Is it this year’s ‘IT’ social trend–or a way to return companies to their purpose? Public benefit corporations (PBCs) are finding a foothold within healthcare and digital health organizations. Developed in 2010, the PBC form is a for-profit corporation that is structured to pursue a social mission and recognized in that structure to create a long-term public good or benefit by providing services and generating revenue. It can be publicly traded (though relatively rare). 36 states, including the ever-popular Delaware, and the District of Columbia permit PBCs to be formed. In terms of corporate accountability, achieving their stated social mission or purpose must work alongside maximizing value for shareholders. Otherwise, they are structured like standard for-profit corporations.
Examples of healthcare PBCs are Aledade (practice management services in value-based care models which just acquired Curia in VBC analytics), Mark Cuban Cost Plus Drugs, Osmind (behavioral EHR), and startup Crescendo Health (health data). Other well-known PBCs are Lemonade (insurance), Veeva (cloud software for life sciences), Patagonia (clothing), Ben & Jerry’s (unusually within Unilever), and Coursera (online learning). Companies like Veeva have converted from traditional publicly traded corporations to PBC.
Would this form be right for your company? From what this Editor has read (see below) if the company is truly purpose-driven from the top and the bottom. A PBC company’s board of directors is required to balance its mission/purpose with the financial interests of shareholders and investors. A mission focus can be attractive to both. It also orients management on the long term versus living and dying by quarter-to-quarter performance. Part of this can be environmental, social, and governance (ESG) criteria. For many companies in healthcare that are oriented to service and to benefit health (beyond the loose ‘transformation’) but must generate profitable revenue, a PBC can differentiate your company from competitors that are standard corporations that answer to VCs and PEs.
Intertwined with this is the B Corporation (B Corp) certification, granted by a third-party organization called B Lab. It is not necessary to be a PBC to have it but it helps the ‘look’. Like most third-party certifications, it’s a high and distracting bar, requiring assessments and changes in corporate governance, and has to be renewed every three years. (This Editor worked for an internationally known travel organization starting with an ‘A’ before healthcare that attempted to achieve the Malcolm Baldrige Quality Award after high scores with J.D. Power. That effort served to distract everyone for an entire year from real business. And then we missed! And then we got bought–and moved!) FierceHealthcare, Kiplinger’s, US News,