The PE Playbook: A Checklist for Investing in Healthcare Services

The healthcare industry offers considerable opportunity for private equity investors equipped to seize it. While the passing of the Patient Protection and Affordable Care Act (PPACA) leaves some ambiguity, it has provided ample clarity to restore confidence in the healthcare industry. The continued need for clinical integration and cost control, the increase in demand for healthcare services, favorable capital markets, and growing consumerism in healthcare have all set the stage for considerable market growth. In addition, revenues are becoming more diversified as providers are pushed to cover a broader continuum of patient care. Even so, hidden risks can blindside even the most proficient investors, jeopardizing investment execution and the prospect of maximizing returns. Historical PE investment theses, growth assumptions, and profit improvement strategies may no longer be appropriate. Consequently, prudent investors are reassessing yesterday’s playbooks to validate alignment with today’s environment and adjusting their approaches where warranted.