What Makes a Successful HealthTech CEO?

As 2023 came to an end, the healthtech market began to settle into a new, slower stasis. With fewer public companies, fewer IPOs, and shelved exit plans, healthtechs are instead finding success via deals with multi-investor syndicates, recapitalization, or acquisitions by larger organizations.

Healthtech investors are also finding themselves in a changing environment—while there are some potential bright spots on the deal horizon, 2024 will see continued disruption caused by global financial complexities, challenging financing environment and higher interest rates, technology innovation around generative AI, and a continued tight market for executive talent. As such, healthtech organizations need to think critically about who is best equipped to lead them through this uncertainty—particularly at the CEO level.

Board and CEO work makes up one third of RRA’s healthtech searches, and through conversations with investors and boards, we’ve found one of the top questions to be: what are key experiences that make a CEO successful in the healthtech space?

To help these leaders identify the CEOs best equipped for success in 2024, we set out to determine the key attributes of healthtech CEOs with successful exits. In addition to our 235+ successful placements of healthtech leaders over the past three years within organizations at every stage of growth, we also analyzed the top healthtech exits* since 2015 – a sample size of 47 public and private companies. We studied the functional and industry backgrounds of those companies’ CEOs, uncovering key insights about their leadership profiles and routes to the top.

Here’s what we learned.

• Prior CEO experience is not required for success: 64% of healthtech CEOs with a successful exit or significant revenue achievement were first-timers in the role.
• Healthcare industry experience is relevant, but not necessary: Only 58% of successful exit-CEOs were at a healthcare organization prior to taking the top job. 1/3 of CEOs in this group has prior general management experience, with operations and product leadership positions as the next most common backgrounds.
• Multifunctional experience is critical: 70% of CEOs brought demonstrable P&L leadership experience, whether as a president or within another C-suite role.

Snapshot: Healthtech CEOs’ route-to-the-top

In charting their paths to success, we looked at CEOs’ prior CEO experience, P&L leadership experience, and role held immediately prior to CEO.

^{Source: RRA proprietary research on 47 Healthcare Technology CEOs; companies have achieved $1B in revenue or a successful exit via IPO, M&A, or LBO – initially PE-backed. Exit occurred between 2015 and 2024.}

CEO experience is not a prerequisite to a successful exit, but prior P&L leadership experience was common among the leaders in this group. Just over half of first-time CEOs had prior P&L experience as a president, GM, or Divisional CEO. Aside from the CEO and president archetypes, chief operating officer and chief product officer were tied for the next most common step-up role.

We also found that successful CEO talent may join a healthtech organization from another industry. The majority of leadership has healthcare (across healthtech and health services) experience, but 24% of CEOs joined their healthtech company from the technology industry, and 18% hailed from professional services, private capital, or other industries.

This combination—P&L responsibility and familiarity with disruptive technologies (in the healthcare space or otherwise)—equips future healthtech CEOs with the agility to innovate and execute on company objectives.

Hiring and supporting the healthtech CEO of the future

Given these findings, investors and boards seeking their next healthtech CEO should consider the following:

Emphasize skills and experiences over titles: The data shows that prior CEO experience is not a primary indicator of future success as a CEO in healthtech. However, when evaluating CEO candidates, it’s important to look for skills that are required of CEOs: managing complexities, setting strategy and executing for results, and leadership and influencing abilities. Decisive and galvanizing leadership matters when managing companies amidst healthtech’s complex environment and road ahead.

Don’t underestimate the support a board can provide: Since healthtech CEOs are often first-time CEOs, it’s important to evolve boards in an optimal way to provide appropriate guidance at the business’ key inflection points. Strategic board appointments of tenured healthcare and technology executives will provide invaluable insight and perspective to support a first-time CEO, especially in a tough market.

Complement your CEO: When building out the executive team, leaders must ensure they hire for complementary skillsets and industry expertise. In a healthtech organization, oftentimes this means bringing in SaaS and product leadership early on, so the organization is equipped with innovative thinking needed to scale. Onboarding and integration are critical to bringing in executives to healthcare from outside the industry.

Implications for healthtech leadership teams

The data on healthtech CEOs’ experiences prior to their CEO role sheds light not only on the archetype of a successful leader, but also on implications for investors, boards, and the broader executive team. Since prior CEO experience is not necessary for outperformance, it’s reasonable to hire CEO talent for potential. Rather than focusing on a checklist of titles and experience, CEOs can show strength through functional and industry experience and leadership traits, especially if existing leadership team members’ skills are complementary. To that end, when building out top teams and board seats, consider the expertise already present within the organization and mapping new leaders to current and future gaps when making decisions about new leadership talent.

Dynamic markets require dynamic leadership teams and formidable CEOs to impart the right strategy and direction for their organizations. Today’s healthtech CEOs and investors can look to the roadmap and experience of leaders who drove successful exits in the past to inspire and inform future success.

Authors

• Noël Auguston leads Russell Reynolds Associates’ Healthcare Technology practice. She is based in Boston.
• Hope Cummins is a member of Russell Reynolds Associates’ Healthcare Knowledge team. She is based in San Francisco.