Investing Perspectives Shaping the Future of Healthcare Technology

In a changing healthcare industry, technology is helping modernize critical infrastructure while improving efficiency, connectivity, and patient outcomes.

With deep experience across healthcare and tech, TPG has spent more than a decade investing at this intersection and identifying opportunities to drive innovation across the ecosystem. In the latest edition of The TPG Take, hear from TPG leaders on the trends shaping the future of healthcare IT and the opportunities ahead.

Note: The below is an edited transcript of the interviews. For more, please watch the full videos.

The Evolving Healthcare Technology Landscape

John Schilling: "One of the challenges with the U.S. healthcare system is that the technology that underpins it has not moved at the same pace that it has in most other industries. And while that's a challenge, it also creates an opportunity for us.

That's everything from electronic medical records to all the technology that serves as an intermediary between different constituents in the value chain. There's a huge array of opportunity to modernize across the board."

Katherine Wood: "Healthcare is a $5 trillion industry. That's bigger than every economy in the world other than China, and it spans pharma, services, medtech, and more. And so, you have to think about where can you inflect growth over a long period of time.

As we observe there's $5 trillion of spend, there's also a lot of waste. 25% of that is administrative costs in the U.S. Very little at this point is spent on technology, which we have seen has made things not only more efficient, but more patient-friendly and safer. So that's an area that we've been focused on for at least 15 years."

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TPG’s Approach to Healthcare Technology

Art Heidrich: "Healthcare and tech are two key pillars of what we do across TPG. And there's a huge amount of opportunity at the intersection of these themes, and you'll see that in other areas as well, but healthcare IT may be the area that we've been doing it the longest across our teams.

As we think about healthcare IT, it always starts with what's best for the patient and what's best for the system. And one of the positive elements around that is there is still so much opportunity for efficiency in the healthcare end market."

Katherine Wood: "One of the nice things is that healthcare and technology are two very active areas in their own right, and we have a real opportunity at the intersection. In some cases that can be that when we're investing in healthcare technology, we have owned a provider or partnered with them in the past, so we really understand the customer perspective.

At the same time, we've seen so many different models of software and technology that our best investments bring together both. There's an end market insight about the growth that's driving it, and there's a software penetration opportunity.

So, if you think about WellSky. One of our investments in the specialty electronic medical records, that's an area they serve among other things, home health. We have focused on investments in home health as a healthcare team because that is one of the most patient-friendly, lowest cost sites of care where volumes are moving. That's part of the solution.

In addition, on the technology side, we've seen that it's very helpful to these providers to have software that is very tailored for their workflows, not a general solution. And so, if you bring those two opportunities together, there's volumes moving to the home, there's specialized software adoption, then you have growth from both of those, and we have insights that can help support that growth."

Art: "I think you see that in all of the investments we've currently made, whether it's WellSky, Surescripts, Nextech, or Lyric and in many cases that creates a lot of growth opportunity for them.

As we broaden the aperture step back and think about, where's the broader ecosystem going? How do we take the assets the company has today and really mobilize those against the future opportunity? And, we've seen great growth as a result of that, and I think we'll see a number of interesting investments coming down the pipe over the next year or two as well."

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Portfolio Spotlight: Lyric

Art Heidrich: "We’re quite excited about Lyric, both where it's come already and also the opportunity ahead. They serve 23 out of the top 25 payors in the U.S. So the question is how do we accelerate growth?

There were big opportunities to accelerate growth all around it. And so secondary editing, post-pay, and AI were all meaningful opportunities the company had not addressed. Under our ownership, we've brought in a leadership team that is very focused on product and the ecosystem. We've seen a very significant growth acceleration in secondary and meaningful opportunities around that in adjacencies as well.

The other big area of focus has been on the tech stack. When we bought it, it was all on prem. It's now predominantly cloud-based, which is a huge transition to go through relatively quickly. But very interesting as you think about data and AI where they have a very privileged position, seeing most of the claims in the healthcare ecosystem and helping partner with their customers to really drive AI adoption."

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Portfolio Spotlight: Surescripts

Katherine Wood: "One investment we're really excited about is a company called Surescripts. You've probably never heard of it, but you've almost certainly used it at some point. It's a really special business because it connects many different stakeholders in healthcare who often are hard to reach or don't connect with one another. And what we've been able to do is come in and help the company address new growth areas. And they're really things that are aligned with what's better for patients and what's better for healthcare.

Because the company has connectivity across so many different stakeholders. They're able to make processes that today are very manual and uncoordinated, much more seamless.

They're a company that pioneered and drove the adoption of electronic prescribing. And if you look at the cost of a prescription over time, they have reduced that by over 80%. And that's not only made things more efficient, but it's also made things safer by ensuring that there's no miscommunication on paper."

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Portfolio Spotlight: Nextech

Art Heidrich: "We're very excited about where Nextech sits today and also where it's going down the road. Our original investment in Nextech in many ways grew out of our investment experience with WellSky. Nextech sits in complimentary and adjacent markets, but a similar business model in terms of products and services delivered to customers.

It has scaled significantly since we first invested in it. It's also one where we're very excited about the AI opportunity. They've made a lot of progress on their AI products and really the benefit there is a lot more clinician productivity in terms of being able to focus on patients in person, instead of typing into the electronic medical record, we can now deal with a lot of that on the backend via ambient listening and scribe solution. I think there's lot more there in terms of how do we automate workflows to make the doctor's life easier and improve the patient experience.

The management team is also doing a great job on the R&D side. And then, the real focus will be how do we scale that and take advantage of what we've built."

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ICYMI: Other News & Views from TPG...

Introducing The Alternatives Angle, our new series designed for financial advisors. Featuring perspectives from TPG leaders, we’ll explore private market strategies, portfolio applications, and the insights advisors need to help clients pursue long-term investment objectives. To kick off the series, TPG Global Wealth Solutions CEO Jack Weingart shares perspectives on private equity, private credit, secondaries, and evergreen vehicles.

Thank you to all of our followers and readers for joining us for another edition of The TPG Take. Please share the newsletter with anyone you think would be interested and we look forward to being back in your inboxes.

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