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Bain Capital Private Equity sees more opportunity in healthcare

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Bain Capital Private Equity's Managing Director Devin O'Reilly explains why his firm sought out its new investment in PartSource and other investment areas Bain likes in the healthcare space.

Video Transcript

- We talk about opportunity for investors when it comes to health care and one of the firms that knows how to find opportunity is Bain Capital. They've been investing in health care going back to about what, 2003 or 2004? Let's bring in their managing director of Bain Capital private equity, Devin O'Reilly, because Bain Capital announced this morning an investment in PartSource. And help us understand what part source does for those of us who haven't lived in Cleveland, Ohio before and how, if you ever should engage with a hospital or different kinds of medical devices, you might be dealing with a hospital that's sourcing via PartSource, right?

DEVIN O'REILLY: Yeah, thanks for having me. PartSource is a really innovative health care IT company that is solving a complex problem that, you know, if you're a hospital trying to manage a very long list of Med-Tech equipment that you have in your facilities, you'll have the need for replacement parts and also service technicians that you need to actually service that equipment and perform that maintenance. And so it's very complex, because there's over 3,500 hospitals in the US and thousands of medical Med-Tech equipment companies and even more service providers.

So what part source does, is basically provides a B2B marketplace to bring all those parties together and allow hospitals to procure those parts and services in a very efficient and cost effective manner. So if you are a patient, you go into the hospital, you want to-- you need the medical equipment and the doctor be ready to-- to serve you, PartSource as part of that whole ecosystem that's helping hospitals run efficiently.

- Devin, Bain Capital is one of the most active investors when it comes to this space, when it comes to health care. I'm curious just in terms of when you look for potential investments out there, I guess, how is that strategy or how has what you're looking for changed as a result of COVID, or has it?

DEVIN O'REILLY: Yeah, well look, every-- every health care provider has gone through a difficult time over the course of the last 12 months and so I think what-- I think what we see from an investment perspective, is that a lot of trends that were actually happening in the marketplace prior to COVID have actually been accelerated by COVID. And so for example, telehealth is one-- one area where, prior to COVID, there was starting to be more and more telehealth visits and clinicians visiting with patients via telehealth, but obviously, COVID dramatically accelerated that.

So we had some providers that were, 2 or 3% of their patient visits were in the form of telehealth. But during the peak of the crisis last summer, that went to 50% or more. But what we see now, is now that we're hopefully largely through the crisis, that's still settling out at maybe 20, 25% of some-- some types of specialties and primary care are seeing patients at that type of level and so I think that would have played out over a longer period of time, but that's been accelerated by COVID and so we're seeing trends like that, that have been underlying trends, that have been actually accelerated by the COVID crisis.

- Their clients, your clients now, are some of the biggest names in hospital care in the United States. Cleveland Clinic, Johns Hopkins, Mayo, New York Presbyterian. They have endowments and foundations that can pay, whether it's for software or these kinds of systems. What about smaller hospitals? Is there a product for them that PartSource, or is that a growth area for PartSource?

DEVIN O'REILLY: Yeah, this-- PartSource actually serves all different types of hospitals and health systems. If you think about the problem that they're solving, it's basically trying to create more efficient health care by bringing together in this marketplace form all the suppliers, Med-Tech parts, and service, and all the potential buyers, and so the problems are equally gray for some of the smaller hospital systems and even-- even perhaps more so, because they don't have as large of a staff to be able to manage some of these issues.

And so we really see it as a significant opportunity for all-- all types of health care providers and even beyond-- beyond the acute care hospital. So a lot of patient care is migrating into outpatient facilities and doctors' offices and that-- that is a future opportunity for the company to serve those types of settings as well. Another opportunity we think about is hospitals all around the world outside of the US deal with these same types of challenges and so that's another, perhaps, growth opportunity for the company.

- We appreciate your sharing a little bit about this deal with us. Devin O'Reilly managing director at Bain Capital private equity, all the best to you.