Healthcare Investors Look to Opportunities and Gauge Risks in 2021
McGuireWoods partners Amber McGraw Walsh, David J.
Pivnick and Gretchen Heinze Townshend discuss policy and litigation trends that healthcare providers and investors will monitor in 2021. Walsh chairs the firm’s healthcare department, Pivnick is co-leader of the healthcare and life sciences industry team, and Townshend is a healthcare regulatory expert advising providers and investors alike.
CCBJ: Setting aside key litigation and risk management concerns for healthcare providers and investors, can you talk briefly about the current landscape of healthcare investing in light of the COVID-19 pandemic? Amber Walsh: The strong interest in private equity, hospital and strategic buyer investment in healthcare that existed prior to the onset of the pandemic seems to have largely returned after a brief pause in the early months of the pandemic. It is true that we are starting to see more distressed asset investing in healthcare. And deals look different than they did pre-pandemic, and likely will for a while. Buyers and sellers are negotiating several unique deal pricings and other protective metrics to ensure that the seller gets the full credit for the historical business that was built but the buyer is protected from COVID-19 unknowns. And with the presence of Paycheck Protection Program (PPP) loans, PPP lenders presents a new class of stakeholders in 2020 deals that will likely remain for the coming few years, which impacts deal pace and process. But the healthcare sectors that remained of interest prior to the pandemic remain of interest, and the features of an attractive business to investors prior to the pandemic remain relevant, with the ability to effectively harness technology for patient care and the demonstration of the hardiness to weather the pandemic storm now being
more critical features for a broader array of healthcare providers than prior to the pandemic. Turning to those litigation and risk management concerns, prior to the COVID-19 pandemic, what were the top issues of concern for healthcare providers and healthcare investors from a litigation standpoint? Were there certain areas of particular focus for different stakeholders in the industry? David Pivnick: There are concerns and risks associated with re-opening during and coming out of a pandemic. These are tough cases due to challenges in establishing causation, but they will be brought, particularly if appropriate safeguards are not in place. We can expect to see an uptick in fraud and abuse investigations for a variety of reasons. We tend to see more whistleblower complaints in a tough economy, especially when employees are getting laid off. There also will be heightened scrutiny on issues related to funding distributed under the CARES Act and the PPP. In addition, the Justice Department’s focus on the opioid crisis has continued and arguably will be heightened. Will the Biden administration take a different approach to enforcement of the Stark Law, federal Anti-Kickback Statute and other anti-fraud laws? Should this concern providers and investors? Walsh: Historically, Democratic administrations have had a more significant focus on healthcare fraud and waste, have been more concerned with perceived risks of private and physician ownership and have generally favored greater government control over all elements of the delivery of care. But I believe that’s an overly simplistic view and does not necessarily reflect what we can see in the next four years for a variety of reasons. CORPORATE COUNSEL BUSINESS JOURNAL
25
