PE and the future of healthcare: Trends and strategies

Emerging technologies, particularly AI, machine learning and generative AI, are poised to revolutionize every aspect of the healthcare value chain. For example, AI spend on drug discovery and development will reach $3 billion this year, allowing for quicker, more cost-effective research that can lead to life-saving treatments.

PE firms can capitalize on this by funding pharma companies that harness AI to drive innovation in R&D pipelines Together with AWS, we developed the Velocity Labs Accelerator, which supports digital lab operations by integrating systems and automatically capturing, storing and structuring diverse benchtop data. This results in data being more readily available for use and expedites drug discovery and device design.

Moreover, we see that PE activity in pharma services and healthcare IT has been outpacing health services, with these sectors offering stronger growth and margin. In the second half of 2024, deal activity was headlined by the $8.9 billion buyout of revenue cycle management platform R1 RCM.

The implementation of AI has also enhanced the reliability of manufacturing and supply chain operations, ensuring that processes are efficient and resilient. This provides PE investors with opportunities to back tech-enabled supply chain solutions that mitigate risks and improve margins. 

Furthermore, technology is transforming the patient experience by enabling personalized services. Healthcare providers are now better equipped to offer tailored care solutions, which improve outcomes and satisfaction for both patients and healthcare professionals. By investing in digital health platforms that emphasize patient-centric approaches and personalized medicine, PE firms can capitalize on this trend.

Digital transformation is redefining how patients engage with healthcare services and professionals. The advent of integrated platforms has facilitated seamless communication, ensuring that interactions between patients and healthcare providers are more efficient and effective. This has led to a shift in the power dynamic, where patients are more informed and empowered to take part in their care journeys.

For PE firms, companies that enhance the digital customer experience can make appealing investment targets. Companies that develop user-friendly platforms for patient engagement, telehealth consultations and AI-driven health management tools are well-positioned for growth. Personalized medicine, supported by AI-driven diagnostics, is becoming a mainstream approach, allowing treatments to be customized to individual patient needs and improving outcomes. By investing in such technology-driven healthcare businesses, PE firms can capture significant market share and drive profitable exits.

The digitalization of health records and the increasing use of wearable technology are also enabling more personalized insurance plans and automating claims processes, simplifying administrative burdens for patients and providers alike. PE firms can explore opportunities in companies that provide these innovative insurances and claims management solutions, paving the way for streamlined operations and enhanced customer satisfaction.

Together with partners such as Microsoft, Avanade and Nuance, Accenture develops in-house proprietary services like Intient Patient™ or PEXpress to support healthcare clients in the digitalization of customer journeys.

The onset of Industry 4.0 has brought about a new era of digital operations within healthcare. Hospitals and clinics are becoming more connected, using the Internet of Things (IoT) and AI to optimize resource management and boost operational efficiency. This connectivity enhances coordination, reduces waste and supports better patient outcomes through streamlined processes.

PE firms can create value by investing in companies that lead in digital operations, particularly those that harness IoT and AI to enhance clinical and administrative functions. Automation is a key component of digital operations. 70% of healthcare workers’ tasks in the US could be redesigned by technology augmentation or automation. By automating routine tasks, healthcare staff can dedicate more time and attention to assignments that are uniquely human. 

AI will provide a disproportionate advantage to large companies in both healthcare IT and services because these organizations can afford to invest in AI infrastructure and workflow tooling. PE investors can support companies that offer automation solutions tailored to healthcare environments, ensuring that their portfolio companies benefit from operational efficiencies and cost savings.

Data interoperability, the secure and agile exchange of information between different healthcare providers, ensures that patients receive comprehensive, coordinated care that spans across different treatment settings. PE-backed investments in platforms that promote data sharing and interoperability can facilitate better care delivery and meet the growing demand for integrated healthcare solutions.

Together with ServiceNow, we developed the Smart Labs offering for QC/M labs looking to reduce effort required to manage and maintain compliance for lab instrumentation. By automating the lab asset lifecycle across the R&D organization, resources can focus on high-value tasks and reduce overall compliance cost.

As the digital landscape continues to evolve, healthcare leaders are turning to managed services to maintain their competitive edge. These services allow organizations to optimize their processes, reduce operational costs and uphold high standards of patient care. Managed services are designed to be scalable, enabling healthcare providers to grow sustainably while staying aligned with the latest digital advancements.

For PE firms, leveraging managed service providers can drive healthcare portfolio value through more streamlined, cost-effective operations. Transformation initiatives driven by managed services not only address current operational challenges but also position healthcare organizations to adapt to future disruptions. This forward-thinking approach is essential for maintaining long-term success and leadership in the industry.

We partnered with a PE-backed pharmaceutical company in supporting their pharmacovigilance operations. This enhanced the management of Individual Case Safety Reports (ICSRs), safety operations, literature screening, aggregate reporting and signal detection across a diverse portfolio of product categories including pharmaceuticals, over-the-counter (OTC) drugs, medical devices, cosmetics and nutraceuticals.

External growth strategies are playing an increasingly important role in scaling and accelerating healthcare transformation. These strategies enable organizations to build robust, scalable platforms that can support continuous innovation and market expansion.

PE firms can unlock significant value by adopting buy-and-build strategies that focus on acquiring and integrating complementary businesses. This approach can help create vertically integrated platforms that offer a full spectrum of healthcare services, positioning these platforms for sustainable growth. 

While the share of buy-and-build rationale in M&A has grown by 2.5x from 2013–2023, executing successful M&A strategies comes with its challenges. Navigating the complex regulatory landscape requires careful planning and execution, and successful deployment requires a holistic pre-deal assessment and readiness of playbooks for smooth post-deal integration, notably for multiple parallel build-ups. Overcoming these barriers is crucial to achieving synergies and ensuring that integrated platforms function smoothly.