Private Equity in Healthcare: Bridging the Values Divide for a More Sustainable Future

The UK’s private healthcare sector is undergoing a period of intense transformation. Investment is flowing in, demand is rising, and innovation is accelerating. But beneath this momentum lies a growing tension – one that’s quietly shaping leadership decisions, influencing career choices, and, in some cases, undermining progress.

At the heart of this tension is a fundamental clash of values: the mission-driven ethos of healthcare professionals versus the commercial imperatives of private equity (PE) investors. This isn’t just a philosophical divide. It’s a practical one, with real implications for how organisations are led, governed, and grown.

Aemilia Lovatt, who was recently recognised at the 2025 HealthInvestor Awards, brings a unique perspective to this discussion. Her experience and recognition in the sector underscore the importance of aligning investment strategies with the values and realities of healthcare.

A Sector Built on Purpose

Healthcare is, by nature, a values-led industry. People enter it because they care – about patients, about outcomes, about ‘doing the right thing’. Their motivation is rooted in service, not profit. That doesn’t mean they’re not commercially minded – many are – but their priorities are different. For most healthcare leaders quality, governance, and reputation come first. The belief is simple: if you run a well-governed, high-quality service, the financial success will follow.

This mindset can be difficult to reconcile with the objectives of PE firms, particularly those operating on short investment cycles. When the primary driver is return on investment within three to five years, it can create pressure to prioritise short-term gains over long-term sustainability. That pressure is felt most acutely by executive teams, who are often caught between delivering care and delivering returns.

The Challenge of Short-Termism

One CEO of a PE-backed healthcare provider emphasized the importance of transparency from investors. She highlighted the need for clarity around the investment structure, expectations from the fund, and how underperformance would be managed. Rather than defaulting to leadership changes, she advocated for collaborative problem-solving that considers external factors like NHS funding or recruitment challenges.

She also observed that when performance targets are missed, PE firms often tighten financial controls rather than investing in staff or adapting to changing conditions. This reactive approach can hinder long-term sustainability.

Short investment horizons are fundamentally misaligned with the realities of healthcare. Building a sustainable, high-quality service takes time – time to embed governance, develop talent, and build trust with patients and regulators. PE firms with longer-term holds are generally held in higher regard by healthcare leaders because they allow space for meaningful progress. In contrast, short-term investors often struggle to build the kind of relationships and reputations that drive long-term value.

Understanding the NHS Effect

One of the most overlooked dynamics in UK healthcare is the influence of the NHS. Even private providers that operate independently of NHS contracts are affected by its policies, workforce dynamics, and public perception. The NHS is a dominant force in the ecosystem, and its actions ripple across the entire sector.

For international investors, this can be a blind spot. Many simply don’t know how the UK system works, or how deeply the NHS shapes the private market. This lack of understanding can lead to unrealistic expectations, poor strategic decisions, and friction with leadership teams. Investors who take the time to understand the NHS, and the unique public-private interplay in the UK, are far better positioned to succeed.

Talent: Scarce, Selective, and Cautious

There is a well-documented shortage of good leadership talent in health and social care. Yet many investors remain risk-averse, favouring familiar profiles and established networks. This narrows the talent pool and limits innovation. To attract and retain the best leaders, investors need to be more open to diverse backgrounds and leadership styles.

There’s also a growing wariness amongst candidates when it comes to PE-backed roles. Increasingly, senior professionals are actively avoiding them. Many now ask upfront whether a role is investor-backed – and if it is, they walk away. Founder-led or privately owned businesses are often seen as more values-aligned, more autonomous, and more appealing.

This shift in sentiment should be a wake-up call. The sector is watching, and reputation matters. If PE firms want to attract top talent, they need to rethink how they engage with leadership teams and how they position themselves in the market.

The Cost of Overreach

The same CEO noted that PE firms often claim to have healthcare expertise, but in practice, their representatives may lack real-world experience in the sector. This can lead to CEOs spending excessive time managing upwards, rather than focusing on operational leadership. She stressed the need for clearly defined boundaries of responsibility and a more supportive, less intrusive approach from investors.

One of the most damaging behaviours from investors is over-interference. When PE firms become overly directive, particularly without sector-specific knowledge, it erodes trust and undermines executive confidence. Healthcare leaders are typically highly capable, experienced, and deeply committed. They don’t need micromanagement; they need partnership.

In some cases, overreach has driven leaders out of their roles entirely. When investors fail to respect the expertise of their executive teams, it creates a toxic dynamic that can derail even the most promising ventures.

What Good Looks Like

From my experience, the best investors in healthcare are those who:

• Take a long-term view and invest in sustainable growth.
• Understand the unique dynamics of the UK healthcare system, including the NHS.
• Trust their executive teams and avoid unnecessary interference.
• Encourage diversity of thought and background in leadership.
• Remain flexible and pragmatic in the face of political and market volatility.

Healthcare is not a typical commercial sector. It’s complex, values-driven, and deeply human. Success requires more than capital. It requires empathy, patience, and a genuine commitment to doing things the right way.

Private equity has a vital role to play in the future of UK healthcare. But to realise that potential, it must evolve. The opportunity is there – for those willing to listen, learn, and lead with purpose.

For further information about the work we do in Private Healthcare, please get in touch with Aemilia Lovatt.