Private equity interest in ASCs is growing. Here are 10 things to know about PE and ASCs:
1. While PE activity year over year has declined, PE's interest in healthcare overall has risen. According to VMG Health's "M&A Report" for 2024, there were 445 healthcare PE deals in 2017, compared with788 transactions in 2023.
2. PE firms have taken interest in outpatient care, specifically. There were 95 private equity deals involving outpatient centers in 2023, the most of any healthcare subsector, according to the Private Equity Stakeholder Project.
3. Among physician groups, PE investors are mostly eyeing dental, ophthalmology and internal medicine practices. Dental, ophthalmology and internal medicine-focused physician groups saw the most PE mergers and acquisitions in 2023, with 180, 47 and 46 deals, respectively, according to the VMG report.
4. Cardiology could be another target of PE investment in 2024. According to a November 2023 blog post by Gary Hershman of the law firm Epstein Beckers Green, and reporting by Beckers, PE investment in cardiology centers has been on the rise. Hershman wrote that there were six active cardiology PE firms at the time and expected that number to double in 2024. This is in addition to cardiology's overall growth in the ASC world as more high acuity procedures migrate to the outpatient setting.
5. PE investment doesn't guarantee success for ASCs. More than 20% of healthcare bankruptcies in 2023 were by PE-backed companies, according to a new report from the Private Equity Stakeholder Project.
6. Physicians aren't fans of PE investment in healthcare. According to one survey in MedPage Today, 60% of physicians viewed PE investment in healthcare negatively.
7. Audax Private Debt was the most active PE investor in healthcare. The PE investor was involved in58 transactions across North America, according to a report by market research company PitchBook.
8. Regulations are tightening around PE investments in healthcare. Sens. Elizabeth Warren and Ed Market of Massachusetts introduced a bill that would target the rise of "corporate greed and private equity abuse" in the healthcare industry. The bill included more penalties, stricter reporting requirements and other payment regulations.
9. ASCs are still largely independent. Sixty-eight percent of ASCs are independently owned, and 32% are owned by ASC management groups and other operators.
10. The largest deal to date in the ASC industry was in 2017. Bain Capital acquired Surgery Partners, one of the largest ASC chains, for $3 billion, according to the AMG report.