MARKET SIZE

Healthcare represents 18% of U.S. GDP ($3.8 trillion) and is rapidly growing

  • In 2019, physician and clinical services spend increased
    5% YoY to $772 billion. The second largest health
    expenditure behind hospital care ($1.2 trillion)
  • Medicare spend reached $800 billion in 2019 and is
    projected to grow at a $7.6% CAGR from 2019 to 2028
  • Rising obesity and aging baby boomers will increase
    healthcare spend and place immense strain on the existing
    healthcare infrastructure

MARKET CHALLENGES

Our reliance on hospital systems is inefficient, expensive and unsustainable

  • For most procedures and services, hospitals charge insurance companies higher rates than out-patient clinics. Increased costs are transferred to the patients via higher monthly insurance premiums
  • The last decade has seen a wave of hospital mergers, resulting in bureaucratic monoliths that are slow to innovate and, despite reduced operating costs from consolidation, have increased the price of their healthcare services on average 6 – 18%
  • Changes to healthcare regulations, including the Affordable Care Act, have expanded the ability for physicians to perform procedures in out-patient settings in an attempt to reduce overall healthcare spend
  • COVID-19 has strained hospital resources and shifted patient preference to be treated in contained, out-patient clinic settings

THE OPPORTUNITY SET

Private practices (“PPs”) are nimble, fragmented and an attractive alternative to hospital-based care :

  • Offer more favorable clinical outcomes than hospital-owned facilities, including fewer preventable hospital admissions and lower readmission rates
  • Bring a flexibility that allows PP’s to quickly adopt new technologies and digital tools as well as tailor services to meet the unique needs of their patient base
  • While private equity has a history of rolling-up practices in select specialties such as dentistry, optometry, dermatology, there remain many other fragmented specialties that are largely untouched and primed for consolidation

Private practices can differentiate by focusing on patient experience and expanding the continuum of care :

  • Digital channels/marketing offer new ways to connect patients and providers and to expand a practice’s patient base. Many practices lack the resources or knowledge to use these tools to drive growth and patient retention
  • Private practices can introduce ancillary services to expand their services and provide a more holistic clinical experience while also capturing increased revenue

The market for physician practices is expanding:

  • Many older-physicians are retiring or are close to retirement and are looking to transition or sell their practices
  • Junior physicians today are straddled with significant student debt and as a result lack the resources or desire to purchase or start their own practice
  • Physicians are increasingly disenchanted by the prospect of working for hospital systems, where there is limited autonomy and extensive bureaucracy
  • Junior physicians are increasingly motivated to work for private equity backed platforms