Private equity's interest in healthcare has boomed in recent years, and it remained a formidable force in the industry in 2023.
Though the number of private equity mergers and acquisitions in healthcare declined slightly from 940 deals in 2022 to about 788 in 2023, private equity firms are still interested in the healthcare sector, according to VMG Health's "M&A Report" for 2024.
Here are 10 things ASC leaders should know about private equity's role in healthcare:
1. Physicians are not fans of private equity. According to a survey published in JAMA Network Internal Medicine, more than 60% of physicians have a negative opinion of private equity's role in healthcare. Just 10.5% of physicians said they view private equity as positive.
2. It may negatively affect infection rates in hospitals. A study published Dec. 26 in JAMA found that patients at private equity-associated hospitals had 25.4% more hospital-acquired conditions; that number was driven by falls and central line-associated bloodstream infections.
3. They may have an increased risk of bankruptcy. More than 20% of the healthcare bankruptcies in 2023 were by private equity-backed companies, according to a report from the Private Equity Stakeholder Project.
4. Private equity firms are interested in outpatient care. Outpatient care saw 195 private equity deals in 2023, the most of any healthcare subsector, according to the Private Equity Stakeholder Project.
5. Audax Private Debt was the leading private equity firm in healthcare in 2023. Audax Private Debt, a debt capital partner for middle market companies headquartered in New York City, was the most active North America-based lender in the healthcare sector in 2023, accounting for 58 transactions, according to a report by market research company PitchBook.
6. Despite a decline in activity year over year, private equity's interest in healthcare has risen overall. According to VMG, there were 445 healthcare private equity deals in 2017, compared to 2023's 788 transactions.
7. The ASC industry's largest deal to date was in 2017. Bain Capital acquired Surgery Partners, one of the largest ASC chains in the U.S., for $3 billion, according to the VMG report.
8. Healthcare leaders intend to up their investments in 2024. A survey of health system leaders found that 61% plan to increase their investments in mergers and acquisitions compared to their activity in 2023.
9. Among physician groups, private equity investors are mostly eyeing dental, ophthalmology and internal medicine practices. Dental, ophthalmology, and internal medicine-focused physician groups saw the most private equity mergers and acquisitions in 2023, with 180, 47 and 46 deals, respectively, according to the VMG report.
10. ASCs remain primarily independent. About 68% of ASCs are independently operated, while the remaining 32% are owned by ASC chains including United Surgical Partners International, SCA Health and AmSurg, according to the VMG report.