PE finds a new healthcare play in cardiology
May 13, 2023
Roughly one in every 10 dollars invested by private equity in the US flows into healthcare services.
PE's foray into healthcare delivery began with investments in surgical centers in the earliest days of the asset class and has since expanded to touch virtually every outpatient provider type.
So it is noteworthy when a new healthcare play opens up.
Since 2021, cardiology has drawn growing PE investor interest, and there are currently five PE-backed groups (four of them operational) in the US.
Cardiology benefits from compelling demand trends—around half of adults in the US have some form of cardiovascular disease. It also turns on two secular trends shaping the US healthcare industry as a whole: site-of-care innovation and value-based care.
The site-of-care theme broadly involves moving healthcare delivery from the inpatient (hospital) setting into other sites that offer equivalent or better care quality while reducing costs and providing a more convenient patient experience—e.g., outpatient centers, homes, retail centers, virtual modalities.
In the case of cardiology, technological progress has enabled more cardiovascular surgical procedures to be performed in ambulatory surgical centers instead of hospitals. This allows PE investors to back independent cardiovascular physician groups.
There is also a significant value-based care opportunity in cardiovascular care since heart disease is a high-spend category that can see improved patient outcomes via chronic condition management, lifestyle improvements, and preventative care.
Our new healthcare services research dives into these opportunities in cardiology, as well as the risks, which include a limited supply of targets and the potential for changing reimbursement dynamics.
It also charts the continued cooling off of PE deal activity in healthcare services broadly—Q1 notched the fifth straight quarter-on-quarter decline—amid a "new normal" of higher interest rates, lower leverage ratios, and sluggish exits.
Download our Q1 2023 Healthcare Services Report.
PE's foray into healthcare delivery began with investments in surgical centers in the earliest days of the asset class and has since expanded to touch virtually every outpatient provider type.
So it is noteworthy when a new healthcare play opens up.
Since 2021, cardiology has drawn growing PE investor interest, and there are currently five PE-backed groups (four of them operational) in the US.
Cardiology benefits from compelling demand trends—around half of adults in the US have some form of cardiovascular disease. It also turns on two secular trends shaping the US healthcare industry as a whole: site-of-care innovation and value-based care.
The site-of-care theme broadly involves moving healthcare delivery from the inpatient (hospital) setting into other sites that offer equivalent or better care quality while reducing costs and providing a more convenient patient experience—e.g., outpatient centers, homes, retail centers, virtual modalities.
In the case of cardiology, technological progress has enabled more cardiovascular surgical procedures to be performed in ambulatory surgical centers instead of hospitals. This allows PE investors to back independent cardiovascular physician groups.
There is also a significant value-based care opportunity in cardiovascular care since heart disease is a high-spend category that can see improved patient outcomes via chronic condition management, lifestyle improvements, and preventative care.
Our new healthcare services research dives into these opportunities in cardiology, as well as the risks, which include a limited supply of targets and the potential for changing reimbursement dynamics.
It also charts the continued cooling off of PE deal activity in healthcare services broadly—Q1 notched the fifth straight quarter-on-quarter decline—amid a "new normal" of higher interest rates, lower leverage ratios, and sluggish exits.
Download our Q1 2023 Healthcare Services Report.
Rebecca Springer, Ph.D.
Senior Analyst, Healthcare Lead
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