Private equity and ASCs in 2024: 5 notes

While many ASCs remain independent, private equity has become an established force in the industry, with notable movements in 2024.

Here are five things to know about private equity's presence in the ASC space and in healthcare overall:

1. PE activity slowed in 2024. According to a 2023 trend analysis of healthcare PE deal activity by the Private Equity Stakeholder Project, 2023 saw a 16% decrease in deals in healthcare, marking the second year in a row of declined activity. However, overall PE interest in healthcare is still higher than it has been in the past. According to VMG Health's "M&A Report" for 2024, there were 445 healthcare PE deals in 2017, compared with 788 transactions in 2023. 

2. PE firms have taken an 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. Cardiology has emerged as the fastest growing ASC specialty and has been particularly attractive to PE groups. 

3. Dental, ophthalmology and internal medicine have also taken centerstage as specialties catching the attention ofPE investors. According to VMG Healthcare's "M&A Report," dental-, ophthalmology- and internal medicine-focused physician groups saw the most PE mergers and acquisitions in 2023, with 180, 47 and 46 deals, respectively.

4. PE still remains largely unpopular among physicians. According to a survey published by MedPage Today, 60% of physicians said that they viewed PE investment in healthcare negatively. 

5. Regulatory efforts aimed at PE in healthcare grew in 2024. While California established the Office of Health Care Affordability to analyze mergers and actions that are "likely to significantly impact the market," the governor also recently vetoed a bill that would have further expanded PE scrutiny in the state. New Mexico recently passed the Health Care Consolidation Oversight Act, which requires a review of proposed hospital acquisitions and other healthcare transactions, while Oregon created a similar program, by which a state agency must review proposed transactions for anti-competitive activity. 

Indiana and Minnesota are also actively considering healthcare PE oversight bills, and they may be joined by Massachusetts, New Jersey, New York and Pennsylvania.

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