Matt Holt on how privacy and private capital can improve healthcare
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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.
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.
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.
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.
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...
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Chapters
8 chapters
1
What are the latest trends in healthcare investing?
0:05–0:57
2
How has healthcare investing changed since 2020?
0:57–1:28
3
What are the core tenets of Matt Holt's investing framework?
1:28–2:12
4
How does private capital impact healthcare efficiency?
2:12–3:36
5
What are the challenges in the current US healthcare system?
3:36–6:07
6
How can data privacy improve patient trust in healthcare?
6:07–8:04
7
What role does interoperability play in healthcare transformation?
8:04–10:26
8
What future changes are needed in the healthcare system?
10:26–27:37
Speakers
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Eric Larsen on the emergence and potential of AI in healthcare
Warehouse to wellness: Bob Mauch on modern pharmaceutical distribution
Leading a best-in-class health system integration