McKinsey on Healthcare
Matt Holt on how privacy and private capital can improve healthcare
09 Sep 2025
Chapter 1: What are the latest trends in healthcare investing?
You are listening to McKinsey on Healthcare, a podcast dedicated to showing the latest trends, insights and innovations shaping the healthcare industry. I'm Prashant Reddy, a senior partner in McKinsey's New Jersey office and your host for this episode. Today, I'm joined by Matt Holt, who is the managing director and the president of private equity at New Mountain Capital.
His work focuses on growth buyouts across a range of industries, including healthcare technology, healthcare products, life sciences materials, and sustainable infrastructure. Five years ago, Matt and I sat down for our first McKinsey on Healthcare podcast, where we talked about how healthcare investing can drive innovation.
I caught up with him just recently to discuss how the industry and investing has changed since 2020. Matt, it's great to catch up again.
Chapter 2: How has healthcare investing changed since 2020?
It's been five years since our last McKinsey on Healthcare podcast, where we talked about healthcare investing. Much has changed since those pre-COVID days, but then again, much hasn't. I'm looking forward to diving in and hearing your thoughts.
I'd like to start by maybe looking back at how things have changed in the past five years, and then I'd like to ask you questions on what you think needs to change in the next five or 10 years for us to address the biggest challenge in healthcare today and to transform the industry for a better tomorrow. Welcome.
Chapter 3: What are the core tenets of Matt Holt's investing framework?
It's great to see you again, Prashant. It's nice to catch up after five years.
Superb. Maybe we have just two sections on this, the look back and then the look forward. So first, how have the core tenets of your investing framework evolved over the past five years, if at all? And how do you see this playing out going forth?
I would say this. We've been studying and investing in the healthcare technology market for approximately 15 years. Over the first 10 years, there were really three core tenets that determined our framework behind which we're investing capital. The first one has been the reduction of administration costs and the reduction of administration inefficiency.
Chapter 4: How does private capital impact healthcare efficiency?
converting paper to digital, converting manual to automation process. That's always been tenant number one. Tenant number two, historically, has been enablement of the shift towards an outcomes-based system. And number three has been, if you're successful in number one, in supporting digitization along the way you generate data and information.
So I'd say historically, those have been the three core tenets that have driven our investment framework and strategy. Over the past five years, those three tenants have really expanded into six. It's really based on the market becoming larger, more nuanced, and we believe there are new market drivers that we're now adding to our core tenants.
So those six tenants going forward include the empowerment of patients, We're finally entering the moment of time in the industry where consumers have a stake, patients have a stake, they have a voice. Number two, the democratization of patient data and information. Number three, the acceleration of interoperability, breaking the silos between data and information sources.
Number four, the removal of waste and the restoration of trust. Number five, the convergence of clinical and financial decision-making. And number six, the enablement of next-generation research. These are really the six core tenets that we're investing behind today.
Chapter 5: What are the challenges in the current US healthcare system?
expanded and specific, which I like the combination. We'll discuss those, I think, in the second half of the podcast. Maybe just to pull us back into just a broader macro view. So private capital continues to play an increasing role in healthcare and life sciences.
If you think about investor interest and from an investor point of view, could be US, it could be global, what makes this an interesting market?
So private capital, I would say private equity has some specific advantages with respect to supporting the acceleration of value creation. Private companies, relative to publicly traded companies, are... able to manage according to long-term timeframes. And they're also often set up to enable the transformation of business process through the transformation of specific companies.
Those features of the private market's advantages position the private market and the private equity market in particular as an advantage framework to drive modernization of the U.S. healthcare space.
How do you think the ownership model of private ownership and private markets impacts things like affordability, access, and quality, positive or negative?
So I would say with respect to driving transformation, control investors in the private equity markets can influenceā¦ people and process in a way that unlocks value on an accelerated timeline. With respect to where you play in the industry, there are different ownership models that are suited to different
components of the value chain. And the public perception of, I'd say, private capital investments in healthcare hasn't always been positive. How would you respond to some of those concerns and how does it impact actually your strategy and thesis as you think about investing?
Yeah, I would say if you look at the history of private equity interest and investment in healthcare, quote unquote, the majority of private equity capital investment over the past 20 years has really been in and around owning the regulated entity, the provider of care, the owner of the license.
Over time now, what's happening is private equity is increasingly investing really in the efficiency and the systems, which is really where New Mount has been focused over the past 10 to 15 years.
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Chapter 6: How can data privacy improve patient trust in healthcare?
That's partly why we've been able to avoid a lot of the mistakes from a larger market standpoint. And ultimately, I think the private markets and private equity markets are evolving to focus on this part of the market as well.
So you mean healthcare technology, information liquidity, outcomes alignment, the things that you actually mentioned earlier?
Yes, exactly. Exactly. Building the toolkit and bringing modernization technology, what I call modern business process, that may be standard in every other industry, bringing that into the healthcare industry, which has been largely a laggard with respect to the adoption of technology and, again, the adoption of modern business process.
So over the last maybe 10 to 20, let's say 15 years, you've been willing to make what people might characterize as much bolder moves in your underwriting process and kind of growth thesis for, let's say, bolt-on investments. What has given you the conviction to make these big slash bold bets?
I'd say over time, it really starts and ends with the quality of the team and ultimately the track record and the experience set of that team. We as a firm have been building out our team and our organization, including the build out of our operating partner, supporting team, our team of investment professionals, increasingly has a track record of replicating a success.
So there's the team complexion within our own firm. And then ultimately there's also the team members at the portfolio companies themselves. That allows us to underwrite, value creation, targets, value creation approaches that have previously worked.
So while it looks like it may be bold or taking more risks from the outside in, really what's happening is we're re-underwriting elements of value creation where we've been successful previously. We also are able to avoid mistakes that we have made in the past.
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Chapter 7: What role does interoperability play in healthcare transformation?
And we catalog those lessons learned. And ultimately, our business model is a It's a constant and continuous improvement process. And ultimately, that's allowed us to stay ahead of the market and embed on sort of the next generation of opportunities we see in the industry.
And you recently talked about this, I think more publicly and privately, on injecting a venture innovation mindset into a business. into, I'd say, a private equity platform. How do you see that playing out from an approach perspective?
Ultimately, what the venture market is really good at is corralling the best talent in the world, building and designing modern, cutting-edge product roadmaps, building out best-in-class engineering capabilities and correspondingly products, combining
that element of the market with access to scale, scaled access to data, scaled access to workflow, scaled access to customers is where private equity can add a lot of value and marrying ultimately innovation with access to scale has the effect of speeding up the commercial adoption of those modern and innovation tools really led by an accelerating technology market today.
So maybe a look forward, if I can shift our questions a little bit. So if you look at opportunities for the future and changes that you'd like to see happen, and you're trying to implement, you've mentioned a few already. You mentioned a few times around just things that are broken in the healthcare system and that you want to fix.
What are the top maybe three or four concerns that you really want to address, you know, going forth?
There are three major issues with the current state of the US health care system. Number one, we continue to have suboptimal health outcomes as measured by comparison stats versus other countries, especially relative to the historical investment in the industry. the economics associated with the industry.
Suboptimal health outcomes is a major issue across things like mortality rates, infant mortality rates. I could list a whole set of clinical KPIs where we're really laggard and we shouldn't be in this country. Number two, growing costs. We're really at a breaking point in terms of the portion of the U.S. economy that's being absorbed by costs within the healthcare industry.
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Chapter 8: What future changes are needed in the healthcare system?
And that's something that continues to be a burden, so to speak, at a system level. And then number three, the increasing administrative burden, which is correlated to cost, but furthermore, makes the system a very challenging system to navigate as a patient or as a consumer, likewise, as a physician or provider, likewise, as a supplier into the industry. So there are huge opportunities to
simplify, use modern technology to attack the administrative burden. And correspondingly, costs should be reduced over time with that. And then fundamentally, outcomes should increase as well. So the solutions to number three will ultimately help us address number two and number one as well.
Fantastic. And so you believe that these challenges are all solvable with the teams you mentioned maybe at the start and other interventions around the platform and bringing VC innovation into the marketplace on a scale. You believe these things that all come together in a way that drives value at the base, not just in pilots.
The platform companies that we're building are... designed specifically to go after specific problem statements within various segments of the market. Ultimately, there's coordination and collaboration across the platform companies that we're building, but they're pointed specifically at these issues and really meant to build solutions at scale.
So it's a vertical use case to solve a problem, but enough of a horizontal platform that it doesn't create friction between other vertical silos. Yes, that's exactly right. Yeah. Maybe we pick some of the themes that you started off on the top with, including empowering patients, democratizing patient data, accelerating interoperability. Maybe we pick also just next generation research.
I'll click through a few questions that hit some of the things that you said at the start. Maybe first starting with the role of data, and you did have a conversation even five years back on this in a maybe different level of maturity, right?
But first, as you think about price transparency and giving patients greater access to clear and transparent data on the cost of services, how do you think that's going to play out in the way the system functions and with all of the friction inefficiencies that sit there today?
Ultimately, transparency is directly linked to supporting patient or consumer choice. We have a structural issue today in that we have a lack of transparency across the system. Today, we also have modern technologies that can enable complexities across pricing to increase. to become transparent. That is a precursor step to be able to then ultimately enable choice.
Being able to shop across markets and push more power to the consumer and to the patient is ultimately an outcome of greater transparency. The other feature of this with respect to data being a part of the solution is the facilitation of patient IDs and matching. We have a US-based
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