CIT says healthcare lending doing well

Healthcare executives maintain a relatively positive outlook for 2016, with 71% indicating that they expect their revenues to increase this year and more than half (55%) expecting to seek financing in the next 12 months, according to research by CIT Group.

Its study “2016 Middle Market Healthcare Outlook” study found healthcare executives are significantly more likely to mention seeking financing for and investing in acquisitions in 2016 compared to 2015. Of the respondents, 55% believe that their company is likely to seek financing in the next year, compared to 44% in 2015.

Similar to the findings of the previous year’s survey, half (53%) of healthcare executives imagine that M&A activity will increase across the industry as a whole; the remainder (41%) of healthcare executives believe it will remain stable. More so than last year, M&A seems to be driven by purchase price multiples and valuation (54%) over strategy (46%). About three-quarters (74%) of executives believe that increased M&A may result in a greater focus on care over business administration.

Technology is clearly seen as having a crucial, and beneficial, role within the healthcare industry by improving quality, convenience and cost of care. At least 80% of executives believe that consumers should be, and are, using technology to monitor their healthcare needs. At the same time, 88% cite security as a clear concern that must be addressed.

Executives overwhelmingly (91%) feel that consumers will be unable to endure any higher costs than what they face right now, while 81% believe that consumers occasionally avoid follow-up visits, even when potentially necessary, to dodge any extra costs, suggesting there is room for technology investment to address this issue.

“The majority of the surveyed healthcare executives remain optimistic, expecting similar growth to last year in revenue, prices, volume and capital spending,” said William Douglass, group head and managing director, CIT healthcare finance. “With a promising financial outlook, it is not surprising that nearly half of executives surveyed also believe that capital spending will increase in the coming year. Moreover, the need for financing is expected to hold steady or increase.”