Will High Prices Follow Private Equity Investment in Primary Care?

Primary care practices are consolidating at a rapid pace: Independent physician practices are combining on their own, and growth-oriented, outside investors — such as private equity funds, health insurers and health systems — are taking stakes in practices or buying them outright. Experts tell AIS Health, a division of MMIT, that the impact of such deals will vary, but warn that consolidation and investment by private equity firms has raised prices across the board in other areas of health care.

According to a July 2021 report by investment bank Provident Healthcare Partners, 41 primary care transactions worth over $2 billion closed in 2020, a higher deal volume than any year since 2010. Meanwhile, 2019 set a record for capital invested, with $5.1 billion spread across 26 primary care deals. At the time, investors were on pace to shatter both records in 2021: 31 primary care deals worth $4.8 billion had been announced when the report was published. A February 2022 Provident report made note of several major transactions in the last quarter of 2021: