See the big picture
A more stable economic environment should lead to increased investment in the sector, with more healthcare providers looking to grow through acquisition. The Government’s discussions on reforming the NHS could also lead to interesting opportunities.
Head of Healthcare, Barclays Corporate Banking
As anyone involved in healthcare should be aware, the three big shifts proposed by the Government to overcome the challenges identified in Lord Darzi’s recent review of the NHS – transitioning from analogue to digital, moving care from hospitals to the community, and focusing on prevention rather than cure – could all potentially have a major impact on the sector over the coming years.
I look forward to seeing how these will be integrated into the Government’s ten-year plan for health and care when it’s published in the spring 2025, and how providers can contribute to finding new solutions to familiar challenges to improve patient outcomes.
The apparent appetite to review the NHS could have a considerable positive knock-on effect on medtech and life science businesses in particular, as well as for a care home sector that still has spare capacity. That said, I think the big question is whether the Government’s actions will result in more investment in the healthcare innovation economy, which I believe is critical to supporting these three key shifts. As highlighted though our recent Health Elevate insights, there is an abundance of entrepreneurial ideas that larger operators can tap into – but will 2025 be the year they receive the support they need to bring those ideas to life?
Merging on the cards
Many of our healthcare clients are talking confidently about their growth aspirations and their plans to expand over the next 18 months or so. For the first time since the pandemic, there appears to be more stability in the market and certainly a more benign interest rate environment, and we expect these conditions to persist throughout the year.
As a fragmented marketplace dominated by many smaller operators, most healthcare subsectors are ripe for consolidation. This, combined with the improved economic conditions, suggests we’re likely to see increased levels of activity during 2025 as businesses and investors alike look to capitalise on the opportunity to grow quickly through mergers and acquisitions.
I’m confident that less political and economic uncertainty, and more settled inflation and interest rates will create a better base for growth and M&A activity within the sector. I expect to see increasing demand for finance to support this.
Head of Healthcare, Barclays Corporate Banking
Remedying a regulatory headache
With two recent reports, from Professor Sir Mike Richards and Penny Dash’s independent review of England’s healthcare regulator finding that it’s no longer fit for purpose1, and the well-documented problems involved in the roll-out of the Single Assessment Framework, I think we can safely assume that regulatory change is on the horizon.
Although the Care Quality Commission (CQC) has promised rapid action to resolve the issues2, 2025 might prove to be another somewhat unsettling year for healthcare providers in England as they wait for the changes to be implemented. Hopefully we’ll have more clarity on what the new regulatory landscape will look like at some point this year – any reform should have a positive impact in the longer term.
Of course, all healthcare operators and lenders know that the marketplace needs a strong, high-performing regulator that knows what good care looks like, drives good health outcomes, and supports public satisfaction and growth in the sector.
Given improving market conditions, now might be the right time to ensure you have the necessary financing in place to support your growth plans.
Maintaining open dialogue with commissioners and other stakeholders could enable healthcare providers to make the most of any opportunities that present themselves in a transformed healthcare landscape.
Given that some fairly major changes are expected in the regulatory space, businesses in the sector should stay abreast of the CQC’s plans to ensure they can meet the necessary requirements.
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1 https://www.cqc.org.uk/press-release/cqc-responds-reviews-dr-penny-dash-and-professor-sir-mike-richards^
2 https://www.gov.uk/government/publications/review-into-the-operational-effectiveness-of-the-care-quality-commission-full-report/review-into-the-operational-effectiveness-of-the-care-quality-commission-full-report^
Keeping fraud front of mind
Fraudsters are as active as ever across the healthcare sector, impersonating our colleagues and attempting to defraud our clients. To help protect you and your business we have a wealth of resources available. You can view our quarterly fraud webinars and take a look at our other educational resources on our Fraud Protection Hub.
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