Volume 7 Issue 15, August 4, 2020
How is the COVID-19 pandemic going to affect healthcare businesses in the short and long term? We asked leaders from several companies to share their responses to this question, which are below. Following these responses, David Coit of VERTESS shares his thoughts about how the health crisis is affecting healthcare business valuation.
Note: Responses from business leaders are arranged in alphabetical order by company name and have received minor editing for clarity.
"The most significant impact of COVID-19 on Dialog Health is that our clients now have an even greater appreciation that we are in a "mobile-first" world. The health crisis has forced healthcare organizations and other types of businesses to reassess their communication strategies, resources allocation, and workflows in response to the challenges presented by stay-at-home orders, social distancing, and the ever-present risks associated with the novel coronavirus. For many, this has meant that conversational, two-way texting has essentially become a required enterprise communication tool. Texting is such a mainstay in the lives of most American adults. Businesses are realizing that they must also embrace the channel — be it for employee, patient, family member, vendor, or any other stakeholder engagement.
As a result, we expect to see a continued increase in demand for our two-way texting platform, with organizations initially adding it to provide mass COVID-19-related updates but then exploring how text messaging can assist them with ongoing operational needs. With the usage of smartphones and texting showing no signs of slowing down, we anticipate the demand for a service like the one we provide will continue to grow even after the worst of the pandemic is behind us."
"I expect the coming months will mirror what we're experiencing now: being exceptionally busy with requests for various services related to management of the pandemic. While ICCS primarily focuses on providing infection prevention and control services to healthcare facilities, we recently launched a dedicated division to support non-healthcare businesses as they also work to navigate the health crisis. I believe both divisions will remain highly active, with increased outreach coming from organizations and businesses in those areas experiencing surges in COVID-19 cases and in the early phases of reopening. ICCS is expanding its team of professionals in anticipation of an ongoing demand for services as COVID-19 is expected to remain in the community for an extended period.
While demand for services may slow a bit following the pandemic, the heightened attention on proper infection prevention practices — from regulators, accreditation agencies, and patients/consumers — should keep demand for services from epidemiologists trained in infection prevention high."
“We can now further demonstrate the value of shared living (or host homes). Through the pandemic, this model has caused the least disruption with the most natural, safe supports for the individuals we support. I think more and more people will embrace this model.”
" COVID-19 has further demonstrated the importance of information technology in helping ensure quality, safety, and compliance and the value that a managed services provider (MSP) plays in supporting healthcare practices in the delivery of patient care. In the coming year, we expect much of our focus — beyond typical day-to-day services — will be on continuing to help healthcare practices, ambulatory surgery centers, and other types of organizations respond to COVID-19-related challenges and take advantage of new opportunities. These include adding telehealth; transitioning to cloud computing, in part to better support staff who work remotely; implementing employee and patient screening solutions; and strengthening security posture.
In the longer term, we believe healthcare providers will continue to embrace IT as the backbone for their operations. As practices expand their usage and reliance on technology, we expect an increased demand for the support services that MSPs like ours provide. We anticipate telehealth to continue growing and more organizations to embrace cloud technologies. We also see the likes of analytics, artificial intelligence, big data, and machine learning playing a bigger role in driving clinical, financial, and operational decisions, so we are strengthening our ability to support these and other cutting-edge solutions."
"We built Optio Rx to be a long-term, sustainable, and successful specialty pharmacy company. Understanding that specialty pharmacy markets trend differently in different markets and not in the same direction all the time, we attempted to de-risk participation in numerous markets by combining the beta risks of each.
Therefore, in a COVID-19 environment, we expect more "lurching" to and fro. However, we expect that we will be able to equal last year's performance by taking advantage of markets surging while managing costs and expectations on markets that rely on behavior changes by writers that are lagging."
"Due to COVID-19, hospital budgets are challenged, so we're being mindful of their new environments. The pandemic has accentuated our need to create hard-dollar reduction in their drug budget and help them spend less time managing key operations in light of personnel reductions. We expect the next 12 months will reveal that nearly every health system is looking closely at improving the cost of their operation to a significant degree. That is one of the benefits of using a solution like ours, which is why we anticipate continued and growing interest in the OrbitalRX drug shortage management platform.
This period feels similar to the enhanced scrutiny and budget restrictions of 2008. A key difference now seems to be a focus on sustained efficiency. COVID-19 has revealed how easy it is for our health system to be significantly impacted by durable increase in work effort and operational costs from a single cause. Drawing upon 15 years of experience as a health system pharmacy leader and work as an entrepreneur, I believe the winners in this environment will be those health system leadership teams that can effectively leverage automation and technology to identify and reduce operational waste and inefficiency. The return on these technologies will be significant, and technology startups and established vendors must make good on their promise to deliver this value. We are working to hold up our end of this relationship, which we believe will help position our company for sustained success over the long term."
"COVID-19 has brought both challenges and opportunities to digital health companies like Prevounce. In the first days of the crisis, revenue dropped by almost 30% as many medical practices closed or limited their services. At that time, we had to move all of our sales from boots-on-the-ground to remote work and internet marketing. Soon after, the wave of interest in telehealth and remote patient monitoring quadrupled the amount of organic interest in our platform, pushing us to expand our remote sales and support team significantly.
There are many unknowns right now that will affect our company: continued telehealth adoption, the expiry of the emergency health waivers, supply chain issues, pending state and federal legislation, and Medicare and insurance regulation changes, to name a few. A lot of focus has gone into keeping our operations and technology flexible as we expand so that we can quickly respond to major changes in the industry and regulatory landscape. We also have had to start expanding vertically. That being said, we expect at least a significant proportion of the telehealth demand to continue, which should let us continue to grow and offer our remote patient monitoring and wellness services to more healthcare organizations as the crisis (hopefully) winds down."
"COVID-19 has put an incredible strain on businesses in every industry. That is no different in our industry, especially concerning sleep studies, whether performed remotely or in house, as our clients largely deferred their studies. However, as the pandemic has plateaued, we have found that this business is not lost, only delayed. Those that put off sleep studies are now coming back, and we are seeing a dramatic uptick. There have been positive outcomes, such as non-invasive ventilation (NIV) being removed by CMS from the current round of DMEPOS competitive bidding. There have also been negatives, such as possible supply chain shortages due to the government stockpiling ventilators.
Our market has already seen increased consolidation because growing regulatory requirements make it difficult for small businesses to compete. When the world returns back to normal (i.e., a "new normal"), the financial burden from the virus placed on many of these businesses will only increase the trend of merger and acquisition activity."
"The COVID-19 pandemic has not impacted Wellspect U.S. organizations' sales negatively at all. If anything, it has proven that our product continues to be clinically valuable to healthcare professionals and our end-users, even in times where we are not able to be out and about. The experience has made us think about how we can continue to provide value to our markets and caused us to think differently about how we approach those markets. But that is something we all should be doing anyway."
"I am always optimistic, and COVID-19 did nothing to change that. As Americans and New Yorkers, we did what we had to do. As a member of the healthcare ecosystem, we used all our resources, technology, and energy to keep the ball rolling and protect the people we care for and care about. In some ways, we were the lucky ones. Not everyone was able to do that. Some lost their job or business temporarily and some never went back to work.
My greatest concern is losing the opportunity to collaborate on a face-to-face basis. Nothing serves the healthcare industry better than collaboration between all sectors to reduce waste and streamline services. Working together increases your company's valuation and offerings. Fortunately for us, our sector demands us to be fully digitized, which we were, resulting in a greater demand for our offerings."
As a certified valuation analyst, I am inundated with industry experts' opinions on the impact of COVID-19 on the valuation of businesses. The critical takeaway of numerous opinions is that this health crisis is creating and will continue to create uncertainty. Uncertainty means an increase in the riskiness of those companies impacted by the virus. Increased riskiness decreases company valuations.
For their evaluation of company risk, business valuators are increasingly seeking answers to the following questions:
Although there are undoubtedly additional questions to be asked of business owners, the point I'm making is that business valuators, investors, and lenders want to know what company owners are doing to decrease the riskiness of their enterprises. Any actions that company owners take to reduce uncertainty and volatility (i.e., riskiness) of their operations will increase the value of their companies.
In her role as Director of Marketing and Operations, Vaughne oversees and implements marketing and client development programs, both short-term and long-range, as well as directs all areas of VERTESS' expanding operations. She is a Certified Merger & Acquisition Advisor (CM&AA). Before joining VERTESS, she had extensive consultation experience in healthcare and international business. She coordinated and executed healthcare-related contracts for the Department of Defense TRICARE Management Activity, as well as developed and implemented technical projects associated with HIPAA. Her background also includes international study in Japan where she became fluent in written and spoken Japanese and graduated with honors with a dual Master’s degree in International Relations from American University and Ritsumeikan University. Vaughne's unique background provides the versatility and sensitivity required for helping clients successfully maneuver through the intricacies of the M+A process.