Innovating Healthcare Under Private Equity Ownership: An Interview with KVLR CEO David Krainert

In this interview, KVLR Capital CEO David Krainert discusses the challenges and opportunities of driving innovation within private equity-backed healthcare organizations. He also discusses the hurdles healthcare teams face, the role of leadership, and the trends shaping the future of healthcare innovation.

Key Challenges in Healthcare Innovation Under Private Equity Ownership

Q: What are the key challenges healthcare organizations face when trying to implement innovation under private equity ownership, and how can they overcome these obstacles?

David: "Private equity funds have a time horizon once capital is allocated to implement strategies and deliver value, whether it’s related to innovation, operational efficacy, or scalability. This can make it hard for healthcare teams who have not integrated new software or other solutions before, leading to extra time with new ideas that may or may not generate value long-term.

The approach of PE is more conservative than people think; opposed to VC, an idea has to come from experienced teams that ideally have built similar innovations before PE will throw money at it. One way to fix it is to focus on ideas that improve patient care and save time or money for payors, shareholders, and patients, like using technology to make things faster and easier."

Balancing Financial Returns and Long-Term Innovation

Q: How do private equity firms balance the need for financial returns with long-term investments in healthcare innovation, such as technology adoption and patient-centered care initiatives?

David: "It's about focusing on smart ideas that help both patients and businesses. For example, telemedicine and certain apps make healthcare faster and better, so investing in something that already exists as a solution can be an uphill battle and potentially a race to the bottom when it comes to pricing yourself in the market.

Even though PE funds are in business to make money, so are insurance companies, for-profit hospital systems, and pharmaceutical companies; so the only difference becomes who is actually delivering the most value to make a patient healthy and happy. As long as the investment thesis is to positively impact the experience for a patient without interfering with medical judgment, the fund should do very well."

Leadership’s Role in Driving Innovation

Q: What role does leadership play in fostering a culture of innovation within a private equity-backed healthcare organization, and what qualities are essential for driving meaningful change?

David: "Good leaders show everyone that trying new ideas is important. They listen to their team and encourage them to share smart ways to make things better. Leaders also need to create a safe space where people feel okay to speak up. Even if it doesn’t always work perfectly the first time, trying until it does is the mentality a leader should display.

Some important qualities for leaders are having a big-picture plan and sharing it with the team so everyone knows what they’re working toward. Without teamwork, not much is possible, so part of creating meaningful change is bringing people together and making everyone feel like their ideas matter. Lastly, good leaders are not afraid to take risks, so bravery will be one of the most important traits for someone leading others."

Examples of Successful Innovation in Private Equity-Backed Healthcare

Q: Can you share examples of successful innovation initiatives you've seen in private equity-backed healthcare companies and what made them effective?

David: "The coolest innovations in healthcare are innovations in the VC world. With that said, private equity has invested in safer solutions like chronic care management and remote patient monitoring.

The systems and technologies to manage both programs are effective because the geriatric community is one of the fastest-growing populations, growing faster than the current provider base can actually handle."

5. Future Trends and How Private Equity Can Prepare

Q: What trends do you foresee shaping the future of innovation in the healthcare sector, and how should private equity investors prepare to capitalize on these changes?

David: "I believe technology will likely play a huge role in treating diseases, combating obesity, and managing chronic conditions by harnessing the power of personalized medicine, artificial intelligence, and microbiome research.

With advancements in genomics, doctors will hopefully be able to tailor treatments specifically to an individual's genetic makeup, optimizing effectiveness while minimizing side effects. For obesity, it will be important to study gut bacteria on an individual basis and implement technology that could remind a consumer what to eat based on real-time data from wearable devices that monitors the person's energy level and total caloric intake.

Medicine, in my opinion, is all about preventive solutions that provide insights into lifestyle choices, metabolism, and the importance of understanding the microbiome to help create personalized interventions to promote longevity.

A sample of your microbiome, typically taken from places like your gut, mouth, or skin, can reveal a lot about your health, lifestyle, and even your risk for certain diseases. By analyzing the microbial DNA in the sample, researchers and healthcare providers can identify which types of microbes are present and how they might be affecting you.

Because the balance of bacteria in our gut plays a key role in digestion, immune function, and even mood, identifying harmful bacteria early on using technology is critical. Certain imbalances in the microbiome have been researched to be associated with chronic conditions like obesity, diabetes, heart disease, and mental health disorders like anxiety or depression.

A private equity firm that plans to invest in microbiome analysis can help pinpoint risk factors early and become a large player in value-based care arrangements with insurance companies and the federal government."

Final Roundup: Key Takeaways

1. Key Challenges: Private equity operates on fixed time horizons, making it essential for healthcare teams to focus on proven innovations that improve patient care and efficiency.
2. Balancing Financial Returns: Investments that prioritize value creation for patients without compromising medical judgment are key to long-term success.
3. Leadership’s Role: Innovation thrives under leaders who encourage collaboration, take calculated risks, and communicate clear visions to their teams.
4. Examples of Success: Private equity-backed solutions like chronic care management and remote patient monitoring effectively address the needs of a rapidly growing geriatric population.
5. Future Trends: Emerging technologies such as personalized medicine, microbiome research, and AI will reshape healthcare, offering new opportunities for private equity to lead in preventive care and value-based arrangements.

David’s insights highlight how private equity can drive meaningful change in healthcare by prioritizing innovation, leadership, and patient-centered solutions. Partnering with the right private equity team can make all the difference for healthcare practices looking to grow, innovate, and deliver more value to patients.

If you’re ready to take your medical practice to the next level, connect with KVLR Capital today. With our expertise in private equity-backed healthcare strategies, we can help you unlock your practice’s full potential while delivering lasting value to your patients and stakeholders.