ValueTracker Q4 2011
- Q4 2011
- Market Analysis
IN THIS REPORT
This quarter was marked by good, bad, and ugly developments without a logical progression or alignment with industry trends:
- The good, US unemployment rate ended 2011 at 8.5%, while still an unsettling percentage; it marks the lowest unemployment rate since Q1 2009. Daily US consumer spending rose 4.1% between Thanksgiving and Christmas, according to a survey by Gallup.
- The bad, the European debt crisis continues to shake the worldwide economy with the US seeing the effects of the bailout in the performance of the S&P500 which hit its lowest point since September 2010.
- And the ugly, the ongoing US debt crisis has created headwinds in the healthcare sector, as the congressional debt super committee threatened to cut Medicare and Medicaid rates, to help bring debt under control. Investors also were worried about the potential non-resolution on the doc-fix and its impacts to healthcare technology and services spend. Ultimately, in December, these issues largely faded as it became increasingly evident that Congress did not have the fortitude to make tough choices on entitlements and therefore, left these programs largely, if not fully, intact.
Healthcare sector M&A activity slowed a bit Q/Q, but investor interest remained relatively high Y/Y in response to transformational shifts in industry dynamics driven by competition, federal investment, and federal legislation. Despite upcoming elections and a pending Supreme Court ruling on the constitutionality of the ACA (Obamacare), the industry is moving forward with its realignment and a race to meet regulatory deadlines on Meaningful Use and Health Insurance Exchanges, among other key initiatives.
In an effort to hedge risks against potential effects of health reform, businesses are making bold moves across the healthcare landscape. Some vendors are realigning their businesses to focus on government healthcare services, reimbursement, and expanded capabilities. And, some vendors are exiting healthcare all together, realizing that success requires a full commitment of time, resources, and capabilities.
Fortunately, HHS and CMS recently announced extensions on enforcing HIPAA 5010 transaction sets, compliance with Stage 2 Meaningful Use, and implementing state established insurance exchanges. While these extensions by no means take the pressure off for healthcare constituents, the added time gives the industry a little wiggle room to comply with legislative mandates and will promote thoughtful approaches and investments.