Questions about Healthcare Banking

RexSimiiformes's picture
Rank: Monkey | 47

Hey all,

With junior recruiting spinning up and with group selection for my BB SA internship starting soon, I wanted to ask about what analysts in healthcare groups do and if any of you have moral questions about the role you play? I'm super interested in HC and have read a number of books on the history of the medical-industrial complex in the USA, and personally I slightly disturbing how the incentives of doctors, insurers and pharmaceutical companies affect Americans with high and rising prices for drugs and insurance, poorer quality and less cost-effective care, etc.

Should I avoid hc groups for this reason? Are transactions ever justified on bases that are likely hurtful to the population, or are they justified on the usual bases of general cost-savings/synergies? Where else should I look to learn more about hc banking in particular? Do you think your work benefits society in the same way that work in other groups does?

I would really appreciate any insights, because depending on the details of the job I can see myself gunning for Healthcare as my top choice (as I would love to work in Healthcare VC in the future). Thanks!

Comments (15)

Most Helpful
Jan 6, 2019

You should not pursue HC banking. Based on this diatribe, HC venture would not be a good fit longer term for you either. The entire goal of HC venture is to fund science that will produce drugs that you can sell at high prices.

Alternatively, you could think about HC banking / venture as facilitating the process of helping patients. Helping a biotech raise capital could be the difference in life or death for patients if the funding allows them to develop a drug faster or study it in more indications simultaneously. Selling a biotech to a big pharma will help that drug reach many more patients must faster. Finance functions play an incredibly small role in that process, but to me it's more of a "good impact" than any other industry group I know of.

Also, I think you have a one-sided view of the industry, at least re: drug prices. Quick food for thought: Innovation in pharmaceuticals is almost completely dependent on the potential profitability of drug development and the ability for this to attract private investment. If you want cures for more diseases, new drugs need to be able to command high prices. If you think this isn't true and that the government could effectively fund drug development for major unmet needs, take a look at drug resistant infections/bacteria. It's an enormous problem that is not being addressed, mainly because antibiotics are not profitable and thus there is no private investment in the field - so there is virtually no innovation. There is some price gouging in the pharma world, sure, but I always tell people that if you want to drastically cut drug prices across the board, you better pray that you never get a disease that we don't currently have a cure for.

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Jan 7, 2019

I've been in life science banking for 5+ years and I can honestly say, I've never had a client who gave me the impression that profit was at the forefront of his/her mind. Life Science investment banking clients are usually doctors and scientists who didn't spend 4+ years getting an MD or PhD so that they could make a ton of money. They did it because they were passionate about helping patients or passionate about science and discovery. That sort of altruism tends to pervade their thinking as leaders of companies developing therapies. Obviously, there are bad actors (i.e. Martin Shkreli etc.) who exploit the nature of the industry for profit but most clients consider patient care a top priority.

From my understanding, services tends to be a bit different. Facilities (i.e. hospitals, assisted living, mental etc.) tends to be more of a real estate game and can attract people who aren't all that altruistic. I don't know much about other services (i.e. HMO's, PBM's, etc.) but given heavy regulation and significant public scrutiny, I believe these guys are generally kept in line

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Jan 7, 2019
RexSimiiformes:

(and the incompetent FDA would approve it in just 19 hours of deliberation vs. years and tens of millions in trials for a class-3 implant).

I find it curious that you don't also see a huge problem with the latter scenario. Those years of delays keep potentially life-saving products off the market, and people die or suffer in the interim. Worse, the millions in regulatory costs change the entire cost-benefit analysis before projects get funded. Possible life-saving research for devices and drugs never even get started, because the risk-return profile is dragged down by the certainty of regulatory costs/delays.

Jan 7, 2019
RexSimiiformes:

personally I find it pretty disgusting how the incentives of doctors, insurers and pharmaceutical companies are fucking over Americans with high and rising prices for drugs and insurance, poorer quality and less cost-effective care, the apalling rates of medical bankrupcies, etc.

Yup. Unbridled capitalism is a scourge on our democracy, but suggest any solution that seeks to mitigate the negative externalities of libertarianism or winner-take-all capitalism, and the Fox News boomers and Ben Shapiro wannabe intellectuals scream you're a socialist.

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Jan 9, 2019

Alright, so I'll bite: what's your preferred economic model that's 'not socialism' but avoids being the 'scourge' libertarianism/capitalism is on our economy?

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Jan 9, 2019
The Stranger:

Alright, so I'll bite: what's your preferred economic model that's 'not socialism' but avoids being the 'scourge' libertarianism/capitalism is on our economy?

Capitalism with higher government regulation, plus a more progressive tax system to fund a larger social safety net, a la the Obama model which Fat Nixon has tried his hardest to undo just because.

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Jan 9, 2019
The Stranger:

Alright, so I'll bite: what's your preferred economic model that's 'not socialism' but avoids being the 'scourge' libertarianism/capitalism is on our economy?

And I'll put a question back to you and the monkey shit throwers. Do you think the American economic model is currently working? Sure, it's fine for you, me, and most of the people on this board. But 1 and 5 millennials are now expected to die with unpaid debt. Healthcare and education costs continue to skyrocket. Still very modest wage growth despite the longest economic boom in history. Wealth distribution has skewed enormously towards the 1% since the Great Recession.

How does this end if we don't change something radically? For all you Bernie haters (and I'm not a huge fan myself), what do you think happens when the MAGA crowd realizes Trump has conned them, and some guy on the other side of the aisle will promise them free shit to get back at Corporate America? "Economically anxious" MAGA nation doesn't hate handouts, they just hate them going to other people. That sounds like a winning electoral coalition to me.

Conditions are ripe for full-blown socialism in this country (on both the far right and far left), so I suggest we find a reasonable compromise between that and unbridled late capitalism before it's too late.

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Jan 7, 2019

Listen, if you really wanna do this with your life you have to believe you're necessary and you are.
https://i.ytimg.com/vi/MAC5J2qgS90/maxresdefault.jpg

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Jan 9, 2019

IMO there is definitely value to the world of HC finance in general - know on PE side at least there are firms that try to target investments that benefit all constituents - payers, providers, and patients. Doesn't have to be a 0 sum game.

Jan 9, 2019

Your statement makes me think we need to ground ourselves before I answer. As such, I ask the following:

1) What is your a priori model for how healthcare should work? If that seems too broad, let me ask what the metrics are that you would use to assess the viability/defensibility of a given healthcare system?

2) What quantitative data (please spare me sharing an article unless it cites the original data) did you rely on to decide NHS performs better than our system?

3) Why would you assume that IB/VC/PE is morally defensible in other industries but not HC? If you think capital markets lead to unfair results in the latter, why would you assume they are fair in others.

Jan 9, 2019

This is not nearly as complex or morally challenging a concept as the long-winded posts by OP and commenters make it out to be.

  1. If you become a healthcare IB analyst, you aren't personally making the system worse. You're just along for the ride. That's putting it mildly.
  2. The moral issues in the system aren't as clear cut as you say. I'd explain, but I don't want to write a novel like everyone else has. Look up critiques of single payer, just for starters.
  3. If you want to make healthcare better, what better way to do it than to go inside the belly of the beast?
Jan 9, 2019
PteroGonzalez:

This is not nearly as complex or morally challenging a concept as the long-winded posts by OP and commenters make it out to be.

  1. If you become a healthcare IB analyst, you aren't personally making the system worse. You're just along for the ride. That's putting it mildly.

"I was just following orders, your honor!"

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Jan 9, 2019

"Following orders" in this case means lining up boxes in powerpoint . . so yeah.

Jan 10, 2019

If you're at all interested in HC I say go for it. I was never really into it prior to being in a HC IB group and find it fascinating now. In the device space you see some truly incredible technologies and are able to help MDs (Doctor of Medicine, not people who mark up slides), scientists, engineers etc get their products to more people.

Nov 8, 2019
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