The next in our series of posts sharing key takeaways from panels at the Healthcare & Life Sciences Private Equity and Lending Conference focuses on the growing importance of female leadership in healthcare private equity. Joining me in authoring the post are Leah Eubanks and Holly Buckley.
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The Growth of Female Founders, Company Executives and Private Equity Leadership in Healthcare Private Equity Investments
By Leah Eubanks, Holly Buckley and Amber Walsh
Gender diversity in leadership positions at both the private equity and portfolio company levels is becoming increasingly important in the healthcare sector according to experts who spoke on a panel at the Annual Healthcare and Life Sciences Private Equity and Finance Conference in Chicago on February 20 and 21.
Experts included Ruta Laukian, Managing Partner at Gray Bella Capital, Monica Mehta, Managing Principal at Seventh Capital, Susan McClanahan, Chief Clinical Officer at Eating Recovery Center and President and Founder at Insight Behavioral Centers, and Jocelyn Stanley, Partner at New Harbor Capital. Amber Walsh, a partner at McGuireWoodsLLP, moderated the panel.
Here are five key points from the panel discussion.
1. The discussion on female leadership in private equity and private equity-backed healthcare companies is timely because the investors, advisors and decision-makers at the top level in this space are predominantly men, yet eighty percent of those that are directing the dollars at the customer level are women. Healthcare is the most female-dominated sector in the employment space in the U.S. economy with, according to one panelist, women representing eighty percent of employees in health and social care, especially in areas such as physical, speech and occupational therapy, veterinary medicine, and behavioral health. One panelist stated that, in areas that are male-dominated today, such as dermatology, women’s health, and ophthalmology, the residents in these areas are now predominantly female. This matters to investors because the disconnect between those directing the dollars and those providing the care, on one hand, and the investors, executives and decision-makers at the top, on the other, can end in a miscalculation of investment dollars.
2. The people in leadership and board positions are increasingly disconnected from those that work for them. According to one panelist, sixty percent of boards do not have a woman on them, and, in general, for those boards that do have women, the women are sometimes viewed as token diversity board members. There is a huge struggle to fix this issue because, with respect to professional sectors where women tend to reach higher ranks, such as human resources and the law, these areas are not typically designated board seats. Board seats tend to be given to individuals with industry or CEO experience or those with geographic and strategic expertise, where women have not historically enjoyed strong representation.
3. Limited partners and pension funds are starting look more positively on teams that are diverse, and some are only investing in businesses demonstrating diverse leadership. Diversity is increasingly more important in fund-raising discussions, and in a handful of states, the authorities in such states are requiring pension funds to report about gender diversity. State institutions are then using such criteria when making investment decisions for their various pensions. It increasingly makes financial sense for decision-makers at companies and private equity funds to have diversity in company leadership in order to tap into these pension funds.
4. For private wealth and next generation wealth experts, impact investing is a major topic. Millennials and females that hold high levels of wealth are very focused on making sure their investments align with their interests and the issues that are important to them, and diversity in both the ethnic and gender categories is important to them.
5. An interesting side effect of type A women leaving the workplace and raising children is the innovation and problem-solving activities they engage in, especially in the health care sector. For example. women who are searching for certain services for their children and are not finding such services are solving problems for themselves by creating businesses to fill these needs. As one panelist said, there is no glass ceiling when you build the house.