With healthcare at a crossroads, nearly 500 healthcare leaders assembled last week for one of the Nashville Health Care Council’s signature events of the year, Wall Street’s View on Prospects for the Healthcare Industry. The 27th annual gathering, held at Belmont University’s Fisher Center for the Performing Arts, convened top industry leaders and finance experts to discuss the current state and future of healthcare. 

 Nashville Health Care Council President Apryl Childs-Potter welcomed the sold-out crowd with a story highlighting the significance of hosting the event on Belmont’s campus, where the council was founded 30 years ago. Childs-Potter shared some initiatives The Council has planned for 2025, including a new healthcare ecosystem map and an already live system to facilitate member engagement and event registration. She then invited moderator Marty Bonick, President and CEO of Ardent Health, to begin the evening’s panel.  

Featured analysts included Matthew Gillmor, Managing Director of Healthcare Services at KeyBanc Capital Markets; A.J. Rice, Managing Director of US Managed Care and Facilities at UBS; and Jessi Tassan, Senior Equity Research Analyst of Healthcare Technology and Distribution at Piper Sandler. 

Bonick and the panelists began by discussing healthcare market trends and industry performance over the past year. The conversation then shifted to political changes and policy uncertainties, the resurgence of M&A and IPO activity, and the impact of rapidly advancing technology and AI. 

Market trends and outlook 

Panelists highlighted the sharp divergence in performance for the various subsectors of healthcare. Rice started by pointing out that while the overall healthcare index was essentially flat, hospitals were up 23% last year, making them the best-performing group.  

 In a nod to the changing political landscape, he added, “That sort of hides the fact that they were up 56% before the election, and then they gave a lot back.” 

 Tassan emphasized that while the hospital recovery has been strong, the benefits have not necessarily extended to the technology vendors that sell to hospitals. As a result, investors are favoring companies with diversified revenue models rather than those exclusively dependent on subscription fees for providers, especially those involved in digital marketing and education for life sciences companies.  

 For companies that do focus on providers, Tassan noted a preference for “companies that are exposed to hospital revenue centers, so think companies that help orchestrate specialty pharmacy operations at the hospital, companies that manage 340B billing.”  

 Gillmor described challenges in the managed care market. Medicare Advantage plans mispriced the trend toward increased care utilization in 2023 and 2024 and suffered as a result. Meanwhile, the potential expiration of the Affordable Care Act (ACA) exchange subsidies casts doubt on future enrollment in those plans.  

 He believes uncertainty will continue in the managed care space, saying, “Our thought has been to recommend clients own stocks that are levered to higher utilization, at least that's what we see for the next several months, but that have some degree of policy insulation.”  

 These challenges extend beyond traditional payers to value-based care and capitated specialty care management providers, according to Tassan. Companies that saw “incredible growth” in 2022 and 2023 have since “fallen apart.”   

 “From an investor perspective, there is limited or no appetite for those business models, at least for the foreseeable future,” she added. 

Policy and regulatory impact 

Healthcare remains highly susceptible to policy shifts, with the 2024 election cycle intensifying market volatility. Rice acknowledged that we are at a place of “maximum uncertainty” about what the current administration will do. 

However, while panelists underscored the legitimacy of concerns, they also suggested the reality of new regulation and legislation might be less extreme than some expect.  

While many fear major cuts to Medicaid funding and the total expiration of subsidies on the ACA exchanges, Gillmor suggested more measured options that can be accomplished through regulation rather than legislation. He provided examples such as reducing rather than cutting Medicaid supplements or extending Exchange supplements on a limited basis.  

“If you take a couple steps back, big change is pretty rare in healthcare,” Gillmor added, “I'm in a camp that I don't think big change will happen.” 

Echoing this sentiment, Rice said, “It’s always best to bet that nothing gets passed.” 

M&A and IPO resurgence 

As a period of regulatory constraints gives way to a more business-friendly environment, panelists indicated that mergers, acquisitions, and initial public offerings are poised for resurgence in 2025.  

 “We’ve already seen a few deals announced…there’s a fair amount of demand,” said Rice. “I also think we’ll see a fair amount of offerings.”  

According to the panelists, the pipeline of potential activity includes post-acute care, home health, behavioral health, hospice care, and a wide variety of technology companies. However, one potential barrier to deal activity in both the private and public markets is the persistent spread in valuations between the two.  

“There are a lot of pipeline companies looking to go public with very similar models to existing public companies that are trading at very different multiples,” said Tassan. “I'm not sure exactly how that reality check plays out, but it will be interesting.” 

Digital health and AI impact 

While it’s undeniable AI will be impactful in healthcare, panelists believe the specifics are still evolving. There was a shared view of AI’s potential to reduce friction and improve efficiency within the industry, and all acknowledged there are still obstacles to adoption. 

One obstacle is price. Tassan noted that AI technologies are “incredibly expensive” today, so it will be interesting to see how pricing evolves in this space. 

She also noted that AI may be “embedded in existing companies as a way to drive operating leverage or free funds to reinvest.”  

The opportunities to implement AI in the industry are limitless, according to Rice. There is an eagerness to adopt AI, but “there also has to be education, certainly with policymakers…and consumers” so they understand the value.  

“Right now, it sounds interesting,” added Rice. “I think people are still waiting to see a payoff.” 

Bass Berry & Sims served as presenting sponsor for the event, with Ardent Health, Cumberland Pharmaceuticals, Gresham Smith, Healthpeak Properties, LBMC, and Wellpoint as supporting sponsors. 

About the Nashville Health Care Council
The Nashville Health Care Council strengthens and elevates Nashville as The Healthcare City. With a $68 billion economic impact and 333,000 jobs locally, Nashville’s healthcare ecosystem is a world-class healthcare hub. Founded in 1995, the Council serves as the common ground for the city’s vibrant healthcare cluster. The Council offers engagement opportunities where the industry’s most influential executives come together to exchange ideas, share solutions, build businesses and grow leaders.