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What We’re Hearing: Q1 2019

It’s been a busy few months in the healthcare world. Industry leaders and innovators gathered at the J.P. Morgan Healthcare Conference in January and HIMSS19 in February to share their successes, plans, and projections for the future. The goal? Identifying the next “big” trend in healthcare. For those of us with our ears to the ground, we’re heading into spring with a good understanding of the industry’s future. Private equity professionals operating - or hoping to operate - in the healthcare sphere should take some time to familiarize themselves with the main themes that popped up in both conferences.

There is broad investor appetite in the healthcare market - both public and private.

Healthcare is a defensive sector, which makes it a popular investment target - especially when investors are preparing for a recession. Healthcare is a smart target for investors worried about defending themselves against an unpredictable environment, but don’t mistake safe for boring. Technology and innovation are reshaping the healthcare landscape.

Healthcare is in a period of transition. The traditional providers aren’t adapting quickly enough to keep up with consumers’ demand for an improved experience with disruptors happy to give consumers what traditional healthcare organizations can’t - or won’t. For as much as investors are focused on healthcare as a safe investment, they are equally excited about the opportunities innovative disruptors present. The healthcare sector presents investment opportunities that are as safe - or as risky and full of potential - as an investor wants. Investor appetite will stay high and varied as a result.

Innovations in healthcare, especially technology, energize investors.

Both conferences focused on showing off advances in healthcare technologies and their impact on the industry as a whole. Innovations in technology, notably ones centered around improved/new telehealth offerings, are particularly good at enhancing consumer experience - and are popular with investors as a result. The most attractive investments use innovative technologies to address healthcare shortcomings and improve consumer experience in the process.

Investors hope that new technology is the solution to another high-profile healthcare problem: managing prescription costs. While 2019 isn’t likely to feature meaningful legislation targeted at decreasing these costs, pharmaceutical companies are experiencing pressure - from both sides of the aisle - to address high and inflating prices. Potential solutions to an increasingly high-profile problem are understandably popular. Innovators that help reduce pharmaceutical costs -- such as GoodRX generate significant value. While GoodRX doesn’t attempt to address the causes of prohibitive prescription costs, it does use technology to help consumers keep their costs down; making it exactly the kind of technology that draws investor attention in 2019.

Industry insider expertise is more important than ever.

The healthcare industry is popular with investors and moves quickly as a result. If you’re investing in healthcare than you will need to lean on insider advice to ensure you get the most out of your investments. The unique perspective and market insight that executive talent brings to the table can be the difference between a successful venture and one that fails. Accessing the right executives and advisors to help during each stage of the investment process - thesis development, sourcing, due diligence, and value creation - propels smart, successful Private Equity firms forward.

Insider advice is undeniably valuable, but connecting with the right healthcare executive can be easier said than done. Bancroft Group can help. We draw upon twenty years of healthcare private equity experience to connect you with the top-tier healthcare executives that will make your investment a success. Contact us to learn more.