Healthcare marketing is a tricky task in and of itself, but the involvement of private equity can make it even trickier.
As healthcare has grown to encompass nearly one-fifth of the American economy, so too has PE investment surged. PE deal volumes in healthcare totaled nearly $750 billion from 2010 to 2019, according to a 2021 study by the American Antitrust Institute and the University of California, Berkeley. The report goes on to state that the PE business model is “fundamentally incompatible” with healthcare and that consolidation undermines competition across the industry.
The involvement of PE funding, which is predicated on a profitable exit within five to seven years, can potentially complicate the mission of a healthcare organization. So while the debate continues over whether PE is good or bad for healthcare, it’s important to understand how this changing dynamic can affect the efforts of medical marketers to promote brands.
When looking at PE, it should first be noted that there are different tranches of investors, according to Sage Growth Partners CEO Dan D’Orazio. This is determined by how evolved a company is in its lifecycle, how much market traction it has gained and how much money it takes in.
D’Orazio said that PE firms look at inefficiencies across the healthcare sector and eye opportunities to “roll up” businesses as part of their growth strategy. In recent years, PE firms have shifted away from acute care facilities like hospitals in favor of ambulatory surgery centers and hospice care.
On the PE side of investing, D’Orazio explained, the question often centers on executional risk and where to direct funds to enhance product capabilities. Thus what medical marketers need to do when working with healthcare organizations supported by PE money is focus on the scalable aspects of the business that allow it to thrive in the market.
Rather than freewheeling and moving fast, D’Orazio suggested that marketers should have “enough air to breathe” and be given the right resources and perspective to achieve their goals. At the same time, in an era where everything is measurable — PE firms generally want specifics — marketers need to demonstrate progress along the way.
“The mistake that people make is that there isn’t a true appreciation for the art and science of marketing and its role in helping an organization grow,” D’Orazio said. “There needs to be an appreciation for marketing’s role in establishing a brand. The brand is not a logo; it’s a promise. What is the promise that this organization can make to the market and then how do we build proof?”
At the crux of all effective healthcare marketing, D’Orazio added, is unique content.
“The words come last and the thinking and strategy come first,” he explained. “Marketers ultimately will figure out what channels to use or how to utilize PR. But if it’s not good content that’s cutting-edge, the best merchandising vehicles won’t take you that far.”
Some PE-backed healthcare organizations have embraced digital solutions for their marketing needs, as noted by Cardinal Digital Marketing in a 2021 blog post.
While the approaches are not uniform, the post laid out viable techniques and strategies for PE-backed healthcare companies to consider when dealing with marketing quandaries. These included full-funnel content marketing, paid search and social media campaigns, and SEO audits.
“Of course, there is no one-size-fits-all approach,” the post stated. “But the right framework should make it far more efficient for PE firms to deploy the marketing strategies that make the most sense for specific businesses, industries or locations.”
