Gastroenterology has seen massive consolidation as management service organizations and groups grow.
Although the number of gastroenterology transactions saw a slight decline in 2023, GI groups are still growing. At least 108 gastroenterology practices consolidated between 2019 and 2023, and more than 12 gastroenterology companies expanded their footprint in 2023.
GI giants such as Miami-based Gastro Health and Southlake, Texas-based GI Alliance continue to scoop up physicians as the population ages and colorectal cancer screening guidelines change, according to consulting firm HealthCare Appraisers' industry outlook report. Consolidation will likely continue as demand for gastroenterology services increases.
The three largest groups include GI Alliance, with 800 locations; Gastro Health, with 152; and United Digestive, with 81. In 2023, Gastro Health acquired two locations, GI Alliance acquired four and United Digestive partnered with private equity firm Kohlberg & Co. and acquired two centers.
In many larger groups, private equity has played a huge role in propelling growth. The number of private equity gastrointestinal groups grew by 28%, to 68, in 2021, according to a report from consulting firm Fraser Healthcare and pharma research firm Spherix Global Insights. Additionally, around 10% of gastroenterology physicians are now a part of a private equity-backed platform, according to the HealthCare Appraisers report.
In 2022, for example, GI Alliance received a $785 million private equity investment from Apollo Global Management, which agreed to take a stake in the company as a part of a physician-led buyout. Through the deal, GI Alliance's physician owners agreed to buy back a minority equity stake of about 30% from Waud Capital Partners, the practice's private equity investor.
The trend mirrors the physician workforce. Around 108,700 physicians left private practice between January 2019 and 2021, according to an Avalere report.
"Many young gastroenterologists are running away from private practice," Adam Levy, MD, a gastroenterologist in Macon, Ga., told Becker's. "This is due to the high cost of educational loans and an environment where hospitals are offering large salaries to graduates. It is difficult for private practice to compete upfront due to declining reimbursements."
But some leaders are hopeful on how consolidation could improve patient care. Megagroup gastroenterologists are more likely to perform colonoscopies, endoscopies and sigmoidoscopies than gastroenterologists not in those groups, according to the Spherix Global report.