Physician acquisitions shifted in 2024, as independent practices struggled to keep up with rising operation costs and stagnating reimbursements.
Here are 10 key trends in this boom, according to VMG Health’s 2025 Healthcare M&A Report, released on April 22.
1. Physician group transactions have historically been impacted by large regulatory changes — passage of the Affordable Care Act in 2010 and the passage of MACRA in 2015 — as physicians opt to align with larger groups rather than face the burden and expense of increased requirements alone, according to VMG Health.
2. Independent practices continue to struggle to keep pace with the capital requirements of transitioning to value-based payments and increased competition from health systems, private equity firms and payers.
3. M&A activity in healthcare was strong in 2024 but declined slightly from 2023, especially in physician medical group deals. The number of physician group transactions dropped about 20% year-over-year due to high interest rates, rising labor costs, market saturation and political uncertainty, according to VMG Health.
4. Around 25% of 2024 physician group deals took place in Florida, Texas and California, correlating with their large populations and growth potential. Several states introduced or expanded regulations that may limit private equity partnerships with physician practices through management services organizations.
5. Some specialties saw higher transaction volumes, including 29 internal medicine deals and 242 dental deals in 2024. Dental consolidation continues to gain momentum, with rising interest in primary care, cardiology and orthopedics heading into 2025.
6. Eyecare deals dropped sharply from 101 in 2020 to just 26 in 2024, indicating a significant pullback. In contrast, dental deals rose significantly, led by major players like MB2 Dental Solutions, while other active specialties included cardiology, plastic surgery, ENT and OB-GYN.
7. The fragmented nature of physician medical groups suggests continued M&A interest in diverse specialties. Specialties with strong commercial reimbursement and cash-pay models, such as dermatology and med spas, remain particularly attractive to investors.
8. In 2024, 37 PE-backed med spa platforms made 45 acquisitions, reflecting strong market interest. However, aggressive expansion and marketing have made organic growth more challenging for individual med spa locations.
9. To enhance same-store growth, many traditional med spas, both PE-backed and independent, are broadening their offerings to include wellness services like hormone replacement therapy. These services cater to aging populations seeking improved energy, cognition, and weight management, aligning with the growing trend of personalized wellness.
10. The explosive popularity of GLP-1 medications for weight loss has drawn investor attention. However, concerns about supply chain disruptions and regulatory scrutiny create uncertainty. PE firms remain divided on the long-term viability of GLP-1s and weight loss services as a growth category.
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