Cradle to Grave as an Investment Strategy

"Cradle to grave" is a phrase that in my past life as a physician, I have associated with continuity of care for individuals. However, it really just means the entire life cycle of a product, from the extraction of raw materials (the "cradle") to its disposal or end-of-life (the "grave").

In this context, the 'product' is really a healthcare venture or business with the express outcome of improving patient care whilst generating a return. Some call this Impact investing. 'Cradle to grave investments involves supporting a healthcare company through its entire lifecycle, from the initial idea and early stage development, through to growth phases and finally to IPO or acquisition. It is more common in drug development and less so in health/medtech.

At an event on Tuesday, a couple of generalist investors, Tania Rahman and Fuchsia Curry discussed this as their firm's main investment strategy which meant that for the remainder of the week I have been thinking about the pros and cons of this as an investment strategy for healthcare transformation. Here are some of the pros:

1. Driving Innovation: Early-stage startups fuel the development of new technologies, services, and care models that enhance patient care. By providing funding and strategic guidance, angel investors and VCs enable entrepreneurs to turn ideas into practical solutions that have the potential to improve patient care while generating an ROI.
2. Consolidating Fragmented Markets: Growth and private equity investments will enable the consolidation of fragmented healthcare sectors like dental practices, vision care clinics, and physician groups. This consolidation is likely to result in more efficient healthcare platforms that leverage economies of scale, streamline operations, and standardise best practices across multiple locations, ultimately enhancing patient care delivery.
3. Increasing Access and Affordability By supplying capital to innovative care delivery models, such as online cremation services or telemedicine platforms which exploded during the COVID-19 era, we can increase access to healthcare services and provide more affordable options for patients. By disrupting traditional models and introducing consumer-centric approaches, these investments have the potential to improve patient experiences and make healthcare more accessible and affordable.
4. Enhancing Operational Efficiency: Later-stage equity investors often bring operational expertise and data-driven approaches that aren’t always available or needed for much earlier ventures. This focus on operational readiness and metrics within the same firm, if that is their investment strategy, leads to efficient use of resources and better care coordination.
5. Providing Capital for Growth: Established revenue-generating businesses like medical device manufacturers and healthcare IT providers benefit from private equity investments that provide the capital needed for growth, expansion, and the development of innovative products and services that enhance patient care.

In summary, there is immense potential of a cradle-to-grave investment strategy to drive healthcare transformation and improve patient outcomes. Are there any other pros that jump out at you? In the coming articles, I will discuss the cons of this as an Investment strategy. If this is your wheelhouse, let's connect!