Around 63% of physician transactions in 2023 were attributable to a PE firm or their portfolio companies, according to VMG Health's 2024 Healthcare M&A Report published May 7.
Here are five major trends involving private equity and physician medical group transactions, according to the report:
1. PE firms are looking to ancillary revenue streams, which have historically been performed in a local hospital or other outpatient setting, because they can be consolidated to increase revenue and earnings growth.
2. For PE firms, physician group acquisitions are attractive for their ability to roll up deals into a large and scalable platform.
3. Additionally, specialties with greater allocation to commercial payers are of interest to private equity.
4. Physician groups offer a unique opportunity if a PE firm can buy a practice at a lower bolt-on multiple and sell the entire business at a higher platform multiple.
5. PE is targeting physician specialties with high probability of generating additional income from ancillary services with low capital intensity.