7 Emerging Health Care Themes | The "Other Side" of COVID-19 (Call Thursday)

Overview

Since the days when COVID-19 was still called the coronavirus, much has changed.  As the emergency response to COVID-19 morphs into a #LowerForLonger recovery we think investor expectations and visibility into the Post-COVID environment will grow murkier and less optimistic by the day.  

The Health Policy as it has risen to tackle COVID-19, has changed forever many industries, but none more than health care. The crisis has relaxed regulations and signaled the need for other newer and bolder approaches to old problems. Practice patterns long observed are being disrupted.

The entire cost structure of the health system could be affected, in many ways for the better. Health Policy will be critical to nearly every corner of the American economy for the foreseeable future. As we press the reset button, the policy and fundamental themes emerging are:

• Re-opening  and  Elective surgeries – Their return is inevitable. But where and how much remain open questions, likely well below pre-COVID levels for an extended period.
• Supply Chain – The pandemic laid bare supply chain challenges for PPE and COVID-19 testing components. “Just in time” was too late in many cases. There will be a regulatory response, but there may also be a hoarding response across providers as they fret over critical supplies.
• Telehealth – Regulations relaxing telehealth requirements are likely to persist long after the emergency subsides, shifting practice patterns and altering business models. There are implications for current capacity configurations at physicians’ offices and hospitals.
• Licensure – This obscure issue has moved to the top of the federal “to-do” list as the emergency left no room for niceties like direct supervision of CRNAs by MDs. Allowing all non-MD clinicians to “practice at the top of their license” has long lasting implications for the cost structure and the health care workforce.
• Rebalancing and capital windows - will there be a long term impact on investors appetites for owning companies that lose money?
• Capital spending –  Until there is a vaccine, likely under pressure along with Medical Spending in general.
• NIH – Funding is likely to remain strong for some time.

We will update our Fundamental Equity Quad framework; our process that fully engages the Hedgeye Macro Macro Quad outlook, using this lens to at our longs and shorts, bench, and screen. 

If you are an institutional investor interested in accessing this call or related research please email sales@hedgeye.com.