As the healthcare market becomes increasingly competitive, whether due to staffing competition, rising labor and supply costs or economic pressures, many practices are partnering with larger entities, including private equity firms.
Here are five key notes on the presence of private equity in healthcare.
1. About one-fifth of healthcare bankruptcies last year were private equity-backed companies. According to a report from the Private Equity Stakeholder Project, they accounted for more than 20% of healthcare bankruptcies in 2023.
2. U.S. lawmakers eye tightening regulations for healthcare private equity firms. Sens. Elizabeth Warren and Ed Markey of Massachusetts introduced a bill that would address the rise in private equity control of health facilities through penalties, stricter reporting requirements and other payment regulations.
Additionally, California lawmakers floated a bill in April that would provide oversight for private equity companies attempting to purchase healthcare facilities, requiring private equity firms and hedge funds to provide written notice before purchasing a healthcare facility or provider group, which would then need attorney general approval.
3. Private equity fund assets in healthcare hit $8.2 trillion in 2023, according to Sens. Warren and Markey.
4. The number of healthcare private equity transactions fell by approximately 16.2% in 2023 compared with 2022.
5 .Sixty-eight percent of ASCs are independently owned. The remaining 32% are owned by ASC management groups and other healthcare operators.