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It’s the End of the World as We Know It But Healthcare Feels Fine

By Dan D'Orazio, CEO, Sage Growth Partners | January 18, 2023

Every healthcare conference should have its own soundtrack.

I borrowed a Gen X favorite from REM for this blog’s headline, which pretty much summed up the vibe at JPMorgan Health — at least for healthcare companies and the PE firms that (still) love them. “Thank god I’m in healthcare with rest of world on fire” was my general takeaway. Not bad for a conference that some HLTH 2022 attendees were dreading back in November.

That said, what’s an on-the-fly market analysis without a few caveats? Here’s three that Sage’s COO David Sheehy and I took away from JPM.

  1. It’s time to re-evaluate valuation.

Coming out of HLTH 2022, the deal environment was still tight and slow, with fewer companies coming to market and debt hard to access. Investors are waiting for the books to come in — the dossiers companies use to shop their businesses. The market hates uncertainty and is looking to make valuations that are truly based on performance. Which leads me to my next point…

  1. It’s time for companies to get their house in order.

As David says: The market is not going to reward the way it did over the past few years. Or as I put it: It’s time for capabilities to stop masquerading as companies. Instead of growth at all costs, companies need to take a step back and focus on how they function — not just on fundraising.

Does anyone even remember what a healthcare SPAC or IPO looked like? No. Get your unit economics right. Optimize. And listen to PE: Don’t come to market now unless you’ve bothered to create a great company.

  1. It’s time for Greater Fools to meet their Better Angels.

The Greater Fools theory suggest there’s always a new idiot ready to buy a meh company. This has (largely) stopped in healthcare. A new sobriety has set in, with Better Angels making better decisions as new set points set in.

In other words, the irrational exuberance of 2020-2021 has given way to the rational pragmatism of 2022. David and I agree that that’s a good thing. And recession or no, healthcare investors still have lots of cash to spend.

Speaking of recession, healthcare has been taking the road less traveled for a while now. The pandemic accelerated the industry into an early recession of its own, thanks to exploding human capital costs and supply chain woes. Healthcare had to respond like the recession was already here. So in a sense, hospitals and health systems might now be ahead of the curve compared to other industries.

All that said, two things are true: Healthcare is still fundamentally broken, but it doesn’t have to be. In addition, we don’t need tourists to come in and think they can fix the industry. The truth is you don’t have to be a rocket scientist to do well in healthcare.


  • We don’t need a revolution; we just need evolution. We don’t need to go to the moon when we still can’t get info from one doctor to another.
  • We don’t need machine learning; we need fax machine learning. As wild as it sounds, faxes are still around because they still solve a problem.
  • We don’t have to be futurists. We’d be better off as past-ists or present-ists. We still need to address the problems that have been around since 1985!
  • We can’t get lazy. Let’s not lose what we gained from the more deliberate thinking and innovation that COVID demanded.

David’s COO Fight Club list gets down to specifics: center in on ops, finance, and revenue cycle. Process innovation is needed before product innovation, which brings us back to anchor on Sage’s own guiding principles: Be able to talk about and create value. In the long run, shiny toys won’t win. And, it’s time to focus on real ROI.

I couldn’t agree more, my friend.

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