Private equity (PE) finance is flowing into the healthcare sector at an increasing pace. Investors are attracted to healthcare due to its constancy of demand, which is rising as the U.S. population ages, and its lower risk profile. The COVID-19 pandemic has further heightened investor interest.

In this report we examine the nature and scale of PE investment in healthcare, which is set to continue to outpace broader PE deal activity. Key trends and strategies are highlighted along with a look to the future.

Key Findings

• Healthcare businesses have become increasingly attractive to private equity (PE) investors. Growth in PE investment in healthcare has been outpacing broader PE deal activity since 2009.
• Investors are attracted to healthcare due to the constancy of demand, which is rising further as the U.S. population ages.
• Healthcare is viewed as being more recession-resistant than most other asset classes with long-term performance potential and limited volatility.
• The COVID-19 pandemic further heightened investor interest due to its exponential impact on demand for healthcare services and therapies.
• The annual PE healthcare deal total rose to 2,360 in 2020 – the highest annual total on record. 2021 is on track to post a similar performance.
• Acquisitions of healthcare service providers, particularly physician practices, remain the dominant focus for PE investors.
• Urgent care was one of the earliest healthcare services to attract PE funds, but interest looks to have peaked.
• Look for PE investors in healthcare to come under increasing scrutiny. It is critical that the quality of service and outcomes are sustained and improved upon, without passing on notably higher costs to clients

Download the Healthcare Services | Q4 2021 report.