BOTTOM LINE UPFRONT
PE-backed healthcare CFOs are not meeting the value creation moment—but they can turn it around. Accordion’s 3-step prescription breaks down how CFOs can capture synergies from postponed integrations by rationalizing tech stacks/EMRs and pulling digital, organizational, and financial levers—operating like they’re always for sale to prioritize equity value and reset the CFO–sponsor dynamic.
The diagnosis: Private equity-backed healthcare CFOs are not meeting the value creation moment. According to Accordion’s recently released survey of 100 PE sponsors and 100 PE-backed CFOs, 82% percent of sponsors say their healthcare CFOs aren’t meeting expectations. In fact, sponsors rank their healthcare CFOs as the most underperforming CFOs within their broader portfolio.
It’s an unhealthy statistic, but not a surprising one. While global healthcare PE soared in 2024 to an estimated $115 billion (the second-highest deal value total on record), exit success sank. Many of the deals done at high valuations during the peak of the market didn’t make their target multiples, thanks to a lack of bid-ask convergence. When combined with high interest rates and regulatory scrutiny, the healthcare sector has seen a decline in exits—making for some unhappy sponsors.
But we’re not dealing with a code blue just yet. While 78% of healthcare CFOs know they’re underperforming, they don’t necessarily know why. We do: Healthcare CFOs are a) floundering on finance fundamentals, b) not fixating on value creation, and c) not getting exit ready with enough urgency.
How can healthcare CFOs turn it around, especially in a market where uncertainty is the only certainty? Here are 3 ways:
1. Focus on the fundamentals: Unlock value from postponed integrations
Healthcare CFOs believe they are falling down on the “plus” parts of the job (or the responsibilities that extend into a more strategic definition of the role), but the reality is that sponsors are frustrated that they’re not more focused on the foundations. According to the survey, sponsors named optimizing the tech stack, leveraging financial data for insights, and effectively integrating acquisitions, in that order, as the top three areas of healthcare CFO underperformance. The CFOs’ list focused more on the forward-leaning finance responsibilities—with sponsors’ top three concerns nowhere to be found.
In a market with limited multiple expansion, every dollar left on the table is a missed opportunity. Sponsors want hidden value—and understand there’s gold to be found from implementing delayed integrations. Serial healthcare acquirers have been too busy biting to finish chewing, and as a result, unrealized synergies from already-completed deals have become the ultimate reservoir for hidden value. This hidden value is especially prevalent when it comes to harmonizing and simplifying the disparate tech systems and multiple EMR environments that are the product of multiple roll-ups. It’s only once CFOs have perfected these basics that sponsors believe that they should turn their attention to more impactful, forward-looking value creation levers.
2. Prioritize performance: Pull digital, organizational, and financial levers to drive value creation
Performance is critical when multiples stop expanding. And the survey makes that crystal clear: 99% of sponsors say that given the limits of multiple expansion, healthcare CFOs should focus on value creation. But a whopping 89% of sponsors also say their healthcare CFOs aren’t delivering on value creation objectives—highlighting a clear disconnect between what healthcare CFOs should be doing and what they are doing.
But there’s good news: when it comes to the type of value that sponsors want CFOs to create, CFOs and sponsors are mostly aligned, agreeing that they should prioritize pulling both digital and organizational levers. Digital levers include both tech and data: optimizing the maze of systems, tools, and records that define the healthcare infrastructure, while also harnessing the power of data & analytics to mitigate costly inefficiencies associated with revenue cycle operations (especially as it relates to managing increasing denials and bad debts from patients and insurers). Organizational levers should center around workforce optimization, particularly impactful in provider roll-ups where automation can enhance (and sometime replace) front-office personnel.
And yet, despite alignment on direction, CFOs are still missing a key piece: foundational financial levers. Healthcare CFOs face more margin pressure than in any other sector, especially in today’s uncertain market environment. What’s more, securing external capital is difficult, as lenders hesitate to fund a sector into which they lack visibility. To meet sponsor expectations, CFOs need to once again go back to basics, focusing on pulling the foundational financial levers that unearth hidden pockets of liquidity already existing within the business.
3. Get exit ready: Operate like you’re always for sale
The days of waiting for the perfect time to sell a PE-backed healthcare company are long gone. LP patience for returns is wearing thin, and sponsors’ coffers are full of dry powder. That means that despite a very uncertain environment, we will eventually emerge from a period of low deal activity into a buyer’s market with a logjam of assets in play—even if conditions are less than ideal.
And sponsors know it. Ninety-eight percent say that they want their healthcare CFOs to operate as if their company is always for sale. Yet only 18% of healthcare CFOs do; they’ve been trained to think in terms of 3-5 year holding periods, and aren’t naturally prepared to think about the end at the beginning of their tenure.