The Healthcare Growth Algorithm: Why Smarter Beats Faster
Another healthcare startup just announced major layoffs. They grew fast, opened clinics even faster, and burned through cash long before reaching unit-level profitability.
It’s a story I’ve seen repeatedly across healthcare startups — and one I’ve personally lived. These organizations have great missions, strong care models, and a genuine desire to expand access to care.
Where it breaks down is when venture capital math meets real-world healthcare. Growing as fast as possible works when you have clear product-market fit, a dialed-in B2C growth engine, and an optimized care model. But healthcare isn’t software.
Consider a healthcare startup that raises $100 million and plans to open ten 5,000 SF clinics per year. In just one year:
$15–$20 million is spent on design, construction, and FF&E
$20–$30 million is committed to long-term leases
Half your total fundraise is locked up before a patient walks through the door — and that’s just year one. Now imagine doing that again in year two, with less cash and more pressure to grow.
There’s a better way: Build with discipline. Focus your investment where it actually drives growth — product-market fit, patient acquisition, and care delivery — and apply a more rigorous framework to everything else.
The Efficiency Framework
Like him or not, Elon Musk has championed a proven five-step algorithm for efficiency that has clearly paid off for the companies he’s built:
Question every requirement.
Delete any part of the process you can.
Simplify and optimize.
Accelerate cycle time.
Automate.
It’s a framework built for manufacturing and engineering — but it applies perfectly to how healthcare startups approach real estate and growth.
Step 1: Question Every Requirement
The first mistake founders make is assuming they need to build an internal real estate team just because that’s what “mature” companies do.
It sounds right — until you realize you’re designing for scale you haven’t reached yet. Real estate is cyclical: it spikes during expansion, then quiets during stabilization.
Before adding headcount, ask tougher questions:
What stage are we actually in?
How much of this work truly needs to be internal?
How can we deploy capital toward the care model and patient experience instead of overhead?
You don’t need more headcount. You need more alignment.
Step 2: Delete the Waste
In healthcare real estate, waste burns budgets. But more importantly, it burns out good people and erodes trust inside and outside the organization.
I’ve seen what happens when deals die late. You spend months chasing sites, reviewing test fits, negotiating terms, and coordinating design. Teams travel across the country, away from their families, grinding to make projects work. Then, after all that effort, the deal gets pulled.
It’s demoralizing. For the people whose job it is to make these sites real, it feels personal. They’ve invested themselves in something they’re proud of, only to have it disappear with a strategy shift or funding freeze.
The impact doesn’t stop there. Landlords remember when a deal falls through late (and they talk to each other). It damages credibility across your brand and makes future deals harder to close.
Deleting the waste means aligning earlier—between founders, boards, and operators. Have real clarity before you start spending money or sending your team into the field. Establish a true go/no-go point early in the process. It’s far easier to hit pause at the strategy level than after people have poured six months of work into a project that never opens.
Your team’s time and credibility are as valuable as your capital. Protect both.
Step 3: Simplify and Optimize
Most healthcare founders overcomplicate real estate before they’ve earned the right to.
Real estate is cyclical. That means the same people who look essential one quarter can sit idle the next. You’ll have months where it’s full-time work, and others where it barely needs attention. But when you hire an internal team, you lock yourself into overhead that doesn’t match your growth rhythm. Those fixed costs stay, even when the work slows down.
Simplifying means building flexibility into your model. Instead of full-time staff, use fractional leadership — senior operators who can step in when you’re growing and step back when you’re not.
The goal isn’t to cut costs for the sake of it. It’s to make sure every dollar you spend moves the business forward.
Reduce fixed overhead and cash burn between openings.
Access VP-level strategy without the long-term cost of a VP-level hire.
Stay nimble — expanding when you’re ready, pausing when you need to recalibrate.
Optimization is found through sequencing. When you have the right structure, you can invest in resourcing where it matters most: improving your care model, driving patient acquisition, and tightening operations instead of paying salaries for idle capacity.
Simplifying gives you control over your costs, your cadence, and your capital
Step 4: Accelerate the Right Way
Founders often equate speed with progress — more sites, faster. But in healthcare real estate, acceleration means removing friction.
The fastest path to scale usually starts by slowing down long enough to get the foundation right. Bringing in experienced leadership early means you catch mistakes before they happen — the kind that cause six-figure change orders, missed regulatory steps, or costly launch delays.
Expert execution turns velocity into efficiency:
You reduce cash burn by sequencing projects intelligently and negotiating stronger leases.
You open faster because you avoid rework and regulatory back-and-forth.
You spend less time managing vendors and more time building the business.
True acceleration happens when decisions are made once — correctly — and every clinic you open builds on the lessons from the last.
That’s the difference between rushing to open doors and building a sustainable growth engine.
Step 5: Automate What You Can (and Build Toward Automaticity)
Once you remove friction, the next step is flow — operational automaticity — a point where the process runs smoothly without constant reinvention. But getting there takes time, experience, and systems that can scale.
A full-time real estate team sounds logical — but for most early-stage healthcare companies, it’s premature. The work comes in peaks and valleys, and the cost of maintaining that overhead between projects can be steep.
Bringing in a fractional VP-level real estate leader accelerates the path to automaticity. You get executive-level strategy, proven processes, and a deep bench of trusted partners without the permanent cost structure. A strong external leader helps you:
Build a repeatable development playbook that scales across markets.
Catch design and construction issues before they become change orders.
Reduce cycle time between site selection and opening.
Create systems that your future in-house team can seamlessly inherit.
By the time you reach the scale where a full-time real estate department makes sense, you’ll already have a tested model, clear data, and a network of proven partners. That’s how you transition from building sites to building an organization that can sustain growth.
That’s how you reach automaticity — when execution becomes second nature, and your leadership team can stay focused on growth, not putting out real estate fires.
Efficiency Is the Real Differentiator
The founders who will win this market aren’t the ones who grow fastest — they’re the ones who grow smartest.
They match ambition with discipline.
They invest in operational maturity before headcount.
They build facilities that strengthen the care model and protect capital at the same time.
After years leading real estate for healthcare startups, I started Retained CRE because I saw the same thing again and again: mission-driven founders burning capital on the wrong kind of growth.
You don’t need to overbuild to win, you just need to build smarter.