Primary Care Private Equity – Market Update

The Primary Care space continues to see private equity as a new and differentiated strategic option compared to what has been available to physician owners historically, and it is an option that is growing in popularity. From a demand perspective, interest is being driven by rapid acceleration in the adoption of value-based care reimbursement models. As this trend continues, groups that manage vast patient populations – whether solely from a primary care perspective or primary care with downstream referrals under the same umbrella in a multi-specialty model – will be those who are best positioned for success. The opportunity for private equity is directly tied to not only their ability to provide capital (and in turn build scale), but also expertise in navigating complex payor relationships alongside the resources needed to validate and articulate outcomes through data in a way the average, independent practice cannot. Practices that lead with clinical excellence, provide market leading outcomes across a substantial patient population, successfully manage downstream referrals (internally or externally), and maintain strong density from a lives under care perspective with the major payors in their respective market will drive particularly strong interest from the buyer universe. All these factors will play a key role in a group’s ability to take on risk, in lieu of a fee-for-service offering, successfully.

For sellers, private equity is an attractive option to help navigate a changing reimbursement environment that can be most acutely felt in the Primary Care space. The characteristics driving value-based reimbursement models are often the most broadly and easily applied at the beginning of the care continuum, and as a result the pressure on physicians in the space to act proactively continues to grow. Scale will be a necessity for success, and private equity has emerged as a much more attractive option than aligning with a health system, or a payor like Optum, as they can provide significantly more attractive economics in a transaction, allow far more clinical autonomy and governance at the local level, and have the resources to pursue an aggressive growth strategy.

As a result of the rapidity of change occurring within the primary care and multi-specialty environment, we expect to see elevated levels of deal activity in 2024 from both a new platform and add-on acquisition perspective. Independent groups need to react to the activity in the market one way or the other, and private equity will remain an attractive option that should be considered as practices evaluate how to stay sustainable and competitive in a changing landscape.

Recent Primary Care Transactions

About Our Firm

Physician Growth Partners (PGP) Physician Growth Partners (PGP) is an advisory firm working exclusively with independent physician groups in transactions with private equity.

PGP has completed 15+ transactions in the last 12 months. Our firm is differentiated by:

• Senior partner involvement at every stage of the process
• Extensive physician practice transaction experience
• Unmatched relationships with all key private equity and strategic buyers interested in Primary Care
• Educational approach focused on partnership and cultural fit + achieving a market-clearing valuation

Relevant Physician Practice Transaction Expertise