Will the troubles of Obamacare upend the robust growth that we have been experiencing in services in the healthcare space? It’s an interesting question, given that Obamacare’s march toward the looming January 1, 2014, launch date resembles a complicated traffic snarl with a lot of cars wrecked and not drivable.
Let’s look at the situation from three perspectives.
First, there is a possible so-called “nuclear option” in which Congress would repeal the Affordable Care Act, better known as Obamacare. The fact is the underlying reforms necessary for healthcare providers (hospitals, physicians) and payers will further churn an uncertain market and drive more change into the market. So the impact from Obamacare would be even more growth for the services businesses.
Second, it is highly unlikely that the healthcare industry’s new commitment to evidenced-based medicine and data-driven health plans will diminish. Although the business models and supporting processes may eventually take a different form, the commitment of both industry and government for the underlying changes will continue whether or not the government implements Obamacare. Again, the massive industry-wide changes will drive growth for service providers.
A third perspective involves the life sciences space. Here the industry is at the brink of a patent cliff with patents expiring on blockbuster drugs. This dilemma will cause life sciences companies to either restructure to accommodate a lower revenue base or to change their business models. As the patent expirations will continue unabated, the need for services providers to support business change will continue without regard to what happens with Obamacare.
So we believe it’s clear that Obamacare has a strong pulse and is no lightweight when it comes to impacting the healthcare services; it may actually provide a big bounce to services providers’ revenue.
Despite the bumpy, uncertain road Obamacare is traveling on, its failure or success will not change the trajectory of the growth in the healthcare services industry. The necessary changes to business processes and models in the healthcare provider and payer space will continue under any scenario that happens with Obamacare.