Cain Brothers Newsletters: Industry Insights
“Industry Insights” is a bi-weekly email newsletter published by Cain Brothers, a division of KeyBanc Capital Markets. The newsletter features innovative and original perspectives about healthcare services, healthcare IT, and life sciences from our team of experienced investment bankers. Read the latest newsletter content below, and subscribe to start receiving the newsletter in your inbox.
Innovation and Expertise at Cain Brothers 2024 Private Company Healthcare Conference
Cain Brothers, a division of KeyBanc Capital Markets, convened its 11th Annual Private Company Healthcare Conference In October at the New York Lotte Palace Hotel. The conference featured:
- More than 500 top leaders from healthcare companies, private equity, venture capital, and healthcare-related corporations
- 54 participating companies, spanning nearly all sectors of the healthcare economy, reflecting the breadth and depth of Cain Brothers’ industry coverage and relationships
- Two keynote panel presentations on urgent industry topics
- Over 600 one-on-one investor meetings with company leaders
In his opening remarks, the head of Cain Brothers, Wyatt Ritchie, observed that when the firm was founded 42 years ago, most investment banking firms were generalists, but Jim and Dan Cain believed that exclusive coverage of a single industry would yield better advice and counsel. Today, as we exit a period of cheap capital, success in healthcare markets requires the kind of expertise, perspective, and relationships that such specialization brings. Cain Brothers is uniquely positioned to advise companies, organizations, and investors looking to create a more efficient industry that meets the difficult challenges and issues of our era.
One of those challenges is runaway costs across the system as a whole and for consumers in particular. As The Wall Street Journal recently reported, employer health insurance costs have risen 7% for the second year in a row, an unprecedented rate that has added more than $3,000 to average family premiums, which now amount to around $25,500 per year. As private equity panelist Anna Haghgooie offered a few minutes later, “We’re close to the tipping point. Every family is buying a small car each year and getting no value for it as they pay their insurance premiums.” Such issues were top of mind in two stimulating panel discussions that brought together attendees and thought leaders.
Restoring the Roar: Private Equity’s Insights on the Recovering M&A Markets and Unique Investment Perspectives for 2025
As Ritchie noted, private equity has been blasted recently for driving up costs rather than generating efficiencies. Industry reports such as Avalere’s recent review of physician-driven Medicare expenditures indicate that such criticisms may be simplistic. Data-driven perspectives are needed to capture the impact of private equity’s longer-term investment horizon.
The first panel sought to provide that reasoned view. Featuring Anna Haghgooie, Managing Director at Valtruis and Operating Partner at Welsh, Carson, Anderson & Stowe; Ben Edmands, Managing Director and Co-Founder at Consonance Capital; Jeff Abramoff, Partner at Court Street Capital Partners; and facilitated by Cain Brothers Managing Director Matt Margulies, the discussion spanned a range of important themes including:
- Progress and challenges in value-based care
- PBM and pharmacy market dynamics
- Opportunities in pediatric home health
- Challenges in provider investments
- Stakeholders driving change including employers, consumers, and Medicare Advantage competition
In speaking about what makes a provider business investable today, Edmands described the shifting focus away from simple rollups that expand scale and infrastructure to “models that are using technology, integration, and innovation to actually deliver better outcomes and drive efficiencies.”
Abramoff agreed that the days of expecting multiple arbitrage are gone. Today, integration must go beyond the table stakes of centralizing back offices and building a brand. Instead, “What can we do once we have one platform, what can we do with the data, what can we do with the doctors themselves to improve their practice?”
Haghgooie added that providers need “models to get past encounter-based reimbursement because then you have the flexibility to use technology to bring down the cost curve and create a path to contracting differently.”
Disruptive Healthcare Purchasing by Self-Insured Employers
The conference ended with a panel on opportunities in the self-insured employer market, featuring the leaders of two innovative companies, Donald Trigg, CEO of apree health, and Glenn Tullman, CEO of Transcarent. The discussion was facilitated by Cain Brothers’ thought-leadership partner Dave Johnson, CEO of 4sight Health, whose new book with Paul Kusserow, "The Coming Healthcare Revolution: 10 Forces that Will Cure America’s Health Crisis," features both companies as case studies.
As Johnson noted in his introduction of Trigg and Tullman, self-insured employers have long paid a premium for commodity healthcare services without receiving premium value. Apree and Transcarent are working in different ways to improve the experience and cost of health care.
Tullman described the challenge bluntly: “Employers have simply run out of money and patients can’t pay more. Starbucks spends more on health care than they do buying coffee.” Moreover, consumers across all demographics, regions, and political views see health care as more confusing and complex than ever. Transcarent’s solution is to empower consumers with a smartphone-based platform and an AI “wayfinding” interface that dramatically enhance ease of access to a suite of services while simplifying the employer’s ability to provide coverage and pay for care.
Trigg agreed that the dearth of innovation in the commercial insurance market has created opportunities for new business models to meet the cost and consumer service needs of employers and health plans. Apree was formed by combining Vera Whole Health, an advanced primary care business, with Castlight Health, a digital care navigation platform. As Trigg described it, the approach was validated by two early clients who also participated in the firm’s cap table. “Elevance was our anchor client on the payer side and J.P. Morgan was our core client on the employer side. We started with J.P. Morgan in their Columbus market with 38,000 lives. After we built out and deployed the product suite at a market level, we started to think about what it would be like to do this on a multi-market basis.”
Both Transcarent and apree are gaining significant traction with employers and consumers, proving that markets will reward diverse approaches that meet the need for value.
It was a powerful discussion to end another edition of the healthcare industry’s premier private company healthcare conference.
Keith Hollihan is Editorial Director at 4sight Health.
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