Good signs? Tell me more

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01/05/2018

The print issues of HME News are on their way to your mailboxes (if not already there), but I wanted to call your attention to page 22. Here you will find, as you do every month, The Braff Group M&A Insider. This graph and accompanying analysis are always interesting, but I found this most recent graph and accompany analysis of particular interest.

The two key takeaways from the The Braff Group’s latest contribution: 1.) M&A activity for the HME industry in the third quarter topped out at 18 transactions, its highest output since the second quarter of 2014; and 2.) that activity spanned multiple product categories (really, just respiratory and complex rehab, but in the past it has been more focused on niches like home infusion or supplies).

M&A activity has long been a harbinger of the health of the HME industry, especially when equity investors are involved (which they were in the third quarter), so this is a good sign. “You might even characterize the climate as robust,” The Braff Group said in its analysis.

Now that Medicare’s competitive bidding pricing has gone nationwide, “there is little room for substantial additional cuts,” The Braff Group points out.

Well, for Medicare, anyway. We all know eyes have turned to Medicaid (which is in the ugly position of having to implement a provision from the 21st Century Cures Act that essentially gives it no choice but to adopt bid-influenced Medicare pricing) and managed care organizations (which are ginning up their own cost-reduction schemes in the form of preferred partnerships with large distributors, or just run-of-the-mill*, across-the-board reimbursement cuts).

But as much as everyone talks about payer diversification and cash retail, Medicare is still the biggest game in town for a large number of providers, so let’s focus on this “good sign,” shall we?

Speaking of M&A, Managing Editor Theresa Flaherty caught up with the latest hire at Vertess, Eric Hymes, for our upcoming February issue. Hymes brought up another reason why M&A activity, even for HME, might be more free-flowing in the year ahead.

“They slashed the levy that companies are paying on repatriated earnings, so there’s going to be a movement of cash back to the U.S. I think it’s going to trigger a buying spree and we are going to see that in the healthcare segment.”

These days, I’ll take good signs where I can get them.
 

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