Despite the distractions of an election year and the Supreme Court review of the Affordable Care Act, healthcare companies and providers are looking beyond immediate issues as they seek to offset the recent decline in healthcare spending, says Moody's in its latest Healthcare Quarterly.
"Both government and private industry are seeking ways to curb healthcare spending, which will pressure reimbursements to healthcare providers, as well as reducing spending on drugs and medical devices," said Peter Abdill, a Moody's Managing Director, in a press release.
Moody's new report examines how life sciences and pharmaceutical companies, insurers, for-profit and non-profit hospitals, medical device manufacturers and real estate investment trusts (REITs) are planning to deal with upcoming shifts in the industry.
Pharmaceutical manufacturers are shying away from blockbuster sales models of the past and instead focusing on innovative, high-value products in specialty disease areas, says Moody's.
Moody's expects robust acquisition activity among the for-profit hospital operators as management teams seek to increase scale and efficiency. Non-profit hospitals will also focus on gaining efficiencies and building scale, particularly through improved information technology, says the report.
Insurers, on the other hand are looking to improve behavior by providers and patients, including bonus payments for improved care quality and patient satisfaction scores. Insurers hope that behavioral change will lead to greater cost-savings, says Moody's.
Manufacturers will need to ensure that their products are cost-effective as hospital administrators become increasingly involved in purchasing decisions - traditionally left to medical personnel.
Shrinking reimbursements may impact rent payments for REITs, although rate cuts would need to be significant before operators reduced paying rents, notes the report.
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