From the December 2016 issue of HealthCare Business News magazine
The sixth pillar is the leadership team itself. A business might have the best strategic plan in the world, but if this team can’t execute on it the company’s not going anywhere. What really drives outsized returns is leadership with more than just health care expertise — someone who has really proven that they can scale and build companies, perhaps more than once. When a buyer or an investor evaluates a company, often the most important factor is management team experience. Without this pillar, the other pillars would not hold up.
Ideally a company in the health care space has not just one, but two levels of talented leaders, with folks who are really taking ownership over their respective areas according to a deep sense of accountability regarding their own chain of command. This is far superior to a situation where everyone is reporting in to the CEO, who is truly irreplaceable or the business won’t continue to operate.
Management bench strength is absolutely the core and it sums up the key element of what drives business value: leadership emphasizing strategic elements founded on true fundamentals. A health care platform may have a team of rocket scientists — the smartest guys in the world, who have built the most sophisticated predictive model that might literally predict cancer. But if they don’t know how to monetize that product and turn it into a lasting revenue opportunity, then it’s not really worth much.
Many young health care companies have ridden the bandwagon of building tools in hot spaces, and are gaining value because they landed in the right place at the right time. As a result, too many assume the short-term view that a business is really valued on the basis of a capability set. But a much longer-term view based on fundamental attributes is what a business really needs to achieve the highest possible value in the long-run.
About the author: Andrew Colbert is a managing director and founding member of Ziegler’s Healthcare Services & IT Corporate Finance Practice. Colbert has represented seven radiology groups on innovative transactions. He specializes in advising physician groups on strategic and financing alternatives, including mergers and acquisitions, capital-raising transactions and partnership development.Back to HCB News
