Middle Market Healthcare Executives Expect Proposed Healthcare Reform Will Be Good for Businesses

NEW YORK--(BUSINESS WIRE)--Middle market healthcare executives favor the Obama administration’s proposed healthcare reform initiatives by a nearly 2:1 margin and they believe some reform initiatives will be good for business and will have a positive impact on their operations, according to an exclusive study released today by CIT Group Inc. (NYSE: CIT), a leading provider of financing and advisory services to the middle market.

The study includes the following key findings:

• 60% of middle market healthcare executives expect revenue growth over the next 12 months.
• 43% expect their workforce to grow over the next 12 months.
• 82% see their capital expenditures as stable or rising.
• Compared to a study of their peers from a variety of industries three months earlier, healthcare executives are more optimistic about their sector, but less optimistic about the near-term recovery of the U.S. economy.

The research report, “U.S. Middle Market Outlook 2009: Resiliency in the Healthcare Sector,” shows how healthcare companies, while realistic about the difficult economy, are more immune than other industries to the effects of the global recession and in fact see growth opportunities in the current environment. This study is the second in a series of four middle market studies to be produced this year by Forbes Insights.

“Middle market healthcare executives are optimistic about the positive impact that the Obama administration’s proposed plans for healthcare reform will have on their businesses,” said Margaret Au Brown, President and Co-Head of CIT Healthcare. “While other industries have decreased borrowing activity, our middle market healthcare clients continue to borrow at a steady pace as they prepare for the costs associated with these healthcare reform initiatives.”

The study is based on the responses of more than 100 senior-level financial decision makers at U.S. middle market healthcare companies (those with annual revenues between $25 million and $1 billion). It highlights how these executives are managing the current economic crisis and also reveals their outlook for the remainder of 2009.

“As a counter-cyclical sector, many healthcare companies are poised to take advantage of opportunities in the current market downturn,” said Steven N. Warden, President and Co-Head of CIT Healthcare. “Middle market executives recognize the troubling economy, but despite this, more than half of them have seen their businesses grow or remain the same over the past year. In fact, many expect a similar trend in the coming year, as they place a greater focus on operating efficiencies and new investment in capital and equipment.”

Middle market companies, a key component of the U.S. economy, account for more than $6 trillion in sales and employ almost 32 million Americans (2002 U.S. Census).

The study includes the following detailed findings:

• Strong support for Obama healthcare reform. By a nearly 2:1 ratio, 56% of executives overall and 67% of executives from hospitals/medical centers said they are in favor of reform “in general.” For many healthcare businesses, areas of reform may present new opportunities for growth.
  • Electronic health records and preventive care good for business. Of study respondents, 70% expect the increased use of electronic health records to have a positive impact on their business. In addition, 67% of middle market healthcare executives expect that their businesses will benefit from reform proposals that place greater focus on preventive care.
• Resilience against effects of the recession and positive outlook on the future. While middle market healthcare executives acknowledge the troubling economy, they have been able to weather the storm and grow their companies during these difficult times. Over the past 12 months, 64% of middle market healthcare executives saw their revenues either grow (49%) or grow significantly (15%), and executives continue to see additional opportunities for growth in the future. During the next 12 months, 60% of middle market healthcare executives expect their revenues to either grow (48%) or grow significantly (12%).
• Investing for future growth. While other industries have been tightening their purse strings, middle market healthcare companies continue to invest in their businesses. Forty-two percent of executives expect their company’s capital expenditures to increase (38%) or increase significantly (4%) in the coming year, while 40% expect these investments to remain the same. Of the healthcare companies surveyed, 51% indicated that they will primarily be investing in new technology (27%) and acquisitions (24%).
  • Active job market. Other industries may be reducing their workforces during the downturn, but healthcare companies are still hiring. Forty-three percent of respondents said they expect the size of their workforce to grow over the next 12 months, and 41% expect it to remain the same.
• Less optimistic about economic recovery in 2009. While healthcare executives are highly confident of their own industry, their views on the near-term recovery of the U.S. economy are less optimistic. Only 54% see the financial crisis bottoming out in 2009, while 63% see the financial markets turning around in 2010. These results are indicative of recent market events and are in contrast to CIT’s earlier study results, in which 80% of middle market executives from a variety of industries said they expected the crisis to bottom out in 2009 and 46% saw the financial market turnaround occurring within the year.

Individuals interested in receiving future updates on CIT via e-mail can register at http://newsalerts.cit.com.

EDITOR’S NOTE:

Complimentary copies of “U.S. Middle Market Outlook 2009: Resiliency in the Healthcare Sector,” as well as podcasts related to the study featuring Margaret Au Brown and Steven N. Warden, Presidents and Co-Heads of CIT Healthcare, can be downloaded at http://middlemarket.cit.com.

About the Report

“U.S. Middle Market Outlook 2009: Resiliency in the Healthcare Sector” is the second in a series of four in-depth studies on the middle market being produced by Forbes Insights in association with CIT. Forbes Insights surveyed 101 healthcare executives at U.S. middle market companies in April and May 2009. All those surveyed had functional responsibility for finance, strategy and business development, or general management at healthcare companies with revenues between $25 million and $1 billion. They represented a range of for-profit healthcare segments, including hospitals/medical centers/practices, nursing/rehabilitation centers, medical device manufacturers, and others.

About Forbes Insights

Forbes Insights is the custom research practice of Forbes Media, publisher of Forbes magazine and Forbes.com, whose combined media properties reach nearly 50 million business decision makers worldwide on a monthly basis. Taking advantage of a proprietary database of senior-level executives in the Forbes community, Forbes Insights’ research covers a wide range of vital business issues, including talent management, corporate social responsibility, financial benchmarking, risk and regulation, and doing business in emerging markets.

About CIT

CIT (NYSE: CIT) is a bank holding company with more than $60 billion in finance and leasing assets that provides financial products and advisory services to small and middle market businesses. Operating in more than 50 countries across 30 industries, CIT provides an unparalleled combination of relationship, intellectual and financial capital to its customers worldwide. CIT maintains leadership positions in small business and middle market lending, retail finance, aerospace, equipment and rail leasing, and vendor finance. Founded in 1908 and headquartered in New York City, CIT is a member of the S&P 500 and Fortune 500. www.cit.com