Current Trends in Private Equity Investment in Ancillary Healthcare Providers

The U.S. healthcare system has recently experienced events that would ordinarily cause those considering private equity investments in the industry to be hesitant to do so. A new Administration, uncertainty regarding the status of the Patient Protection and Affordable Care Act (PPACA), consolidation in the provider and payor world and changes in reimbursement would seem to all be material in making investments in the healthcare sector. However, these considerations, which may be red flags to some, appear to be opportunities to others. While there has been a slight drop-off in healthcare merger and acquisition activity, private equity investment in the healthcare sector continues to be significant across areas of the spectrum. This activity is not limited to hospitals and physician practices. Significant investment continues to flow into ancillary providers. These ancillary providers supplement the care provided by hospitals and physician practices or provide products or services utilized by those providing direct patient care. For purposes of this review, all such ancillary providers are considered ancillary healthcare providers.