Election Implications (Part 2): This Wall Street Analyst Agrees, “Healthcare is Hard”

With the White House and Congress up for grabs this election,
anticipation in the healthcare industry is high. Shifts in
healthcare policy will influence how care is paid for and
delivered, which will of course influence the flow of investment
dollars in both public and private markets.


During the first episode of a four-part series on election
implications, beltway insider Julie Barnes laid out potential
scenarios for the direction healthcare policy might take
depending on election outcomes. With that background, Part 2 of
the series zooms in on healthcare investing. 


For more than 20 years – and now six presidential election cycles
– Richard Close has covered the healthcare space as a Wall Street
analyst. He was one of the first analysts covering healthcare
technology and as Managing Director, Digital and Tech-Enabled
Health Equity Research at Canaccord Genuity, he focuses on
introducing the investment community to disruptive and innovative
companies that are leading the digital transformation in
healthcare. 


In this episode of Healthcare is Hard, Richard talked to Keith
Figlioli about the election and how it could impact investments
in the healthcare sector. A few of the topics they discussed
include:



Predictions on priorities. Healthcare has not been a
major focus this election cycle and Richard doesn’t believe
either candidate has shared many specifics about their plans
for health policy. But he discussed general expectations like
an increase in Medicare drug price negotiations under a Harris
Administration, or giving states more control of Medicaid under
a Trump Administration. Regardless of who takes the White
House, he sees an increasing focus on addressing employer
health costs, driven by forecasts for an 8% increase next year
– the highest jump in more than a decade.


Contrasts in public vs. private markets. Richard says
healthcare investors in public markets tend to “paint with a
broad brush” and are focused on the short-term. Because of
this, he says struggles at large-cap managed care companies in
recent years have influenced overall investor sentiment. Once
these companies get beyond current challenges and start hitting
their numbers, he believes it will open the market and drive
improved valuation for smaller and mid-cap companies. On the
other hand, Richard says investors in private markets look more
deeply into sub-sectors and are placing bets for the long
run. 


Optimism for health tech. With healthcare accounting for
20% of the economy and continuing to grow, Richard sees
technology as a primary lever to help bend the cost curve. He’s
optimistic about the future opportunity for investors in both
public and private markets, and sees an opportunity for the IPO
window to potentially open up after the election. He says there
are a handful of companies that are profitable and have been
growing revenue that may be ready to test the IPO market in
2025.



To hear Richard and Keith discuss these topics and more, listen
to this episode of Healthcare is Hard: A Podcast for Insiders.