Newsletter: 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.
Five Trends Shaping Healthcare Markets: Insights from Cain Brothers’ 13th Annual Private Company Healthcare Conference
More than 600 senior leaders from private equity, public equity, venture capital and private healthcare companies gathered October 14 and 15 at Cain Brothers’ 13th Annual Private Company Healthcare Conference at the Lotte New York Palace. As KeyBanc Capital Markets President Randy Paine noted, “If anything is happening anywhere across the healthcare ecosystem, it’s getting talked about here.”
From those conversations, we noted five trends shaping healthcare markets.
1. Get ready for divided government and incremental policy moves
The midterms loom. Polls and prediction markets are pointing to a Democratic House and a Senate that’s too close to call. Some likely outcomes for healthcare: the One Big Beautiful Bill will remain intact, reform to the No Surprises Act has a chance of bipartisan support, Medicare Advantage will continue to experience choppy waters, and the Administration’s anti-fraud agenda will kick into another gear. Markets like divided government, but Andrew McKechnie, partner at Tiber Creek Group, sees more “table-setting” than policymaking in the two years leading up to 2028.
2. Math and demographics will drive bigger policy changes than politics
Exacerbated by COVID-era deficit spending and higher interest rates, net interest on the federal debt now exceeds federal spending on Medicare. At the same time, the federal budget is under mounting pressure with a growing senior population, a declining birth rate, and reduced immigration. “The math coming at these giant federal transfer programs is not sustainable, and there will be a reckoning,” observed Brian Blase, president of Paragon Health Institute. When? Possibly sooner than expected.
3. AI is moving from point solutions to platforms
Healthcare faces what Innovaccer’s Co-founder, President, and COO Sandy Gupta called “a tsunami of hundreds of thousands of AI agents” across every conceivable use case. But organizations that build their own data layer first will make better use of the applications they plug in later. Most administrative processes could become fully autonomous, but clinical care will likely remain human-led even with growing AI support.
4. Consumerism is becoming a real competitive differentiator
Consumerism has been a buzzword in healthcare for years. But several private companies presenting this year, including Clever Care Health Plan and Unified Women’s Healthcare, attributed their growth, financial performance and clinical outcomes to success engaging members and patients. They develop and scale their offerings based on deep knowledge of the customer.
5. Affordability is now the market’s problem to solve
Rising healthcare costs are causing real pain for all stakeholders. But relief won’t come from Washington. As Capitol Street’s Founder and Managing Director Ipsita Smolinski noted, “The government does not have the answers.” That makes affordability a market opportunity – and one where AI can make a transformative difference across a range of areas, such as enabling informed choices, stripping costs from administrative processes, improving health outcomes, and steering patients to lower cost care.
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