The healthcare industry is ripe with opportunity for private equity investments. In fact, private equity deals in healthcare in the U.S. more than doubled over the past 10 years. There are several disruptive trends that will shape the healthcare landscape in the coming years. It’s important that investors are aware of them and understand both the opportunities and risks these trends may create.
Investors have a huge opportunity in healthcare when it comes to personalized medicine. As research allows medicine to become personalized to the consumer, the opportunity for investors to invest in areas like diagnostics or derivative tools becomes available. Without these tools, personalized medicine wouldn’t be possible, so it makes sense that private equity investors are heavily investing in personalized medicine.
Speaking of personalization, private equity investors need to keep their eye on consumers when making their investment decisions. Consumers are more involved than ever before in making their own healthcare decisions. Not only that, but consumer-driven concepts are driving and creating best practices in healthcare. Private equity investors must pay attention to the consumer in order to be successful.
Digitalization is pervasive across all industries, but it is actually considered to be “behind” as it pertains to the healthcare industry. Artificial intelligence is becoming the driving force behind the creation of better, more-effective medicines. When you combine that to the amount of digitalization behind customer outreach, there is plenty of opportunity for private equity investment in the digital component of healthcare.
As popular as private equity investments in health care have become, there is still push back. Some say that because investors are motivated by making their returns, they should not be involved in the healthcare industry. Vocal critics like The Service Employees International Union say that investors have no business in mature business like skilled nursing homes. The Union believes that investors would have incentive to treat employees poorly and possibly even take the company in a bad direction on purpose.
When private equity investments began to gain popularity in the early 1990s, most investors shied away from the healthcare industry due to its perceived complications. In 2019, we know that private equity investors can find massive success by investing in the healthcare industry, especially in the areas of personalized medicine, consumerism and digitalization.