The Good News:
Healthcare is a fertile investment sector. Americans spent $1.7 trillion through 785,000 companies classified in the Healthcare space. That’s 300% larger than the “booming” US auto sector. Healthcare specialty segment growth is also off the charts. In 2012, 6,000 medical device companies had sales of $120 billion dollars (42% of the global market). That segment alone is about the size of America’s annual automotive after-parts market!
The Bad News:
If you and your staff don’t ask the right questions every day of every year, investing in new companies or adding capital investment to your existing healthcare assets can be like tossing bags of money into quicksand. So, what are the “right” questions?
1. Does the company fill a known need today in its healthcare segment? Are you certain it will continue to do so for the next 5-10 years based on market analysis, high demand, unique offerings, reputation and quality?
2. Does the company offer revenue building opportunities to its customers and/or a service that improves revenue and lowers cost (e.g., revenue cycle management, methods that result in more revenue to the provider)?
3. If the company in question is a “Provider Organization,” does it offer medical services that are in demand by a growing population of patients? Can they demonstrate that the patients they treat get better, faster results, and with fewer complications? Do they report higher satisfaction with the results? Does it use medical techniques or diagnostic and treatment methods that possess a sustainable competitive advantage in the market?
4. If the company is a medical technology/device company, is a primary technology platform fully integrated with medical informatics? Does the platform deliver measureable improvements in patient outcomes? Does the technology platform improve physician productivity? Does owned technology demonstrably lower actual costs of treating patients?
5. If the company is a medical services organization, (i.e., a non-device driven provider), does it offer personalized medical tools to its patients? Does it possess a known expertise in high dollar/high risk disease detection, intervention or prevention? Can patient medical needs be effectively and efficiently treated at home or outside the facility?
More Good News:
PIP’s HealthCare practice is led by one of America’s leading healthcare futurists, George Britton. As a complimentary service to our Private Equity clients and partners, PIP is offering a no-obligation consultation with George that we hope will make everybody a little Healthcare smarter. The process is simple. First we schedule an informal 15-minute discussion to ensure George’s expertise fits the tasks at hand. If so, the two groups jointly agree on next steps. So give us a call at 203.220.9556 to schedule an appointment.
Businesses of all sizes rely on information technology as a crucial component of their day-to-day operations.
“Nautic Partners has worked with Performance Improvement Partners for several years. They are a unique set of seasoned technology personnel with deep experience who can quickly dive into a wide array of businesses. We have been very satisfied with the work they have done with our portfolio companies.”
James LaRowe, Managing Director
Nautic Partners, LLC