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Healthcare Industry Optimistic Despite Challenges, GE Capital Survey

January 19, 2015, 06:57 AM
Filed Under: Healthcare

While they acknowledge the challenges facing them, healthcare industry leaders in the U.S. are less concerned about healthcare reform and regulatory oversight than they were one year ago, according to a survey conducted by GE Capital’s Healthcare Financial Services business. Overall, they’re optimistic about the future and are relying on a combination of mergers and acquisitions and organic growth to expand.

Forty-three percent of respondents said implementing the Affordable Care Act (ACA) is the greatest challenge facing the healthcare industry in 2015. The second-greatest challenge cited was regulatory oversight, selected by 30 percent. The U.S. economy came in third at 17 percent. Last year, 57 percent of respondents to a similar GE Capital survey said that ACA implementation was their greatest challenge, followed by regulatory oversight (20 percent) and the U.S. economy (13 percent).

More than two-thirds (68 percent) of respondents said they expect their business to perform more strongly in 2015 than in 2014. Less than one-third (29 percent) said that it would perform the same and only three percent said that it would be weaker this year.

“We agree with the optimism shown by our customers and other healthcare industry leaders about 2015. Though less than last year, implementation of the ACA is still top of mind across the industry,” said Al Aria, senior managing director of GE Capital, Healthcare Financial Services’ corporate finance team. “We look forward to supporting customers as they adapt and grow amidst the changing healthcare landscape.”

GE Capital conducted the survey shortly before the large gathering of healthcare professionals in San Francisco (which coincides with J.P. Morgan’s Annual Healthcare Conference, which is being held Jan. 12-15). Respondents were asked about their industry and company outlook for 2015. They included 521 senior executives from healthcare companies representing pharmaceuticals, healthcare IT and medical technology companies, hospitals, healthcare service providers and health systems, as well as other industry participants.

Additional findings from the survey:

Growth Strategies

The two most popular growth strategies cited by healthcare industry leaders were revitalizing and upgrading existing offerings (38 percent), and buying or merging with existing businesses (37 percent). Only 25 percent are planning to launch new segments or lines of business in 2015.

Corporate Financing

When asked about their expected capital needs in 2015, 67 percent of survey respondents said they expect them to remain about the same, while 27 percent said they would be significantly higher.

ACA Alterations

The C-suite is divided on the question of whether there will be changes to the ACA. Forty-three percent said they expect moderate changes and 41 percent expect insignificant changes.

Healthcare Costs

Most company leaders who were surveyed (64 percent) said their own employee healthcare costs will be slightly higher in 2015, while 22 percent said they’ll be significantly higher.

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