Market analysts predict a fairly stable ride for healthcare in 2018 in wake of rapid technology developments and major players like Amazon entering the marketplace. However, some sectors of import to clinical labs will fare better than others.

Trouble spots across the globe, the unknown reimbursement status of some tests, Brexit, and consolidation in healthcare are likely to contribute to uncertainty in the market this year, Bruce Carlson, publisher of Kalorama Information, a division of, told CLN Stat. Kalorama recently published several forecasts that address high growth segments in molecular diagnostics and IVD market trends.

Fitch Ratings, which released its 2018 outlook for U.S. healthcare in late 2017, anticipates that the largest public laboratories will report organic top-line growth of 0%-1% per year. Forces affecting this modest growth include volume and mix tailwinds offset by continued pricing pressures, which included the effects of the Protecting Access to Medicare Act, Britton Costa, CFA, a director in Fitch Ratings’ Corporates group, explained to CLN Stat.

Despite the challenges facing labs and the healthcare sector as a whole, Carlson anticipates that some areas of molecular diagnostics will experience solid growth in 2018. Its growth rate as a whole, however, “will merely be competitive with immunoassay testing for near-term,” he said. Cancer markers of all types, human leukocyte antigen typing, and hepatitis and respiratory disease molecular testing are the top markets ripe for growth. 

Although they don’t command the largest market, it’s anticipated that cancer assays will experience the highest growth rate in the molecular diagnostics field, according to Kalorama’s analysis on molecular diagnostic projections. “At roughly $1 billion in projected sales for 2021, cancer assays will represent one of the largest market segments for molecular diagnostics with blood screening and histology, and behind only infectious disease,” the report’s authors projected. A number of factors are driving this trend, such as the aging of the global population and new opportunities for integrating next-generation sequencing, as well as the introduction of multiplex cancer profiling panels and liquid biopsy tests.

The healthcare industry is being forced to defend its value proposition as volume growth due to aging demographics pressures the financial resources to pay for it, Costa observed. “These secular challenges, when coupled with technological advancements, have led to increasing amounts of care occurring outside of the hospital in lower cost settings and forcing hospitals to find ways to replace or mitigate the revenue and margin pressures.”

Because it isn’t protected by a regulatory moat, the healthcare sector is vulnerable to outside influences, although successful disruption “would require significant capital investment and a high degree of strategic expertise,” the Fitch analysts indicated.

If successful, Costa anticipates that vertically integrated entities will be well-positioned to manage care and patient outcomes while controlling costs. The proposed CVS-Aetna merger “is the most prominent example of vertical consolidation among healthcare providers, payers and PBMs in response to secular challenges,” which center on access to care and affordability of care, he said.

Regulatory disruptions posed by the Affordable Care Act (ACA) aren’t likely to cause much risk to the industry in 2018. “Healthcare companies have been operating under a pall of uncertainty regarding the ACA since the early part of the decade without a deleterious effect on credit profiles,” Fitch’s analysts observed.

Not much reporting has been done on the ACA’s contribution to financial results, Costa said. HCA Holdings Inc., the largest for-profit acute care hospital company, reports that ACA is contributing 5% to 6% of earnings before interest, tax, depreciation, and amortization, he said. Others, however, report that contributions are flat to negative after accounting for the ACA cuts to Medicare and Medicaid payments.

Regarding the elimination of ACA’s individual mandate under the new tax law signed by President Trump in December, healthcare providers—acute care hospitals in particular—have the most to lose from changes that reduce the insured population, Costa said.