The Old And The New – Day 3 Notes From The JP Morgan Healthcare Conference

Day 3 of the JPMorgan healthcare conference was one of striking contrasts between the old and the new. (And, by the way, the rain finally stopped for a day, but it will be back tomorrow to finish off the last day of the conference).

The Old: Sitting in the Community Health Systems (CHS) presentation and listening to Wade Smith talk about the slimming down of CHS through the 20+ sales completed or in process, the audience could have heard this speech (with a few exceptions about the pending ACA changes) and not known if it was 2006 or 2016. Very traditional hospital system presentation - admissions and revenue growth (or, as appropriate, losses), hospital market share, number of surgeries, physician recruiting, management of debt and expenses, etc. All appropriate, but a marked contrast to many of the other hospital presentations this week with their emphasis on moving to risk, population health management, apps and patient engagement and brand.

One interesting valuation statistic from CHS - the average EBITDA multiple for their divested hospital transactions was 10x. This is a high multiple for troubled hospital properties, but Mr. Smith noted that they had a surfeit of bidders for their hospital properties including other nonprofit hospital systems and private equity funds.

The New: Two very different presentations today focused more on the "new" aspects of healthcare - IBM Watson Health and Evolent Health.

IBM Watson Health - I really, really wanted to enjoy the IBM Watson Health presentation, just like the other several hundred people in the most overcrowded room I saw all week (other than for Vice President Biden's speech on new cancer initiatives). We were all ready to be wowed - bring on the technology, the magic that will fix healthcare's problems and give us all hope (Lord knows we need it this month). And, seventeen minutes later when the presenter, Deborah DiSanzo, the General Manager of IBM Watson Health, concluded early on her supposedly thirty minute talk, we all were feeling a little shortchanged. Actually, no, a lot shortchanged. Not one single reveal, no magic tricks, not even anything sexy that we could lord over others who hadn't made it into the room. Nothing actionable, nothing investable. Just a high level overview of the work that IBM Watson is doing in multiple spheres to grind out the necessary steps to get to the point where they really can fully transform medicine. And yet, that's ok. It has taken me several hours...