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CIT: Middle-Market Healthcare Execs Expect Growth Through Acquisitions, Investment

May 20, 2013, 03:23 PM
Filed Under: Healthcare

Middle market-healthcare executives are focused on growing their businesses through acquisitions and investment, despite views of overregulation, a tepid economy and a major decline in approval of the Affordable Care Act, according to an exclusive study released today by CIT Group Inc. The report, “U.S. Healthcare Outlook: Strong Performance Amid Healthy Capital Investment," includes responses from more than 300 senior middle market executives in the healthcare industry. The study was conducted by Forbes Insights on behalf of CIT.

“This study provides critical insight into the minds of middle market healthcare executives and their focus on growing their businesses,” said Steve Warden, president of CIT Corporate Finance, Healthcare. “Nearly a third of respondents indicated that acquisitions will be an important part of their growth strategy, with an equal amount expecting to increase spending this year. And while there is an intense feeling of overregulation, healthcare executives remain confident of their future growth potential.”

Key Findings from the Study:

  • Industry Focused on M&A and Financing: Roughly a third of healthcare executives say acquisitions will be an important (24%) or very important (8%) component of their strategy over the next year. Interest in M&A increases dramatically (59%) among medical device-related executives: 46% describe the strategy as important and 13% as very important.
  • Committed to Growth Through Investment: Nearly a third of respondents anticipate seeking financing of a significant nature in the next year. Here, the most frequently cited purposes include acquiring or implementing new technologies/patents/licenses (39%), increasing working capital (31%) and investing in a new plant and equipment (28%).
  • Support for the Affordable Care Act (ACA) Declines: In a sound reversal, the industry – on net – no longer favors the Affordable Care Act. In the spring 2009 iteration of this study, those in favor of healthcare reform outnumbered those opposed by a nearly 2-to-1 margin. In the 2013 study, support has dissipated, with 37% now opposing ACA, whereas 31% favor it and 32% are uncertain.
  • Some Positive Components of ACA. However, certain segments of the industry, such as healthcare IT providers and hospital medical centers, favor ACA. Pluralities also see benefit in ACA-induced Medicaid expansion, health insurance exchanges and reductions in the number of uninsured.
  • Overregulation Is a Significant Concern: Three out of five executives believe that their segment of the healthcare industry is overregulated. A nearly identical number (59%) say that overregulation exacts downward pressure on their performance.
  • Despite Overregulation, Executives Foresee Growth: More than half (54%) of healthcare executives have seen revenues increase in the past 18 months. More than half (52%) expect their revenues to grow in the coming year. Meanwhile, 28% expect “no change,” while just one in five (20%) anticipate revenue declines.
  • Prominent Healthcare Megatrends Are Fueling Strong Performance: The most frequently cited factors that are having the greatest impact on revenue are advances in technology (65%), which have led to expanded treatment options and improved efficiencies, and the aging population (65%), which has led to an increased demand for services.

Complimentary copies of the report can be downloaded here.

The study, which was conducted in March 2013, included insight from more than 340 middle market healthcare industry executives from companies with annual revenue between $25 million and $1 billion. Industries within the healthcare sector include skilled nursing, biotech/pharmaceutical, hospitals/medical centers, physician services, private practice, healthcare technology and medical devices.

Forbes Insights is the strategic research and Thought Leadership practice of Forbes Media, publisher of Forbes magazine and, whose combined media properties reach nearly 50 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights conducts research on a host of topics of interest to C-level executives, senior marketing professionals, small business owners and those who aspire to positions of leadership, as well as providing deep insights into issues and trends surrounding wealth creation and wealth management.

Founded in 1908, CIT is a bank holding company with more than $35 billion in financing and leasing assets. It provides financing and leasing capital and advisory services to its clients and their customers across more than 30 industries.

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