RECENT TRENDS IN PRIVATE EQUITY HEALTHCARE ACQUISITIONS

In 2022, private equity healthcare investments in the US remained high, with 125 buyouts and 503 add-on acquisitions. Outpatient care, medtech, and health IT were the most active categories. The report highlights risks associated with the private equity model, such as cost-cutting and high debt, which may negatively impact patient care and increase prices. It recommends expanding federal and state pre-merger reviews for all private equity-backed healthcare transactions.

• Private equity healthcare investments in 2022 were the second highest on record after 2021 in terms of disclosed deal value and deal count. The Private Equity Stakeholder Project (PESP) tracked 125 buyouts and 503 add-on acquisitions to 364 unique platform companies, involving 471 private equity firms and similar investors.
• Outpatient care was the most active subsector for deals in 2022, with dental care and eye care seeing particularly heavy volumes. Other growing areas of interest include orthopedics and podiatry, driven by an aging population and fragmented markets.
• Private equity firms often use Physician Management Companies (PMCs) or Dental Services Organizations (DSOs) to manage the business administration of practices, which allows them to bypass state regulations prohibiting direct investor ownership of clinical practices.
• Evidence suggests that private equity ownership of provider practices is linked to increased healthcare spending and prices. For example, a study found that payments to anesthesia providers were higher for practices contracted with a PMC, with costs increasing by 16.5% for patients and unit prices climbing by 18.7%.
• Medtech was the second most active category for deals, with 61 add-on acquisitions and 22 buyouts. A significant portion of these deals focused on medical device outsourcing, driven by supply chain weaknesses exposed in recent years.
• Investment in Revenue Cycle Management (RCM) companies—which specialize in medical debt collection—has increased. The report notes that these companies are incentivized to aggressively pursue patients, sometimes violating federal laws like the Federal Debt Collection Practices Act.
• Private equity is increasingly investing in Contract Research Organizations (CROs) because these investments allow firms to profit from pharmaceutical R&D without incurring the risk of a drug failing to reach the market.
• The report argues that the private equity strategy of seeking high returns (e.g., 25% over 3-7 years) and using high debt can lead to cost-cutting that harms patients and workers, particularly in behavioral health, home health, and hospice care.

APA

Bugbee, M., O’Grady, E., & Fenne, M. (2023). RECENT TRENDS IN PRIVATE EQUITY HEALTHCARE ACQUISITIONS. Private Equity Stakeholder Project. https://pestakeholder.org/wp-content/uploads/2023/02/PESP_Report_HC_Acquisitions_Feb2023_FINAL.pdf

Chicago

Bugbee, Mary, Eileen O’Grady, and Michael Fenne. RECENT TRENDS IN PRIVATE EQUITY HEALTHCARE ACQUISITIONS. Private Equity Stakeholder Project, 2023. https://pestakeholder.org/wp-content/uploads/2023/02/PESP_Report_HC_Acquisitions_Feb2023_FINAL.pdf.

Wikipedia

{{cite report |last1=Bugbee |first1=Mary |last2=O’Grady |first2=Eileen |last3=Fenne |first3=Michael |title=RECENT TRENDS IN PRIVATE EQUITY HEALTHCARE ACQUISITIONS |publisher=Private Equity Stakeholder Project |date=February 2023 |url=https://pestakeholder.org/wp-content/uploads/2023/02/PESP_Report_HC_Acquisitions_Feb2023_FINAL.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bugbee2023recent, author = {Bugbee, Mary and O’Grady, Eileen and Fenne, Michael}, title = {{RECENT TRENDS IN PRIVATE EQUITY HEALTHCARE ACQUISITIONS}}, institution = {Private Equity Stakeholder Project}, year = {2023}, month = feb, url = {https://pestakeholder.org/wp-content/uploads/2023/02/PESP_Report_HC_Acquisitions_Feb2023_FINAL.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }