The Sleepy Healthcare Industry Is No Longer

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The Sleepy Healthcare Industry Is No Longer

Aug 13, 2015 · Posted by David Karabinos

Healthcare IndustryI recently ran across an insightful Health IT midyear 2015 market review by Healthcare Growth Partners, a well respected investment bank out of Chicago.

At PointClear we constantly scour the landscape for fresh intelligence on HIT Product and Health Information Service companies. As clients, our goal is to help these companies innovate, scale and achieve exceptional market share. Some have even found their way through the IPO window, while many are on their way. A few have become unicorns by growing to billion dollar enterprises while continuing to attract massive amounts of capital which allows them to delay becoming a public company and all that entails.

This HGP report in particular does a nifty job of linking the HIT IPO market to the public policy, regulatory and investor dynamics shaping healthcare and the global product roadmap of the HIT industry writ large. This public HIT group has grown over 600% in the last 7.5 years with a collective enterprise value $87.3 billion which is plenty stout. But it’s still an expanding universe at an accelerating clip.

Here’s why.

“For healthcare reform to be effective, it cannot be a zero sum game. To reduce the 17.4% of GDP and $2.9 trillion spend on healthcare, certain incumbent stakeholders, must give up more revenue or profit than that gained by disruptors. Disruptive markets, such as Health IT, expand at the expense of traditional models. As such, incumbents are making a significant investment in Health IT to prepare for and defend against this transformation”. The emerging army of new entry disruptors are spending like hell so the incumbents now realize they must ramp up R&D for new product….all to accommodate the chaos created by the the Affordable Care and HiTech Acts.

People ask me all the time, “what has the impact of Obamacare had on the HIT industry and your business”? My elevator response has been, “it has created chaos in the business models of the pillars of healthcare, provides and payers in particular. That chaos has unleashed fear and the competitive juices of the players (small, medium and large) in Health IT.” The quote above from the HGP report pretty much substantiates my claim. Recall that Andy Grove of Intel fame penned his book Only the Paranoid Survive for a reason. Well, the sleepy healthcare industry is no longer.

In addition to the HIT IPO trends, the report is chalk full of useful content related to M&A and investment activity through 1H2015. It’s a good read so I highly recommend it.

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