SCALE Report

SCALE Healthcare 2021 Predictions

Plenty of residual headwinds in 2021

Weakened healthcare company balance sheets across the board
More patient disruption in 2021 as virus continues to flare up
More operational disruption as “what is safe” continues to involve new standards of care
Making sense of 2020? We will have time in 2021 to revisit lessons learned and changes that need to be made henceforth
Anticipate lingering confusion as to the effectiveness of the vaccine against mutations
Pent up demand – The US Census Bureau “Pulse Survey” (weekly survey of 1 million people) still pegs the number of people “delaying care” at around 35% across the country. In 2021, there should be a lot more patients looking to move forward on a wide variety of electives as well as a higher number of urgent procedures due to preventative care and/or delays.
Healthcare tied to national security – what new regulations, reporting requirements and precautionary protocols will be implemented? What will be the resulting cost and administrative burden of any such measures?

Public media attention slowly but noticeably returns to the question of PE in healthcare

PE backed platforms continue to grow in scale primarily through acquisitions – founding platforms from the investment wave over the past several years are increasingly moving across state lines
Outsized returns continue to generally drive home the message that PE can add real value in the healthcare services segment
The question will be whether the valuations paid over the past 12-36 months were proven right or not
The failed or under-whelming investments will further drive home the message that more expertise is required beyond the standard playbook of finding the right CEO and independent board advisors
Continuation of the broken auctions as ‘not ready for primetime’ platforms continue try to sell themselves in a frothy market
PE backed platforms that are unable to meet debt covenants ultimately ab- sorbed by their lenders
Growing list of publicly traded platforms brings an increased level of attention and performance transparency to the market