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Private Equity in Healthcare – Healthcare Economists

Private equity investments in healthcare have grown in recent years.according to Appelbaum and Bart (2020)while only 4.7% of leveraged buyouts (LBOs) took place in healthcare in 2000, this figure rose to 12.2% in 2019.

One 2022 White Paper Find out that investment in healthcare has increased even more:

The number of transactions rose 36% to 515 from 380 the previous year. The total disclosed value more than doubled from $66 billion to $151 billion (see Figure 1). The average disclosed deal value soared 134%, mainly due to five acquisitions over $5 billion, compared to just one a year earlier.

The top 5 deals of 2021 include acquisitions of Medline Industries ($34 billion), Athenahealth ($17 billion), Parexel ($8.5 billion), Inovalon ($7.3 billion), Cerba Healthcare ($5.3 billion). Other investments include “Telemedicine, Digital Health and Health Information Technology” also Supplier acquisition.

President Biden is skeptical of private equity investments in health care, even addressing issues related to private equity buyouts of nursing homes in his report. 2022 State of the Union addressStill, it remains to be seen whether private equity investments can help provide additional capital to reduce costs and improve outcomes. More specifically, which types of healthcare would benefit the most from private equity investment? We all agree that healthcare can benefit from additional use of technology to improve outcomes and increase process efficiency. Will private equity be a way to achieve these goals? Only time will tell.

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