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Trump Administration’s Impact on Health IT Analyzed in New Report

April 12, 2017
by Rajiv Leventhal
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Most healthcare professionals do not believe that the Affordable Care Act (ACA) will be repealed anymore, but plenty of policy and health IT-related challenges exist in healthcare sub-sectors as industry leaders wait for more direction from the Trump administration.

This was a core conclusion of the 2017 Healthcare Prognosis survey from capital venture firm Venrock, which interviewed a few hundred healthcare executives on the impact of the Trump administration on the ACA, how various healthcare IT subsectors will fare going forward and valuation sentiments, amongst other topics.

The report revealed that accountable care organizations (ACOs) and insurance startups face the most uncertainty under Trump, with 66 percent and 62 percent of respondents respectively noting that these sub-sectors will be the most challenged. Meanwhile, telemedicine and wearables are expected to continue their efforts unscathed. Analytics and big data is expected to see the most growth, with 45 percent of respondents noting that they think this sub-sector will keep pushing forward without issue.

While about a third of the survey respondents said that economic uncertainty and potential regulatory changes are each big concerns, most (60 percent) do believe that the number of new healthcare IT companies will continue to increase over the next couple years. Just 17 percent reported that they think the number of companies created in this space will decrease. Most respondents (78 percent) also said they think that electronic health record (EHR) companies will ramp-up their M&A efforts to create new revenue streams.

To this end, 87 percent said there will be increased consolidation among health IT venture-backed startups. As far as the future for hospital consolidation, 53 percent said they expect the pace of consolidation to speed up before MACRA (the Medicare Access and CHIP Reauthorization Act of 2015) fully goes into effect. MACRA’s first reporting year started in January, though eligible Medicare clinicians are permitted to treat 2017 as a “transition year” as they get their feet wet in the program, according to federal officials who designed MACRA’s Quality Payment Program. On the other hand, 32 percent expect the pace of consolidation to slow down due to the inability to create value as larger health systems.

What’s more, although the feedback was mixed, the majority (85 percent) predicted that it will get harder to raise money at some stage, if not across the board. Respondents were asked if they would invest in a number of companies, given their current valuation. The enterprise with the greatest approval rate was telehealth company Doctor on Demand, with 42 percent saying they would invest in it, with its $250 million valuation. Thirty-seven percent said they’d invest in healthcare concierge company One Medical with its $750 million valuation, and 32 percent said they would invest in Farzad Mostashari’s Aledade, a company devoted to physician-led ACOs, with a valuation of $250 million.

In the end, respondents think that the ACA will be repaired (40 percent); or renamed (32 percent); but only 8 percent said that it will be just repealed, while 20 percent said it will be both repealed and replaced.

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