Middle market healthcare executives favor the Obama administration's proposed healthcare reform initiatives by a nearly 2-to-1 margin, according to a study by the CIT Group.
Many believe the reform initiatives will be good for business and have a positive impact on their operations.
The research report, "U.S. Middle Market Outlook 2009: Resiliency in the Healthcare Sector," claims that healthcare companies are more immune than other industries to the effects of the global recession and in fact see growth opportunities in the current environment.
Forbes Insights conducted the study for the CIT Group, which is a provider of financing and advisory services to the middle market.
"Middle market healthcare executives are optimistic about the positive impact that the Obama administration's proposed plans for healthcare reform will have on their businesses," said Margaret Au Brown, president and co-head of CIT Healthcare. "While other industries have decreased borrowing activity, our middle market healthcare clients continue to borrow at a steady pace as they prepare for the costs associated with these healthcare reform initiatives."
The study includes the following:
- 60 percent of middle market healthcare executives expect revenue growth over the next 12 months.
- 43 percent expect their workforce to grow over the next 12 months.
- 82 percent see their capital expenditures as stable or rising.
Compared to a study of their peers from a variety of industries three months earlier, healthcare executives are more optimistic about their sector, but less optimistic about the near-term recovery of the U.S. economy.
The study is based on the responses of more than 100 senior-level financial decision makers at U.S. middle market healthcare companies (those with annual revenues of between $25 million and $1 billion). It highlights how these executives are managing the current economic crisis and also reveals their outlook for the remainder of 2009.
"As a counter-cyclical sector, many healthcare companies are poised to take advantage of opportunities in the current market downturn," said Steven N. Warden, president and co-head of CIT Healthcare. "Middle market executives recognize the troubling economy, but despite this, more than half of them have seen their businesses grow or remain the same over the past year. In fact, many expect a similar trend in the coming year, as they place a greater focus on operating efficiencies and new investment in capital and equipment."
Middle market companies account for more than $6 trillion in sales and employ almost 32 million Americans, according to the 2002 U.S. Census.
Some detailed findings from the study include:
- Strong support for Obama healthcare reform. By a nearly 2-to-1 ratio, 56 percent of executives overall and 67 percent of executives from hospitals/medical centers said they are in favor of reform "in general." For many healthcare businesses, areas of reform may present new opportunities for growth.
- Electronic health records and preventive care are good for business. Of study respondents, 70 percent expect the increased use of electronic health records to have a positive impact on their business. In addition, 67 percent of middle market healthcare executives expect their businesses to benefit from reform proposals that place greater focus on preventive care.
- Resilience against effects of the recession and positive outlook on the future. While middle market healthcare executives acknowledge the troubling economy, they have been able to weather the storm and grow their companies during these difficult times. Over the past 12 months, 64 percent of middle market healthcare executives saw their revenues either grow (49 percent) or grow significantly (15 percent), and executives continue to see additional opportunities for growth in the future. During the next 12 months, 60 percent of middle market healthcare executives expect their revenues to either grow (48 percent) or grow significantly (12 percent).
- Investing for future growth. While other industries have been tightening their purse strings, middle market healthcare companies continue to invest in their businesses. Forty-two percent of executives expect their company's capital expenditures to increase (38 percent) or increase significantly (4 percent) in the coming year, while 40 percent expect these investments to remain the same. Of the healthcare companies surveyed, 51 percent indicated they will primarily be investing in new technology (27 percent) and acquisitions (24 percent).
- Active job market. Other industries may be reducing their workforces during the downturn, but healthcare companies are still hiring. Forty-three percent of respondents said they expect the size of their workforce to grow over the next 12 months, and 41 percent expect it to remain the same.
- Less optimistic about economic recovery in 2009. While healthcare executives are highly confident of their own industry, their views on the near-term recovery of the U.S. economy are less optimistic. Only 54 percent see the financial crisis bottoming out in 2009, while 63 percent see the financial markets turning around in 2010. These results are indicative of recent market events and in contrast to CIT's earlier study results, in which 80 percent of middle market executives from a variety of industries said they expected the crisis to bottom out in 2009 and 46 percent saw the financial market turnaround occurring within the year.