Key points covered in this article:

• Private equity activity is increasing across healthcare, especially in outpatient care, behavioral health, and physician-owned practices, as investors target fragmented markets with stable demand and expansion potential. This is contributing to a more consolidated and competitive environment for healthcare organizations.
• Many healthcare leaders are being pushed to think more strategically about valuation, succession planning, and operational readiness, whether they are considering a transaction or remaining independent. Financial performance, efficiency, compliance, and market position are becoming more important as PE-backed competition grows.
• Risk management and diligence readiness are also taking on greater importance. Strong internal controls, clear procedures, and proactive planning can help organizations reduce risk, strengthen their market position, and better prepare for future opportunities or challenges.

Private equity investment in healthcare continues growing, particularly across outpatient care, behavioral health, and physician-owned practices. More PE-backed organizations means that healthcare leaders are starting to face a more consolidated and competitive market. In other words, the industry looks much different than it did just a few years ago.  

Staying informed of PE activity and ongoing trends can help healthcare leaders with long-term planning and decision-making. This is true whether an organization is considering outside investment, competing against PE-backed organizations, or simply trying to better understand the current healthcare market.  

What’s Driving PE Activity in Healthcare?

Healthcare continues attracting strong PE interest even as economic uncertainty and higher interest rates slow activity in other industries. According to reports, healthcare was one of the sectors that saw the biggest increases in buyout deal value in 2025. That momentum likely stems from the reality that people still depend on healthcare services regardless of economic conditions. Investors also seem to be thinking of healthcare as less vulnerable to near-term AI disruption than many other industries. 

Healthcare also remains highly fragmented across many sectors, particularly outpatient care and physician-owned practices. That creates opportunities for investors to combine smaller organizations into larger regional and national groups. At the same time, many physician owners are nearing retirement, and smaller organizations are managing staffing shortages, reimbursement issues, technology costs, and growing administrative demands, all of which make outside investment more appealing.  

Much of the recent PE activity has centered around outpatient and specialty care, where organizations are often easier to grow and manage across multiple locations than large hospital systems. PE firms usually acquire a larger organization first, then add smaller practices or facilities over time. Many of these arrangements centralize functions like billing, scheduling, recruiting, and technology management across the organization. Other areas seeing high levels of investment include behavioral health, home health, hospice, specialty pharmacies, and dental practices. Distressed healthcare assets are also a growing priority for PE firms. 

The following takes a closer look at three of the some of the most active areas: 

Ambulatory and Outpatient Care

Ambulatory surgery centers (ASCs) are a consistent target for PE investment, largely because the healthcare system continues moving more procedures out of hospitals and into outpatient settings. ASCs now perform more than half of outpatient procedures in the U.S., and PE firms accounted for more than 60% of ASC transactions in recent years. Outpatient specialty care and imaging centers are seeing similar interest as the outpatient market continues growing. 

Part of the appeal is that these types of organizations are generally less expensive and less cumbersome to oversee than entire hospitals. They are also easier to expand across multiple locations. PE-backed organizations often have more resources for technology, recruiting, and other essential operations, which is hard for independent providers to match. 

Behavioral Health

Behavioral health and addiction treatment have become some of the busiest healthcare subsectors for PE activity, and investment continues to accelerate. Patient demand is increasing, and public attitudes toward mental health treatment have changed dramatically over the past several years. Telehealth has also expanded access to a new and growing patient base.  

Behavioral health has also historically been highly fragmented, with large numbers of small independent providers operating without the resources of larger organizations. PE firms see an opportunity to combine practices and expand access. However, the sector comes with its challenges, including potential staffing shortages and lower reimbursement rates.  

Physician-Owned Practices

Specialty physician groups remain a steady area of PE interest. According to the AMA, private practices now account for less than half of physicians across most specialties, continuing a long-term shift away from the independent practice model that once defined much of healthcare. As more physicians get closer to retirement age, succession planning conversations are becoming more common across independent practices. 

Running an independent practice has also become more difficult. Staffing shortages, new compliance demands, and advanced technology continue pulling physicians further into the business side of healthcare. For some physicians, PE partnership starts to look like a practical way to focus more on patient care and less on operations and administration. That said, selling a medical practice can also bring changes to compensation structures, decision-making, productivity expectations, and physician autonomy. 

Major Trends to Watch

Considering PE’s growing influence over healthcare, what are some of the major trends to watch? 

Consolidation continues changing the healthcare market. PE-backed organizations are continuing to acquire practices, outpatient centers, and other healthcare providers at a record rate, likely with a strategic plan to build larger regional and national systems. This is changing the competitive outlook. Larger organizations tend to have more resources, and independent providers will likely need a clear strategy for how to differentiate themselves in the market, whether they are planning to pursue outside investment or stay independent. 

Valuation is becoming a bigger part of the conversation. Valuation is becoming a bigger part of the conversation. If a future transaction is even a possibility, healthcare leaders will want to focus on the factors that drive value. A proactive approach includes reviewing areas like overall financial performance, operational efficiency, and market position. Succession planning timelines may also need to move faster than expected given current market activity.  

Risk management has a greater importance. Compliance and internal controls are all under greater scrutiny than in the past, and PE firms consistently report that risk exposure uncovered during due diligence is one of the biggest obstacles in closing transactions. Even for organizations where a transaction is not on the radar, viewing operations through the lens of a potential buyer can be a helpful exercise. Strong procedures and policies benefit any organization regardless of future ownership plans. 

Economic headwinds are still a factor. PE investors are concerned about persistent inflation and elevated interest rates, slowing potential investment in recent years. Even so, healthcare remains attractive to investors because of its relatively stable demand. Healthcare leaders should prepare for more activity ahead though. Whenever interest rates start to come down, PE activity is expected to pick up. 

Looking Ahead

Private equity will likely remain a significant part of the healthcare industry for years to come, and its effects will be felt beyond organizations directly involved in transactions. Healthcare leaders will want to understand their financial position and be proactive about long-term strategy. Preparing a business for sale typically takes 12 to 24 months, so starting that process well before a transaction is on the table puts leaders in a much stronger position when the time comes. For more information, contact the PBMares’ Healthcare team, led by Partner Jonny Rosch, Senior Manager Reid Peterson, and Business Valuation Partner Dwight Buracker.