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  • Specialty Physician Groups
Health Matters
June 17, 2020

Pandemic Shaping the Playing Field for Physician Group Acquisitions

MHT Partners  | Healthcare Investment Bank

Throughout the pandemic, private equity and strategic acquirers’ appetites for well-performing physician groups across a number of specialties have been resilient.  On the other side of the equation, physician groups that had desired to remain independent are now seeing the benefits of being part of a larger organization as they work to manage significant declines in patient volumes and related operational challenges attributable to COVID-19.  It’s reasonable to infer that as some groups start to emerge from the crisis, they will begin to explore partnerships with private equity-backed platforms seeking shelter from future storms.  This bodes well for both groups, as private equity platforms can add leading practices to their rolls, and physicians can benefit from increased scale, robust back-office services, and enhanced payor contracts.  Across the board, we foresee large waves of consolidation of independent groups and sponsor-backed platforms under the auspice of “we’re better positioned to address future challenges and on-going pandemic fallout together.”

One trend we expect to gain momentum will be commercial payors’ efforts to use the pandemic to drive consolidation of physician groups as part of the race to vertically integrate, provide more coordinated care, and narrow networks.  As an example, integrated payor / provider groups like United Healthcare’s Optum Division have been increasingly aggressive in their pursuit of physician group acquisitions, as well as technology-driven care models like those acquired in the purchase of remote behavioral health provider– AbleTo for $470mm.  We also think there is a meaningful play for sponsors interested in building out more integrated models, which can extend the continuum of care, improve outcomes, and reduce overall healthcare expenditures.   Enhanced Healthcare Partner’s recent combination of a surgicalist group and physician compensation services group to form EA-Synergy is a prime example of how value can be generated by providing more coordinated services to health systems.

Based on conversations with the sponsor community, we expect the first wave of pandemic-driven physician group M&A activity will largely consist of add-on acquisitions in specialties where private equity has already invested, specifically: dermatology, vision services, orthopedics, GI, dental,  physical therapy, and women’s health.  There is also meaningful interest in ENT practices, and interestingly, in some traditionally hospital-based specialties like cardiovascular care.  However, we think new, large sponsor-backed provider platforms will be the exception and opposed to the rule for now.

Timing around the launch of new deals is a frequent topic of discussion.  Many well-capitalized businesses may opt to sit on the sidelines through the summer to see how the response to the pandemic unfolds and how the M&A market responds in kind.  However, for other groups, the relative lag in deal flow could place their process in the spotlight as opposed to competing for attention during headier times.  For those groups willing to dip a toe in the water, after seeing patient volumes swing back, a process launch in the late summer will give their advisors two or three months of “new normal” performance from which to baseline financial projections for the remainder of the year.  In this light, one could expect to see deals coming out beginning in Q3 2020. Pertaining to most things in life, timing is everything. There’s no right answer to the question of “when should I test the market,” but the demographic tailwinds which made physician groups compelling investments prior to the pandemic have not changed, and in fact may be amplified by pent-up demand that has been building for healthcare services over the past three months.

We continue to closely monitor the market for healthcare services businesses and remain optimistic that there will be attractive opportunities for well-run provider groups now and in the future.  To the extent that you would be interested in having further conversations on this topic, or others related to our healthcare services capabilities, please do not hesitate to contact members of the MHT Partners healthcare services team: Taylor Curtis ( or Alex Sauter (

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