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Are High Prices Testing Private Equity's Ability to Close Healthcare Deals? Print E-mail
Written by David H. Fater   
Thursday, 06 September 2018 11:37
Now that healthcare consumerism is replacing traditional retail storefronts with dental and urgent-care clinics, the sector has drawn ravenous interest from private equity funds. But are would-be buyers getting discouraged by increasingly high prices? In a recent survey of private equity funds and strategic buyers, the top challenge identified in completing healthcare mergers and acquisitions is a shortage of attractive targets. The biggest reason? The deals are getting too expensive.
Of the 579 deals for U.S. healthcare targets last year the median transaction value has increased substantially since 2015. It is what appears to be a perfect storm and the number of transactions was the second highest on record. The specific targets included healthcare providers like physician practices and health systems as well as healthcare IT companies and life sciences companies. This is a diverse mix of targets with each of them having their own unique valuation issues.

Health system deals tend to catch a lot of headlines primarily because of their size, but they actually represent a small proportion of overall healthcare acquisition transactions.  Midmarket transactions, especially among relatively small specialty practices, make up most of the deals taking place.

The problem is investment banks are overpricing the companies looking to sell, valuing them in some cases two or three points higher than just two years ago without much justification for it. It is an old story where companies that are essentially average in terms of their financial performance or operational capabilities are looking to demand a price that is in line with companies operating in the top quartile. Put differently, the sellers believe their streets are paved with gold rather than high class bricks.

Prices have risen on the provider side in a herd mentality because their peers are selling at premiums. Dental groups, for example, are attractive to private equity firms because insurers tend to reimburse them without much pushback, their patients return at regular intervals and their industry is fragmented, inviting firms to create services organizations to support them. It is the reason that physician practice management companies flourished in the late 1990’s and we all know where that ended up. However, it has not deterred private equity groups from looking at other specialty groups that have similar criteria such as dermatology, ophthalmology, plastic surgery and behavioral health.

Private equity's strong appetite for healthcare acquisitions was on full display in a recent regulatory filing that revealed nine such firms submitted offers to buy Nashville-based physician staffing company Envision Healthcare in February. In June, Envision announced private equity firm KKR would buy the company for $9.9 billion in cash and assumed debt. KKR submitted a bid for up to $46 per share, which came in less than other offers of up to $60 per share. We recently valued a specialty practice at $155 million and when the transaction closed it fetched very near that price.

As the acquisition trend plays out, a new difficulty for private equity is finding companies with the infrastructure to support the kind of growth they are targeting. Outside of hospitals and health insurers, the healthcare market is highly fragmented with many early stage companies. The targets tend to be one or two dominant players of size and then there is a significant drop-off in terms of size and sophistication.

Interestingly enough, 73% of respondents in a recent survey had walked away from a potential healthcare acquisition. The principal reason was what was discovered in extensive due diligence. Would-be acquirers walked away because of anticipated problems with reimbursement, technology integration and security and compliance. We have preached for years about the necessity of integrating the due diligence with the post-merger integration plan as the best way to determine if the deal is worth doing and at the target price.

A different firm’s view through the lens sees that 75% of what is out there still represent attractive targets. This is most evident in physical therapy, urgent care, dentistry and even veterinary practices. Bringing consumerism into the equation makes a transaction more attractive AND that is one of the things that is inherently wrong with our current healthcare system. The consumer is not really involved because of the way the system works. So, the more like a retail play the more attractive the business is.

Despite all of private equity's investment in specialty practices, several industry experts said firms haven't shown the same appetite for hospitals and health systems. Brick and mortar assets like hospitals are expensive, and the high degree of consolidation that has already taken place in the sector has made them even more so, not to mention buying health systems means improving patient care, paying for building upkeep and adding new technology. Also, the rapidly growing trend is to push more services out of the hospital and into free standing facilities which can help drive down cost to the system.

We believe the acquisition binge will continue for a period of time despite the valuation questions. There is value in scale in healthcare, especially in negotiating insurance contracts or directly contracting with large employers. As long as the economy continues to hum, deals will get done until the contraction takes place or the valuations become too high even for the private equity players

To explore ways in which we can provide assistance in assisting with your merger and acquisition activity, including valuation, in this evolving health care environment, please contact David H. Fater at or Richard M. Cohen at

Last Updated on Thursday, 06 September 2018 12:41
Novel Strategy Shows Promise for Earlier Detection of Alzheimer’s Disease Print E-mail
Written by FHInews   
Thursday, 06 September 2018 00:00
Finding an effective way to identify people with mild cognitive impairment who are most likely to go on to develop Alzheimer’s disease has eluded researchers for years. But now, a team of researchers led by David Loewenstein, PhD, director of the Center for Cognitive Neuroscience and Aging (CNSA) and professor of psychiatry and behavioral sciences at the University of Miami Miller School of Medicine, has devised a novel strategy that could do just that.

The study, “Utilizing Semantic Intrusions to Identify Amyloid Positivity in Mild Cognitive Impairment,” funded by the National Institute on Aging, was published in the September issue of Neurology and earlier online.

Along with study co-author Rosie E. Curiel, PsyD, assistant professor of psychiatry and clinical neuropsychology, and their colleagues, Loewenstein studied 88 patients with amnestic mild cognitive impairment (aMCI). They identified 34 people in this cohort with underlying, prodromal Alzheimer’s disease (AD) by history and amyloid positive scans. Amyloid-beta is an abnormal protein in the brain long associated with the development of AD.

Among the 54 aMCI participants negative for amyloid-beta, 29 were classified as having a clinical course suggestive of AD but suspected non-AD pathology or “SNAP.” The remaining 25 amyloid negative patients had major depression, anxiety or other psychiatric disorders; cerebral infarctions; diffuse Lewy Body disease, or other non-AD neurologic conditions.

The investigators predicted those at greatest risk for AD using the Loewenstein-Acevedo Scales for Semantic Interference and Learning (LASSI-L), a tool developed at the University of Miami. The LASSI-L allowed researchers to uncover specific memory deficits that aligned with imaging findings for abnormal brain amyloid accumulation.

“Developing more sensitive and effective measures to tap the earliest Alzheimer’s changes in the brain is essential for providing earlier and more effective treatment, to better understand the neuropathology of the disease, and to monitor emerging interventions,” said Loewenstein.

The LASSI-L measure is a novel “cognitive stress test” validated in both English and Spanish. Researchers ask patients to read 15 words. The words come from three categories — fruits, musical instruments and articles of clothing — of five words each. They ask participant to repeat the list of words, and then cue their recall by category. A second trial repeats this learning task and the cued recall to strengthen their recall.

Next researchers present a list of 15 different words from the same three categories. The patients are asked to recall these new words as a measure of “proactive semantic interference” (PSI). PSI occurs where there is interference in new learning based on previous learning and correlates with risk of developing AD.

Researchers also present the second word list a second time, and repeat the cued recall. This component of the LASSI-L measures how well people can recover from the proactive semantic interference. It’s called failure to recover from PSI (frPSI) — and a second indicator of AD risk.

A major finding outlined in the Neurology paper was that the amyloid-beta imaging-positive patients committed a significantly higher number of semantic intrusion errors — specifically on the PSI and frPSI measures – compared to the SNAP and other non-AD patients.

Traditional cognitive measures to identify AD risk do not include PSI or frPSI, so the LASSI-L may represent a specific, non-invasive test that could successfully differentiate true AD from SNAP, the researchers noted.

“The association of the LASSI-L with amyloid positivity makes it useful in the clinical evaluation of preclinical Alzheimer’s disease and for appropriate recruitment for clinical and prevention trials,” Loewenstein said. “This also provides an effective and inexpensive way of screening at-risk populations.”

The research is ongoing. Curiel received a new federal grant to computerize the LASSI-L and other novel cognitive measures. In addition, current studies are underway to compare progression on the LASSI-L to brain biomarkers such as MRI, fMRI and PET scans, as well as new agents that assess pathology in the brain.

“We are assisting our national and international institutional partners in developing this cognitive stress test for their investigations and clinical practice,” Loewenstein said. “It is a goal of our Center for Cognitive Neurosciences and Aging and the University of Miami Miller School of Medicine to be at the forefront of these efforts.”
Last Updated on Friday, 07 September 2018 07:04 Launches Its Healthcare Marketplace to Make the Affordable Care Act (ACA) More Affordable for Consumers Print E-mail
Written by FHInews   
Wednesday, 05 September 2018 00:00

FORT LAUDERDALE (September 5, 2018) -- MediXall Group Inc., (OTCQB: MDXL), a technology and innovation-driven organization structured to bring effective change to the U.S. healthcare industry, is pleased to announce today that the company has launched to uninsured and high-deductible consumers throughout the state of Florida. This first full-featured platform launch will focus on Radiology Full Diagnostics, which includes MRI, CT, PET, X-rays, ultrasound, mammogram scans and more. will subsequently be rolling out an extended list of in-demand medical and dental specialties in the near future.

Radiology diagnostic imaging centers became the initial specialty for the full launch because MediXall’s research indicated this sector of the healthcare industry suffers the most serious pricing discrepancies, thus, acutely in need of a pricing transparency intervention. In Florida, prices for MRIs, PET scans, CT scans, X-Rays and other diagnostic imaging services can vary widely, within a town, or county—without necessarily any real difference in the quality of outcomes as well. For example, MRI costs can range from $400 to over $3000 for the same service within South Florida. In addition, increasing numbers of patients go without insurance entirely, thinking their healthcare needs would not justify the expense of an insurance premium. According to the National Center for Health Statistics, over 48% of this state’s population between the age of 18 to 64 in 2017 was reported to be uninsured, or struggling with a high deductible insurance policy, leaving patients paying cash for medical imaging services that they cannot evaluate or comparison-shop, due to lack of available information.

The company’s initial diagnostic imaging focus was exponentially accelerated by a partnership with CoreChoice, Inc., the nation’s leading specialty network for diagnostic radiology, neurodiagnostic testing, and interventional pain management, which exists to increase consumer access to high-quality and low-cost services for the self-pay and underinsured market across the country. With over 22,000 radiology providers and facilities in the CoreChoice network, the partnership will create one of the nation’s largest networks of affordable, high quality providers – offering consumers an unprecedented opportunity to compare radiology service providers across the country based on a best all-in cash price, location/distance, ratings, & availability, and select the best value according to personal preferences

With this launch, the Company is also adding the Referral Program as a tool for physicians to share the cost and location information. By launching and the associated Referral program, the platform will now provide a one-stop-shop for patients and referring physicians to search, compare, and book most diagnostic/imaging services. Through this innovative toolkit, healthcare providers can decrease patients’ out-of-pocket expenses, streamline referrals, and improve the patient-physician relationship by facilitating a transparent conversation about cost and value.

“We learned many things over the last few months with the controlled launch of that allowed us to perfect the way the platform serves our customers. Taking the time to do this extra step allowed the development team to focus on optimizing the interface and functionality to improve the healthcare shopping experience for our users,” said MediXall President Michael Swartz.  “With these improvements, I believe consumers will find extremely simple to use, since it now works much like booking a hotel or flight through Priceline or a similar online booking site, providing consumers with user-reviews, transparent pricing, and comparative shopping.”

About is a new generation healthcare marketplace platform designed to address the growing need of self-pay and high deductible consumers for greater transparency and price competition in their healthcare costs. With MediXall, consumers now have the option to search for doctors or dentists and book appointments based on cost, distance, ratings, and availability at the click of a button.  By delivering a solution that better connects consumers with high-quality healthcare providers and wellness services, enables healthcare providers to engage consumers with a level of price transparency and digital convenience that they have come to expect in every other aspect of their lives. In this era of rapidly increasing deductibles and healthcare costs, the cloud-based platform is designed to be transformational and disruptive to traditional methods of medical care and provisioning of medical services to the consumer. For more information, please visit or call (954) 440-4678.

About MediXall Group, Inc.
MediXall Group is a technology and innovation-driven organization purposefully designed and structured to bring effective change to the U.S. healthcare industry that is actively trading on the OTCQB under the symbol “MDXL.” The Company believes its revolutionary approach will help drive much-needed change that it envisions is needed in the current healthcare system. The mission of the MediXall Group is to revolutionize the medical industry by improving communication; providing better technology and support services; and enabling more efficient, cost-effective healthcare for the consumer. By approaching the healthcare ecosystem as a whole, MediXall creates, invests and incubates companies that embody its mission statement.

Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are based on current plans and expectations of management and are subject to a number of uncertainties and risks that could significantly affect the Company’s current plans and expectations, as well as future results of operations and financial condition. Specifically, the Company’s ability to raise additional capital, execute its business plan and strategy, sustain or increase gross margins, achieve profitability and build shareholder value are forward looking statements. A more extensive listing of risks and factors that may affect the Company’s business prospects and cause actual results to differ materially from those described in the forward-looking statements can be found in the reports and other documents filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Media Contact Information:
Kip Hunter Marketing - 954-765-1329
Nicole Lewis

Last Updated on Friday, 21 September 2018 10:45
What Have We Learned About Bundling Medical Conditions? Print E-mail
Written by FHI's Week in Review   
Monday, 03 September 2018 15:13
In an Aug. 28, 2018 Health Affairs blog post we get an insightful update from authors Amol S. Navathe, Eric Shan, and Joshua M. Liao:
...the impact of bundled payments appears to differ between surgical and medical episodes. On one hand, Medicare has achieved promising results from bundling surgical care for lower extremity joint replacement...On the other hand, recent evidence corroborates analyses conducted by Medicare and its contractor, suggesting that as designed, bundles for medical conditions such as congestive heart failure (CHF) and chronic obstructive pulmonary disease (COPD) are not associated with significant changes in quality or Medicare spending.
Read more in the current issue of Week in Review>>
Last Updated on Monday, 03 September 2018 15:24
Hospitals battle for control of lucrative heart valve procedure Print E-mail
Written by Phil Galewitz | KHN   
Friday, 24 August 2018 17:04
When Medicare in 2011 agreed to pay for a revolutionary procedure to replace leaky heart valves by snaking a synthetic replacement up through blood vessels, the goal was to offer relief to the tens of thousands of  patients too frail to endure open-heart surgery, the gold standard. To help ensure good results, federal officials limited Medicare payment only to hospitals that serve large numbers of cardiac patients. The strategy worked. In the past seven years, more than 135,000 mostly elderly patients have undergone transcatheter aortic valve replacement, known as TAVR. And TAVR's in-hospital mortality rate has dropped by two-thirds, to 1.5 percent.  
Now, in a campaign motivated by a muddy mix of health care and business, smaller hospitals and the medical device industry are arguing that  the technique should be more widely deployed. They note only about half of the nearly 1,100 hospitals offering surgical valve replacement can do TAVR. And they say current limitations discriminate against minorities and people in rural areas, forcing patients to undergo a riskier and significantly more invasive treatment - or miss getting a new valve altogether.
Last Updated on Friday, 07 September 2018 06:56
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