Event: Nashville Health Care Wall Street Event?
Where: The Grand Hyatt, Nashville?
- Moderator - Sam Hazen, HCA CEO?
- Panelists - Brian Tanquilut, Jefferies LLC; Whit Mayo, Leerink Partners; Gary Taylor, TD Cowen?
Every year, the most anticipated element of the Nashville Health Care Council’s most popular Wall Street luncheon are stock predictions. Hundreds of healthcare pros fold their napkins, push back their chairs and wait for the closing moments when panelists speed -round through picks.?
If you took the panelists’ advice last year and bought UHS, McKesson and Tenet as you walked out of the event, you’d be up 12, 33 and 52 percent, respectively.?
If you’d started back in 2007 in the early days of the Wall Street event, picking CVS, CHS, Amedisys, United and HCA, among others, you’d have seen returns of 148 percent (CVS), -88 percent (CHS), 190 percent (Amedisys), 894 percent (UnitedHealth) and a measly 925 percent (HCA).?
This year, the panelists named HCA, Acadia and Surgery Partners. That marks at least the seventh time since 2007 that HCA was chosen. For comparison, UnitedHealth comes in second at four.??
While it might be a good bit of fun to have a play portfolio invested only in stocks mentioned at the event, there’s always much more to the hour-long discussion that helps focus Nashville’s massive healthcare industry on industry trends.?
The big news this year was how bullish panelists are on hospitals. Panelist Taylor said that 2023 and 2024 are the only years in the past decade that his team has recommended providers over payers.??
Here are a few quick hits our team picked up on in between bites of chicken and chocolate mousse:?
- Panelists were also bullish on ASCs and behavioral health. Not at all surprising considering the three company names listed above. Utilization of care is high, putting a bit of pressure on payers and helping hospitals. Plus, payers are having to cover more behavioral health services and pay more for those services.?
- Next was the question of: How do we merge primary and behavioral care? CMMI recently announced its plan
to do just that. And, it’s happening in some isolated practices and markets. But it hasn’t taken off industry wide, which is part of that whole “transition to value” conversation.??
- Continuing on value-based care and why it still hasn’t landed, moderator Hazen suggested that outside of payers, there’s too much fragmentation to get efficient risk-based models working well.?
- In light of those problems, Hazen asked, why is Wall Street “so enamored with retread ideas?”? Capitation and HillaryCare in the ‘90s have become value-based care in the 2000s. Panelist Tanquilut said it’s because CMS has created an unignorably huge total addressable market. Taylor added that the premise is attractive, but execution has been less than optimal. Companies have tried to scale too fast.?
- The group noted that Medicare Advantage is too big to fail at this point, but some of the issues are becoming clear. Panelist Mayo said that “health plans love passing off risk, which they can do to physician groups.” But the question for providers becomes, “Why take on risk when you can’t control the circumstances? For example, you can’t control how often a patient goes to a specialist.”?
- That trope about healthcare being around 20 percent of GDP? Mayo noted that it’s really much higher. “Probably closer to 50 percent” he said, somewhat facetiously, when taking into account all the other industries that feed into healthcare.?
When it comes to analysis and due diligence, the speakers had a few thoughts.?
- In general, stocks are often viewed in a positive or negative light based on the latest catalyst. Sure, the market tries to make sense of the big picture and put a corresponding value on it, but the reality is there isn’t always a deep reasoning behind the latest move on the price chart.?
- Asked how he analyzes businesses, Mayo said he puts a lot of his diligence into the board and leadership team. He’s looking for financial fundamentals, sure. But also, a steady culture and a disciplined leadership and governance team.?
- Taylor added that analysis is a little different in healthcare. “My colleagues on the retail side take their kid to The Gap and look at their denim line. Healthcare analysts read 1,800-page CMS reports.”?
- Taylor and Mayo said that they're big fans of Investor Day and want companies to host them more often. These days offer a great chance to peek behind the curtain, showcase non-executive talent, get into the details of resilience plans – all of which is great for the key audience of investors to understand both the short- and long-term trajectory.?
Most pointed quote (Taylor): “Payers are using AI to engage in cyber warfare against rev cycle.” Breaking the stunned silence he added, “I’ve been known for saying the quiet part out loud.”?
