Challenges in Finding Senior Healthcare Talent

SPMB brings decades of personal relationships from a wide range of industries, providing clients with candidates from both healthcare and non-healthcare ecosystems. Allison Beach, a client partner at SPMB, co-leads the health technology practice and is a seasoned leader within the firm’s enterprise GTM practice. Pairing her GTM search expertise with a passion for health & wellness, she partners with growth-stage and pre-IPO organizations to place VP & C-level executives in sales, marketing, and operations roles across health tech, SMB tech, developer tools, and cyber security. SPMB managing partner Dave Mullarkey works with a range of clients including high-growth venture- and private equity-backed organizations and multi-billion dollar public companies. His primary focus is placing C-Level GTM execs in B2B leadership roles. Over his 25-plus years in search, Mr. Mullarkey has helped build the leadership teams for brand-name companies across health tech and other tech verticals. Ms. Beach and Mr. Mullarkey recently sat down with Hunt Scanlon Media to discuss some challenges with finding senior executives within the healthcare sector, what types of leaders are sought after, and how PE outfits are investing in this space.

March 20, 2024 – The healthcare industry is undergoing significant transformations driven by advancements in technology and evolving consumer preferences. What major trends are reshaping the landscape?

Beach: Artificial Intelligence: Historically, healthcare has been slow to embrace technological change, but industry leaders have rapidly recognized the need to adopt AI solutions. AI offers a number of benefits such as streamlining paperwork, enhancing clinical workflows, optimizing staffing, providing crucial clinical decision support, and drug discovery. Remote Healthcare: The pandemic accelerated the adoption of telehealth, transforming it from a convenience to a necessity. On-demand telehealth services have become increasingly popular as consumers prioritize accessibility and convenience. Providers offering seamless virtual care experiences are gaining a competitive edge, driving the expansion of telehealth platforms and services. Big Tech: Major players like Alphabet, Amazon, Apple, and Microsoft are disrupting the healthcare industry by leveraging their vast resources and tech capabilities. They are investing in (and acquiring) digital health initiatives, telemedicine services, and innovative healthcare delivery models to improve access, affordability, and convenience for consumers. Beyond consumer-facing initiatives, these companies are also actively supporting health systems with data and AI solutions; they are working to enable health systems to harness vast amounts of data for insights into patient care, population health management, and operational efficiency.

What types of leaders are healthcare organizations looking for and prioritizing today?

Mullarkey: Executive recruiting for digital health companies involves navigating subtle distinctions, particularly when comparing clinical services and employer-based models. The search for talent is multifaceted, considering both functional expertise and specific industry sectors. Some companies prioritize candidates with extensive healthcare backgrounds, while others seek fresh perspectives from outside the healthcare ecosystem. In recent years, there has been a noticeable surge in searches for early-stage CEOs and COOs within clinical services. These searches are characterized by their nuanced requirements, with clients increasingly favoring candidates with hands-on healthcare experience. For instance, when seeking a CEO for a digitally enabled clinical services business, there’s often a strong preference for candidates who have successfully scaled brick-and-mortar clinics. The intricacies of interfacing with patients, healthcare providers, and payers underscore the importance of direct industry experience. Similarly, senior operational leaders with direct clinical oversight responsibilities are expected to establish credibility quickly, making directly relevant experience critical. In both scenarios, clients are attracted to candidates with backgrounds in building and leading innovative companies.

Beach: We’re also seeing a significant uptick in the number of sales and marketing searches for B2B2C and healthcare tech enabled service companies. In contrast to clinically focused companies we work with, across our healthcare SaaS Go-ToMarket searches, founders with therapeutic and domain expertise have been interested in talent from different sectors, as long as there are synergies from a buyer and audience perspective. The first few executives brought on by founders tend to be more of the subject-matter-experts, and they seek sales and marketing talent who can sophisticate the overall revenue machinery and lead flow engine to mirror a successful enterprise SaaS business. For example, a company selling a family planning and benefits platform to a self-insured employer may look for a chief revenue officer who has also built and led a team selling to an HR or benefits department. This is also a chance for executives with HR or line-of-business SaaS experience to step into something more mission-driven. As a result, we’ve seen an increase in candidates coming on the market who are specifically targeting healthcare and wellness organizations for their next role.

How competitive is it to find and close top candidates in the healthcare sector?

Beach: The current executive search landscape continues to be very competitive for top talent. The number of new search starts this quarter is greater than what the market was seeing at this same time last year. What’s driven that uptick? I’d say it’s largely due to two factors:

1. Things have stabilized after the 2023 turmoil. Boards and executive teams have now made strategic plans based on the new reality and are executing on that plan, which in many cases will include bringing in new executive talent.

2. There has also been quite a bit of executive turnover in the past 12 months. Some boards have elected to make the changes, and in other instances, high valuations and uncertainty have led to some execs electing to jump into new roles.

We’re finding that once a top-tier candidate starts looking at opportunities, the process can move quickly for them. I often hear that candidates are surprised at the quantity and quality of opportunities. As a result, companies must act swiftly as we’re often running into multiple offer scenarios.

Mullarkey: We’re also finding that executives are quite cautious and discerning when it comes to selecting opportunities. Candidates look for well financed businesses still at reasonable valuation levels. They prefer environments where they already have established connections (working with people they trust). We’re also seeing more and more executives wanting to pursue mission-driven opportunities, which plays well for healthcare and healthtech. Some have asked if compensation has been impacted by the downturn. Cash compensation remains competitive, but we are seeing some downward adjustments in equity packages (depending on the runway and path to profitability that a company might have). Overall, executive recruitment demands strategic agility, network leverage, and attractive compensation to navigate a competitive and dynamic landscape.

What types of challenges do you see in research, candidate due diligence, or overall search process?

Mullarkey: In general, from search kick-off to signed offer letter, our search cycle tends to run 80-100 days on average. We have partners at SPMB who are experts in particular roles/functions within the healthcare sector, and each of our deep talent networks helps us match executives to a business problem quickly. As specialists, each of us can coach founders and hiring managers on score-card, research hunting grounds, and areas to probe into across the process, enabling the search to run more efficiently and, oftentimes, more quickly.

Beach: Regardless of function, many themes hold true. The most consistent theme is that the search process has become more candidate-centric. Board members have been involved in selling candidates earlier on in the interview process than we have seen in past years. This helps as candidates are conducting an unprecedented level of due diligence to reflect a down market. Candidates want the company story and upside from multiple points of view. We are coaching many founders to leverage their interview process as a core reflection of their company brand. Healthcare companies live by a special set of values; we want to be sure candidates are exposed to all of them early on.

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