Raising Capital In The Healthcare Industry

Clare Louise May 31, 2019 Comments Off on Raising Capital In The Healthcare Industry
Raising Capital In The Healthcare Industry

The success of the healthcare industry is vital to society. It aims to improve the wellbeing of the people they serve while dealing with endless challenges in terms of medicine, technology, and finances. Despite the vital role of the industry in our daily lives, securing enough money for various endeavors is not always easy. Raising capital in the healthcare industry means having to look for multiple sources in order to keep the ball rolling. Below are some of the options that may be explored:

1. Philanthropy

Hospitals, research laboratories, and the like are often recipients of philanthropic projects. For example, billionaires who are particularly concerned about certain ailments might donate a large sum to researchers who are trying to find a viable cure. They might also donate medical equipment or help build new facilities. Even regular people might band together and try to raise funds for health-related causes. The findings of these studies eventually become the basis for new drugs and other forms of treatment.

2. Government Grants

The government is one of the biggest potential sources of funds. When certain matters are in the interest of the public, such as finding a way to stop outbreaks or reduce the incidence of a destructive disease, the government might step in to provide funding. They might channel the funds to public or private institutions depending on recommendations. This has often happened in the development of effective drug treatments for certain illnesses.

3. Funds from Revenue

Of course, businesses can always try to generate funds on their own so they do not have to be dependent on the generosity of others. Revenues from previous years can be pooled for projects that can move the company forward. However, this is usually feasible for only the biggest players. For example, large hospitals will have the ability to absorb losses during tough times and produce profits during good years, whereas smaller clinics might not be as resilient or as successful in raising capital on their own.

4. Debt Financing

The sale of bonds may be considered, especially if there is a real need to construct new hospitals and similar facilities. These may also be utilized in the acquisition of brand new equipment and other forms of upgrades. Bondholders will be paid through the revenues generated by the hospitals. Operational expenses will be subtracted and the rest can then be used for debt servicing. The risk can be minimized by carefully studying the profitability of the project.

5. Sale of Stocks

Just like any corporation, publicly listed medical companies can try to offer shares of stocks in order to get more capital. Successful offerings can result in millions of dollars within a short span of time. Of course, there will be pressure to perform and meet shareholder expectations moving forward.

6. Mergers

Smaller players might find it difficult to get the attention of the traditional sources of funding. Some of them have tried to merge in order to boost their resources and become more resilient to stresses. The strengths and weaknesses of the businesses should complement each other.

7. Joint Ventures

If there are limited projects on the table, then joint ventures may be considered instead of a permanent merger. This provides greater flexibility among the parties and may serve as a test of their ability to work together towards a common goal.

8. Venture Capital

Venture capitalists may be persuaded to invest if they see a promising idea. For example, there might be a technology that could fundamentally change healthcare delivery such as telemedicine. Those who can develop the most stable platform could potentially rise to the top.

Need more info? Check out Chardan Capital Markets.

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