Private Equity in healthcare: Driving innovation and value

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In an interview published by Private Equity International Magazine, Glenn Mincey, Head of Private Equity, and Ash Shehata, Retired Head of Healthcare, KPMG U.S., delve into the evolving healthcare industry and the pivotal role that private equity (PE) can play in its future. They highlight the significant potential for investment in life sciences and innovative care delivery models, emphasizing the importance of data in driving operational efficiency, revenue enhancement, and scale.

They also note that PE firms are well-positioned to expand healthcare businesses by investing capital to broaden existing specializations or entering new markets through acquisitions. These investments, they point out, are often data-driven, focusing on advanced billing practices and the development of value-based care models, which are supported by comprehensive data validation tools and integrated patient profiles.

	The PE Advantage: Private equity managers enhance healthcare by boosting efficiency and revenue, streamlining data to reduce administrative burdens and improve care quality, while investing in specializations, expanding markets, and optimizing billing to support innovative care models.
	Appetite for Healthcare: Healthcare managers are focusing on life sciences and innovative care delivery models, with private equity's strong appetite driven by platform modernization, including interoperability and generative AI, despite macro uncertainty, leading to continued high transaction levels and valuations.
	Challenges Create Opportunities: Healthcare, a $5 trillion industry facing data challenges and fragmentation, offers opportunities for private equity in health tech, particularly in revenue cycle optimization, with start-ups using generative AI to streamline payment processing and improve claim quality.
	Creating Value at the Portfolio Company Level: Private equity firms create value at the portfolio company level by prioritizing data security, which builds patient trust, ensures legal compliance, and protects against costly data breaches.
	Key Innovations: Private equity is funding key innovations in healthcare, such as advancements in longevity, the development of space medicine with unique orbital treatments, and the use of humanoid robots to assist in patient care, thereby reducing the healthcare burden.
	Implications of U.S. Policy Debate: Provisions of the newly enacted 2025 Reconciliation Bill, coupled with evolving developments in U.S. healthcare policy, will reshape the industry and drive it to seek private equity for capital, expertise, and innovation.