What’s the difference between your expected ROI and a realized loss? Leadership. In private-equity-backed healthcare, success and failure ultimately hinge on leadership and your executive’s ability to carry out a strategic plan. The private-equity-led deal volume has exceeded $750 billion in the last decade alone. As PE-backed investments in healthcare continue, the complexities of healthcare and the rigorous demands of private equity create a unique landscape where traditional leadership approaches aren’t enough.
With over 30 years of experience exclusively in healthcare executive recruitment, we understand the nuances and high stakes of leadership in PE-backed healthcare. We’ve seen firsthand how private equity healthcare organizations with the right talent in key leadership positions can drive clinical excellence and substantial financial returns.
Kirby Bates Associates’ Vice President of Executive Search, Troy Keach, discussed the key attributes that PE-backed healthcare leaders need in a recent webinar. This article distills Keach’s insights and outlines the essential qualities and experiences that leaders must possess.
1. An Entrepreneurial Mindset
An entrepreneurial mindset is crucial in the private equity sphere, especially in healthcare ventures. PE firms thrive on transformative approaches, seeking candidates who exhibit this ethos.
“They’re looking for people who can think outside of the box and who will challenge the status quo,” stated Troy Keach, Vice President of Executive Search Services at Kirby Bates.
Candidates whose experience reflects organizational complacency and a lack of innovation are misaligned with PE’s dynamic approach to healthcare. PE firms value executives who challenge conventional models, driving operational efficiency, enhancing service quality, and maximizing value – critical metrics in PE healthcare investments.
2. Profit and Loss Statement (P&L) Management and Ownership Experience
Private equity is laser-focused on process optimization, value creation, and ROI maximization. In the typical five to seven year investment horizon, executives adept at scrutinizing P&L statements give private equity a critical advantage.
Candidates with a history of P&L ownership can identify areas for improvement, kickstart process consolidation, eliminate inefficiency, and maximize profit – all crucial for PE’s investment thesis.
3. A Proven Track Record Leading Turnarounds
PE healthcare investments demand candidates skilled in effecting dramatic improvements. Turnaround experience in enhancing service quality, operational efficiency, and resolving labor challenges align closely with PE’s objectives of quick value generation within a constrained timeline.
Leaders who demonstrate turnaround success, humility, and collaboration are highly sought after in PE healthcare ventures. Their ability to navigate and lead through transformative changes is pivotal for PE’s expected ROI.
4. Data Analytics and Technological Acumen
In the PE healthcare space, data-driven decision-making is paramount. Candidates proficient in data analytics (especially in platforms like Tableau and Power BI) and tech-savvy play a critical role in identifying trends and opportunities for quality and efficiency enhancements. The skillset is essential because data-driven insights enable PE-backed healthcare firms to adapt rapidly, assuring that their initiatives align with their aggressive growth targets.
“When I worked with larger health systems, once the budget was set, we would stick to it throughout the course of the year,” Keach said. “In private equity, we’re constantly reforecasting, sometimes as often as every month. It’s the latest data that’s coming in that’s driving what we need to do.”
5. Integration and Scaling Expertise
PE healthcare firms prioritize candidates experienced with consolidation and scaling – core strategies in the PE playbook. A candidate’s ability to merge cultures, integrate workflows, and scale successful practices across acquisitions directly impacts ROI and is a highly valued skill set in PE healthcare organizations.
“As I work with private equity groups who are looking for COOs, VPOs, they want candidates with integration and scaling experience,” Keach told listeners. “You’ll often find that bringing two groups or operations together and integrating them into a new, unique culture is a part of the PE playbook. Candidates need to have that experience, understand the challenges that come with it, and understand how to execute it effectively.”
Once those groups are integrated, quickly scaling the operation is crucial to PE organizations, for whom time is money. Whether bringing outsourced services like supply chain and revenue cycle management in-house or extrapolating robust processes across the broader platform, PE organizations want to own those processes, control them, and fine-tune them for maximum efficiency and cost-effectiveness.
6. Driving Growth and Revenue Enhancement
Executive leadership candidates must have a track record of fostering growth and boosting revenues. Experience in mergers, acquisitions, and sales is particularly relevant in PE healthcare. Additionally, the ability to innovate, expand services, and effectively ‘sell’ the organization to key stakeholders, including medical professionals and the broader healthcare community, is critical for sustaining and enhancing investment value.
“When I look at my own experience as a president or as a CEO, I don’t have a traditional sales background,” Keach explained. “However, when I look back at what I did, I was constantly selling our company, our physicians, and our surgeons. Anything a candidate can speak to regarding sales resonates with the needs that private-equity groups are looking for.”
Accelerate Your ROI With The Right Executive Leadership
In healthcare, leadership is not just about managing operations; it’s about driving exceptional ROI without compromising on the critical mission of saving lives and safeguarding sensitive information. For PE-backed healthcare organizations, having the right leadership is not just important; it determines your investment’s success.
For over three decades, Kirby Bates Associates has specialized in identifying top-tier leadership and executive talent exclusively within the healthcare sector. Our specialization stems from our lived industry experience, equipping us with the insights to tackle your organization’s unique challenges.
Not only does Kirby Bates understand the challenges your organization faces, but we also connect you with leaders who are ready and able to overcome them, aligning with your firm’s investment goals. To accelerate the process of bringing exemplary executive leadership into your organization and driving ROI, contact Kirby Bates Associates.