Physician practice consolidation 2022
The healthcare sector has seen steady growth in both the number of medical practices being bought and sold and the amount of money that has been dedicated for this purpose. Medical practice investors continue to see the potential from the $4 trillion spent annually on healthcare which represents over 17% of the US GDP.
While some physicians are skeptical about selling their medical practice to investor-backed companies, others are clearly receptive especially as they see an improvement in purchase terms in many subspecialties. 
Several factors have contributed to this highly active market. A slowdown occurred around March 2020 which along with pandemic-induced stress resulted in more physicians seeking exit strategies once business resumed. The pandemic increased demand for digital health solutions and opened doors for new technologies to improve remote care delivery and decentralized efficiency. There was also a dramatic increase in the value of clinical research and health data to improve patient care and pharmaceutical development.
What’s Being Acquired?
We look at the subspecialties that are tending towards more consolidation.
Until 2017 acquisitions were mostly in emergency medicine, anesthesiology, family practice, pediatrics, and dermatology. Since then, there has been an increase in consolidation in ophthalmology, cardiology, radiology, obstetrics, gastroenterology women’s health, and clinical research.
Key trends to watch when selling a medical practice
For most corporate health practices, hiring providers and support staff will remain a significant challenge for the foreseeable future. As they encounter staff burnout, and an aging physician population, recruitment will be extremely difficult. Strong leadership and proper incentives remain critical to retain the right staff and, more importantly, build and enhance a positive and inclusive culture, which can underpin the success of an organization.
As healthcare investors evaluate medical companies, they should keep environmental, social, and governance (ESG) issues in mind. In recent years, ESG topics have attracted increasing public attention and investors are putting more pressure on fund managers to make this a higher priority. As part of due diligence, healthcare investors should examine a target’s sustainability practices. What are their recycling and reuse policies? How environmentally responsible are they when it comes to energy use?