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PE's Relentless Rise in Healthcare - Some Facts and Figures

In a true COVID-19 paradox, private equity investment into the U.S. healthcare ecosystem has absolutely boomed over the past 2 years. The industry’s historical outperformance during recessions has likely generated greater investor interest relative to other parts of the economy. As a result, even with the pandemic upsetting (and continuing to upset) all manner of business activities and deal processes - PE buyers continue to pile into healthcare deals. Here's some trends we're tracking:

1. By January 2021, 69% of physicians were either employed by hospitals or corporate entities like private equity firms, according to a study from the nonprofit Physicians Advocacy Institute and healthcare consulting firm Avalere.

2. In the second quarter of 2021, private equity firms were the buyers in 63% of the deals, according to a Bass Berry & Sims report published in the legal analysis forum JD Supra.

3. 13% of PE-sponsored healthcare deals were in high-demand practices such as dental, gastroenterology, ophthalmology, and obstetrics & gynecology, according to the same Bass Berry & Sims / JD Supra report.

4. Most practices acquired and funded by private equity firms from 2000 to 2020 were in the South, according to a cross-sectional study published in the JAMA Network.

5. Since 2006, private equity firms have invested $921 billion in U.S. healthcare, according to the American Investment Council

6. That same American Investment Council report also leveraged data from Pitchbook that tabulated nearly $79 billion of PE investment into U.S. healthcare areas that powered R&D, facility renovations, and EMR modernization initiatives throughout 2020.

7. As private equity firms continue to buy up hospitals, a Health Affairs study published in November 2021 found hospitals acquired by private equity firms were more likely to add profitable hospital service lines than nonacquired hospitals.

8.  According to studies published by a UCLA Anderson / Duke Fuqua research team, PE-owned nursing home facilities had lower rates of COVID outbreaks through 2021 as measured by all six primary metrics.

9. That same study also found that PE-owned nursing facilities were less likely to experience PPE shortages, and after controlling for variables like resident composition, facility characteristics, and overall outbreak intensity; PE-owned facilities still remained less likely to experience overall COVID outbreaks.

10. At least 10 private equity-backed healthcare providers in the U.S. will go public in 2022, up from six in 2021, according to a report published by Pitchbook in December 2021.

Healthcare's historical outperformance during recessions has likely generated greater investor interest relative to other parts of the economy. As a result, even with the pandemic upsetting (and continuing to upset) all manner of business activities and deal processes - PE buyers continue to pile into healthcare deals.

Tags

private equity, healthcare, covid-19

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