And recession or no, healthcare investors still have lots of cash to spend.<\/p>\n

        Speaking of recession, healthcare has been taking the road less traveled for a while now. The pandemic accelerated the industry into an early recession of its own, thanks to exploding human capital costs and supply chain woes. Healthcare had to respond like the recession was already here. So in a sense, hospitals and health systems might now be ahead of the curve compared to other industries.<\/p>\n

        All that said, two things are true: Healthcare is still fundamentally broken, but it doesn\u2019t have to be. In addition, we don\u2019t need tourists to come in and think they can fix the industry. The truth is you don\u2019t have to be a rocket scientist to do well in healthcare.<\/p>\n

        \u00a0<\/h3>\n

        IF I HAD TO MAKE UP RULES FOR THE HEALTHCARE VERSION OF\u00a0<\/span>FIGHT CLUB<\/a>, THEY MIGHT GO A LITTLE SOMETHING LIKE THIS:<\/h3>\n
          \n
        • We don\u2019t need a revolution; we just need evolution.<\/em>\u00a0<\/span>We don\u2019t need to go to the moon when we still can\u2019t get info from one doctor to another.<\/li>\n<\/ul>\n
            \n
          • We don\u2019t need machine learning; we need fax machine learning.<\/em>\u00a0<\/span>As wild as it sounds, faxes are still around because they still solve a problem.<\/li>\n<\/ul>\n
              \n
            • We don\u2019t have to be futurists<\/em>. We\u2019d be better off as past-ists or present-ists. We still need to address the problems that have been around since 1985!<\/li>\n<\/ul>\n
                \n
              • We can\u2019t get lazy.<\/em>\u00a0<\/span>Let\u2019s not lose what we gained from the more deliberate thinking and innovation that COVID demanded.<\/li>\n<\/ul>\n

                David\u2019s COO Fight Club list gets down to specifics: center in on ops, finance, and revenue cycle. Process innovation is needed before product innovation, which brings us back to anchor on Sage\u2019s own guiding principles: Be able to talk about\u00a0<\/span>and<\/em>\u00a0<\/span>create value. In the long run, shiny toys won\u2019t win. And, it\u2019s time to focus on real ROI.<\/p>\n

                I couldn\u2019t agree more, my friend.<\/p>\n

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                FOLLOW US!<\/h3>\n

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