Private Equity Investment in Physician Practices – Is it the Right Fit?
Some benefits to consider:
- Centralizing “back office” roles like billing and accounting can provide significant savings.
- Capital contributions up front to offset costs of updating the practice’s infrastructure.
- Potential for profit down the road when the investment is sold.
- Maintaining control of your practice while gaining long-term stability.
- More clout on your managed care contracts, higher reimbursements.
Hot Specialties to Private Equity Investors
The healthcare sector remains a viable area for investment and future growth but certain specialties are more enticing than others to private equity investors. These hot specialties within physician services include:
- Dermatology – Historically, an investment in dermatology has been a win for investors, which is why it continues to grow. As it grows, so does the competition among investors to secure these deals.
- Gastroenterology – Gastroenterology is experiencing substantial growth driven by increasing outpatient procedure numbers, demographic trends, and market changes.
- Ophthalmology – As the age of the population increases so does the demand for eyecare. We are also seeing an increase in ophthalmologists looking for an exit strategy. A number of transactions have already occurred this year and we anticipate this industry to continue experiencing investment and consolidation.
- Orthopedics – While not one of the specialties that has historically seen private equity investment, orthopedics is expected to see a good amount of outside investment due to similarities with other specialties that have been successful investments as well as a favorable economic outlook in the field.
- Urology – Urology is expected to see increased private equity investment activity. While there are a significant number of “super groups”, this area is still considered fragmented and could see more consolidation.
While private equity investment can be a very good choice for your practice, be sure to consider what your goals are; immediate compensation vs long-term returns or managing your practice vs taking a step back. If it is the right for you and your practice, it is a fast track method to gain size and scale in the increasingly competitive marketplace….and the private equity community is aggressively seeking the “right” deals.
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