Alumni Notes & Newsmakers:

A conversation with Bryan Cressey

Bryan Cressey has long been invested in the U.S. health care industry and in ways to make it more efficient.

Credit: Joshi Radin Bryan Cressey has long been invested in the U.S. health care industry and in ways to make it more efficient.

When Bryan Cressey J.D./M.B.A. ’76, a native of Seattle, was putting himself through the University of Washington by working at a conveyor-belt company, he grew intrigued by the “go-go era of the ’60s,” as he puts it, when business innovators such as James J. Ling were creating giant conglomerates. Cressey decided he wanted to build companies and applied to the J.D./M.B.A. program at Harvard. From his first job in 1976 with a venture capital firm in Chicago; to four years later co-founding Golder, Thoma & Cressey (later Golder, Thoma, Cressey, Rauner); to the present, Cressey’s leadership in industry consolidation with a particular expertise in the health care and medical services fields has been recognized by Fortune and Time magazines, among many other publications.

Today Cressey, a member of the Dean’s Advisory Board at HLS, is a partner at Cressey & Company, a firm he founded in 2008 to invest in and build leading health care businesses. With six general partners, it manages $1 billion of capital committed to building health care companies. Cressey lives with his wife, Christy, in Chicago, where he is chair of the HLS Leadership Council of Chicago.

Why did you choose the joint-degree program?

I was interested in both business and law school but wasn’t sure which I wanted to do. I knew I might want to build companies, and I was interested in mergers and acquisitions. I liked the growth aspect. It seemed like a new frontier.

How did a law degree help with your goals?

Law school taught you to think about the “what-ifs.” As long as it doesn’t slow you down too much, that’s a good way to think: spotting possibilities and knowing how to systematically think them through. I don’t practice law, but law is involved in everything we do—management agreements, financing. You go find a young company you want to invest in, and the first thing you’re confronted with is a legal agreement. If you have only an M.B.A., you have no idea which parts are important, which to ignore. Harvard Law School taught me how the world works.

What is a favorite HLS memory?

One of my favorite courses was Contracts with Phillip Areeda [’54]. He was a dynamic, real-world, voluble professor—fun but very tough. I loved Contracts and it proved extremely useful going forward in the world.

And another?

I worked while I was there, part time, as a janitor of the apartment building where my wife and I lived. We would clean up apartments when people moved out, stay up all night painting and vacuuming. I did some pretty mundane work to pay my way through. So those were the days.

What was your first job out of Harvard?

I wanted to get into venture capital, which I’d learned about in school. A business professor introduced me to a group in Chicago I ended up joining. I think that year, 1976, only two people in all the U.S. were hired into venture capital. It was a nascent industry, and it was during a deep recession. I was extremely lucky.

What prompted your interest in the health care industry?

I made my first health care investment in 1979. After that, I recognized it as a strong growth industry, relatively noncyclical, with a lot of room for management improvement. Until 1984, the biggest part of the industry—hospitals—had a cost-plus payment system. They were reimbursed by Medicare for what they spent plus a profit margin, which encouraged them to spend more and build more buildings. When you compared health care to competitive industries like technology, what you found were managers who hadn’t been trained in real-world economics and sales and marketing and IT systems and business processes. Although there are a growing number of great managers in the field, I think that’s a legacy that still affects health care today.

What do you like most about your work?

One of my favorite things in the world is visiting a new company for the first time. It’s so exciting to me, figuring out what it can do differently. It’s a little bit like trying to unravel a mystery. Every year they get compensated less per unit of care delivered because the system can’t afford much more, and therefore our companies have to improve quality and efficiency every year. They have to work on it constantly, and good companies can do that. It’s a silent revolution, and we love doing that.

What’s your prediction for the U.S. health care system?

In the U.S., we complain about cost of health care, yet in 10 to 20 years, we’ll see a far better system because of the innovators working on ways to be more efficient. That’s why I love investing in it: There’s more room for improvement and it’s a big industry—18 percent of the total U.S. economy—and it’s crucially important to each of us. I think we already are the best system, with leading practitioners and the best entrepreneurs, and I think we’ll become more and more efficient. But it will take a couple of decades. Don’t hold your breath. It won’t happen tomorrow.

What is unique about your company?

I think we are the only private-equity group in the U.S. that has a “patient quality” activity that we implement in each of our companies. One of my partners, Bill Frist [former U.S. senator], a heart and lung transplant surgeon, leads that effort for each company. One thing we’ve found is that the highest quality is correlated with the highest profitability. A lot of people think you spend money to have quality, and that’s patently false. Our best companies have higher quality and higher profitability, and studies now prove that, which is good news for patients. No one needs to skimp on quality.

Why have you remained involved with HLS?

I think Harvard Law School is an extremely special place. Whenever I am there and talk to professors, the dean, and students, they are just so caring about the world we live in and how can we improve it. That’s inspirational. They’re also driven. I like that about any institution, whether it’s one of our companies or HLS—that they’re driven to be better and better.

You’re an author in your spare time.

I’ve written a play, and a book called “End Game”; it’s a thriller. I do like to write as a hobby. It’s exercising different parts of the brain. I also do amateur acting, at a local theater in Barrington, Illinois. I just love it. It probably helps my judgment and helps me see reality a little more richly.

Speaking of health, how do you take care of your own?

I do five snow sports: snowboarding, skiing, snowmobiling, tubing and snowshoeing. We have a ranch in Steamboat Springs, Colorado, so we get to really get out and play and exercise in the snow. My three daughters and I are all vegans. Now I’ve been vegan for 17 years because my daughters were vegetarian and vegan, and it was a way to get closer to them. The more I learned how healthy it was and how good for animals, the more I spread the word, so now two of the six partners in my firm are vegan.