What Private Equity 3.0 Means for Health Technology Portfolio Companies

Over the last few years, I’ve been on more calls where one question keeps surfacing: why isn’t this portfolio company growing the way we expected?

It’s not always the product, or even the market. It’s often the assumption that the old PE growth levers—debt, cost streamlining, and timing—will still deliver the returns they used to.

Private equity has evolved. PwC’s Kevin Desai calls it Private Equity 3.0, and I think he’s right. What used to be a financial engineering effort is now, increasingly, an operating one. The PE and VC firms that win today are the ones that build real value inside portfolio companies—through growth, execution, and operational excellence.

And in healthcare technology, that often means creating a commercial engine that works in a system built to resist change.

From flipping companies to fixing systems

Private equity used to be more straightforward. In what we’d call PE 1.0, most of the value came from financial structuring—leverage, timing, and arbitrage. Buy low, finance smart, exit at a higher multiple. That worked when debt was cheap and growth was easier to find.

Then came PE 2.0. Competition increased, prices went up, and the model shifted toward operational efficiency. Cost cutting, vendor consolidation, and SG&A control became the tools of choice. And in many industries, those moves still get results.

But in the healthcare technology ecosystem, we’ve already squeezed most of that juice. We’ve seen the layoffs. We’ve consolidated the tools. Most teams are already running lean. So if cost savings aren’t moving the needle like they used to, what’s next?

We’re squarely in PE 3.0. Growth can’t be bought—it has to be built. That means the next chapter of value creation depends on getting back to business basics: generating real, repeatable revenue.

Why the health tech ecosystem feels this shift more than most

If you’re working in or around healthcare, you already know this: the commercial path is slower, more complex, and fraught with friction. Long enterprise sales cycles, multi-stakeholder buying teams, regulated environments—all of that adds complexity to scale a health technology GTM plan.

A digital health company trying to sell into hospitals might have a 12–18 month sales cycle, just to get a pilot. There’s IT review, clinical validation, EHR integration, and internal champion turnover to deal with. These aren’t just delays, but structural barriers that make revenue harder to earn, and even harder to forecast for private equity teams.

So when a firm adds a health technology asset to its portfolio, the investors aren’t just acquiring a company—they’re buying into a GTM reality that doesn’t behave like most B2B categories. Which is why PE 3.0 feels different in healthcare-related investments. The margin for execution risk is lower, and the path to value creation is more dependent on getting the commercial system right.

That’s where seasoned operators come in.

The operator’s role is no longer behind the curtain

Historically, the deal team got most of the attention. The operator was often brought in post-acquisition to implement plans and support the management team. That role is changing.

I’m seeing operators increasingly pulled into deals earlier. We’re now in the room before the LOI, reviewing commercial assumptions. We’re asked to poke holes in the revenue plan, not because we’re skeptical—but because we’ve seen where these plans fall apart. Especially in healthcare.

Desai calls this shift a cultural one. I’d agree. Operators aren’t just supporting the thesis anymore—we’re increasingly part of the thesis.

If you’re investing in a company where growth depends on influencing buyers inside health systems or payer organizations, and your plan is based on expanding topline performance, then you need someone who’s built that system before. Not just advised on it or staffed a workshop—actually built and run it.

What this shift looks like in practice

Let’s say you’ve just acquired a digital health solution that’s selling into mid-sized hospital systems. The commercial plan calls for 30% YoY growth through net-new logos, plus some upsell within the existing customer footprint. On paper, that looks achievable. But what does the execution look like?

In a PE 2.0 model, you might look at sales rep productivity and make some hires. You might reduce customer support headcount to bump margins. You might bring in a sales trainer or restructure compensation plans.

In a PE 3.0 model, you’d look at whether the segmentation strategy matches actual buyer behavior. You’d validate whether the pricing model reflects value perception for CFOs and CIOs alike. You’d audit the handoff between sales and customer success to see if churn risk is quietly killing lifetime value.

It’s not about “working harder”—it’s about working on the right system. In many health technology companies, the revenue problem isn’t about headcount—it’s that the GTM strategy never made it off the slide deck and into a market-tested selling program.

Here’s how that can show up:

These gaps don’t get solved by another deck or a new VP. They get solved by operators who can translate commercial vision into executable systems, especially in regulated, high-friction environments like healthcare.

What this means for investors

If you’re leading a deal or supporting a healthcare portfolio company, you’ve probably already seen the shift. Financial plays are delivering less. Operating plays are delivering more—when they’re done right.

That doesn’t mean the deal team gets sidelined. It means the value creation thesis has to include someone who knows how to grow revenue in a market that’s built to slow things down by design.

In my work, I partner with PE and VC firms to support their portfolio companies with healthcare-specific GTM execution. That includes diagnosing friction in the current motion, rebuilding the revenue model if needed, and supporting the team so the plan actually gets off the ground.

Because in PE 3.0, it’s not just about seeing the opportunity. It’s about building the machine that captures it.