🩺The Opportunity in Healthcare

Primary and Alternative Healthcare

Boring with Sexy Margins

While seen externally as boring, PAH in practice has great unit economics and great margins. Below are some of the key contributing factors:

Operating Margins

In contrast to the larger health organizations, despite the lower revenue per patient, PAH centers typically have significantly lower fixed overheads because they do not require extensive diagnostic, imaging, and laboratory equipment, high-tech facilities, or specialized medical and non-medical staff to comply with the operating regulations.

Continuity of Care

Primary healthcare providers often have long-term relationships with their patients with a higher frequency of visits per annum, which can result in higher patient satisfaction and loyalty. This can lead to increased patient referrals and improved financial performance for primary care providers. As primary care operators, we experience more than 100x CLV:CAC per average patient.

CLV/CAC ratio is the total average value you anticipate receiving from a new customer over their lifetime compared to the average cost to acquire a new customer.

Value-Based

Primary healthcare focuses on value-based care and in doing so, providers are incentivized to focus on patient outcomes (i.e. keep patients healthy) so as to reduce the need for expensive and unnecessary tertiary care services.

Preventative Care

Primary healthcare is focused on preventive care and promoting wellness, which can result in lower tertiary healthcare costs over time. By identifying and managing chronic conditions early, primary care providers can help to prevent costly hospitalizations and surgeries. This can result in lower healthcare costs for patients and payers, while also increasing the profitability of primary care providers.

High-Barrier To Scale

The ownership and practice of running healthcare centers are highly regulated and limited to the healthcare fraternity. Non-healthcare retail investors interested in pursuing a healthcare practice without being properly equipped to do so have limited access to carry out the business.

Furthermore, solo practitioners without a professional structure and proper governance are limited in their business practices from effectively scaling. The growth challenge is systems, structures, and capital.

Expertise and License needed to run and operate

Healthcare is highly regulated by local laws and regulations and is complex to operate without a high degree of requisite knowledge. Compliance with regulatory requirements is the first hurdle, making a healthcare business successful is the second.

Healthcare entrepreneurs must function within the regulatory confines designed to protect patients as it relates to medical, operations, marketing, structures, and indemnities. The healthcare business carries a high degree of legal and financial risks associated with lack of or non-compliance stemming from adverse events.

To be successful in the industry, it is crucial to have a dynamic team with experience and requisite knowledge on how to execute efficiently and effectively within the nuances of the local laws and regulations and to do so in a manner that generates high yields.