CHICAGO—The Private Equity Stakeholder Project (PESP) released its latest report on health care acquisitions, providing an in-depth analysis of private equity dealmaking in the health care sector throughout 2024. Titled "Private Equity Healthcare Deals: 2024 in Review" the report delves into key trends shaping the industry and raises important considerations for policymakers, regulators and patients.
Historically, health care has been an attractive space for private equity investment due to its steady demand, aging population,and fragmented subsectors ripe for consolidation. Despite the headwinds of increasing regulatory scrutiny and high interest rates, private equity firms continued a steady pace of investment in the U.S. health care space in 2024.
PESP identified a total of 1,049 private equity-backed health care deals in the U.S., consisting of 262 growth-expansion investments, 166 leveraged buyouts and 621 add-on acquisitions to 383 unique platform companies. These deals involved at least 676 private equity firms, business development corporations, venture capital firms, private credit funds and other types of investors.
Some firms stood out for their active participation, with at least 16 private equity firms executing 10 or more health care deals in 2023. Among them, Latticework Capital Management led the pack with 27 deals.
Key subsectors attracting significant investment included outpatient care, dental care, health IT, pharma services and medtech. Home health, homecare, hospice, behavioral health and disability services were also noteworthy investment targets.
The report underscores concerns regarding private equity's growing presence in health care. The PE business model, centralized on the pursuit of outsized returns over short periods, may lead to cost-cutting measures that impact patients and workers negatively. Moreover, reliance on debt financing poses challenges, particularly amid rising interest rates, as evidenced by the bankruptcies of major private equity-owned health care companies in 2024. Private equity-backed companies accounted for seven of the eight largest health care bankruptcies in 2024.
Analysts predict a resurgence of health care dealmaking in 2025, driven by falling interest rates, increased dry powder and expectations that a Trump administration will take a more favorable stance on private equity investment. Given sustained investor interest and the risks of private equity ownership—such as "stealth consolidation" that drives up costs—the report urges state and federal policymakers to strengthen oversight of health care mergers and acquisitions.
For more information and to access the full report, visit pestakeholder.org/private-equity-healthcare-2024-trends.