Opportunity Themes

September 1, 2016

Dominant longer-term investment themes for healthcare
investors will be true innovation or cost-control.
Successful business models will increasingly offer a
differentiated ability to either 1) deliver clinically superior
outcomes or 2) take costs out of the system. The market
will continue to reward true innovation, though the financing of
the innovation pathways will be more challenging in a belt
tightening environment.


On the cost side, focus will rise on improving care efficiency
and on incentive realignment in two fundamental ways.
First, we will see a migration away from fee-for-service
reimbursement toward quality-based payment and, second,
we expect a continued ownership shift of care costs onto
consumers. Relative pricing power could mitigate these dynamics,
though pricing power without a demonstrable clinical or cost
advantage may erode more quickly than many appreciate.

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