Private Equity Examines Medical Practices

Private Equity Examines Medical Practices

Texas Tribune Reports Uptick in PE Interest in Primary Care Practice Groups
A recent Texas Tribune article highlights evidence that private equity firms are eyeing the Primary Care market in Texas:

“Consolidation in health care is nothing new, and private equity firms have for years been buying up specialty practices in areas like anesthesiology and radiology. In 2014, the value of health care buyout deals in the United States increased to $15.6 billion, a 60 percent increase from the previous year, according to a recent report from consulting firm Bain and Company.

“But the influx of private-equity firms chasing profits in Texas’ primary care practices appears to be a recent phenomenon, and it’s unsettling some physicians in the fiercely independent Lone Star State – which has one of the highest rates of doctors practicing privately in the country, according to the Texas Medical Association. Representatives for several independent practices in Texas – who asked not to be identified for reasons of financial privacy – said investors have approached them aggressively, in some cases as often as twice per month.

 “… [I]nvestors say they aren’t interested in micromanaging doctors’ offices. Rather, they see an opportunity for cost-saving innovation as the health care economy changes from a fee-for-service payment system, which pays doctors for each service they provide, to a value-based care model, which rewards doctors for providing cost-effective treatments. The Obama administration has said it wants 50 percent of payments from Medicare, the federal health insurance program for the elderly, tied to value-based care by 2018.

Read the entire article here.

As these groups eye the state, their attention will doubtless turn, at some point, to the Rio Grande Valley.  Between our status as a medically underserved region, the employment statistics indicating the healthcare sector as one of the largest in the region, and the impending launch of the UT-RGV medical school, nearly everyone looking sees huge growth opportunities in our region.  But, all this opportunity certainly begs the question, “Are we ready?”

In assessing the readiness of any business to engage in a transaction with a private equity firm, or really any buyer, the medical profession, and its treatment model, provides a great framework.  As medical specialties have evolved, the primary practice physician today regularly seeks the expertise and guidance of a specialist in order to assure the best quality care for patients.  This is the same approach that a primary care practice group should take in assessing their business and engaging the possibility of taking on a PE investor, or an outright sale.

At B2B Exit, we are specialists the process of buying and selling businesses.  Using a proven model, based closely on the treatment process used by some of our early physician clients, we provide an initial assessment of our clients’ business, prescribe a plan resolve any ailments or maladies the business faces, provide follow-up care to assure the treatment plan is followed and revised as necessary, and ultimately follow the client for years to come, at times with simple, periodic check-ups, and at other times with more aggressive treatment when a new situation arises.  Contact me today if you’d like a free business check-up, or to discuss a strategy to bring in additional capital or exit your business.

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photo credit: Doctor’s Office via photopin (license)

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