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Becker Private Equity & Business Podcast
Physician Practice Management and Healthcare Private Equity Trends in 2026 with Amber Walsh of McGuireWoods LLP 6-19-26
00:15:41
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- [00:01]
A
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- [00:29]
B
This is Scott Becker with the Becker's Private Equity and Becker Business Podcast. We're thrilled today to be joined by brilliant leader Amber Walsh. And Amber's going to talk to us about the state of healthcare private equity with a particular reference to physician practice management companies. Amber, let me tee it up and ask you what is the current state of investing in practice management companies and MSOs and so forth around physician specialties? What are you seeing out there?
- [00:58]
C
There's been a lot of discussion over the past couple of years of various headwinds I guess that kind of slowed or I would actually use rationalized some of the investments in physician practice management. Some of those dynamics that we've dealt with over the past couple of years are tougher regulatory environments. We where several different states have famously introduced and are now actively reviewing physician practice management deals prior to closure on a much more active basis or reimbursement pressure. There's a whole host of things, higher interest rates, et cetera that have been talked about as headwinds on the investment in the physician practice management space. And I think a lot of that is true. But I intentionally use the word rationalize because what I think has really happened is that investors have become more thoughtful, you might use cautious in some ways, but thoughtful. They're spending a lot of time in assessing the structures of their deals. They're doing deeper dives into diligence, more thoughtfully crafting and going after different deals. So you're still seeing plenty of activity. And last year was actually a record breaking year in healthcare private equity investments. But it's different than it was a couple of years ago because of these dynamics. You're seeing a lot more thought, carefulness and I think the ultimate deals are happening probably with a lot more rigor around how they're actually going to operate going forward.
- [03:02]
B
And take a second, you use the word and I love this more maybe rationality around it. And we see that in the doubling down in certain specialties and not in other specialties. Can you talk about that a little bit? Because it seems like some areas it's going great and some of the hugest practice management driven things are going really well in other areas seems very challenging. You break any of that down by specialty or how do you look at some of that?
- [03:32]
C
Yeah, I think that's absolutely right. There are some features of different specialties within the PPM world that make particular specialties more attractive. So and we're talking on the specialty basis now. Of course you've got individual practice and platform delineations as well. But when you're talking about on a specialty basis, the ones that are getting the most attention enthusiasm from investors are those that are really poised to take advantage of what has been a long time move. And it's been going on for a long time and it only continues the move towards outpatient in both procedures, the move to at home and outpatient basis out of the hospital specialties that are poised to take advantage of that are really in high demand right now. In particular enthusiasm for investors. So cardiology is a perfect example. With the slow elimination of the inpatient only list and the migration of certain cardiology procedures into the outpatient basis. Cardiology is one area that has been really exciting for investors for the past couple of years and it's only continuing. And there's several other specialties like that. What's interesting is that I think there are very few specialties that investors have completely cooled on or backed away from. I would more use that they've been more steady and this actually plays out. We recently published as you know Scott, you're a part of it, we recently published a paper at the firm of 22 different specialties and where investor enthusiasm currently sits. What's interesting is of the 22, there wasn't a single one that we said declined interest. We had a lot of study. There are a lot of study as it goes, dermatology, dental, gi, but none of them were a complete decline. And I, I think that's actually true and very interesting aspect to where we are right now.
- [06:00]
B
Well, it does seem fascinating because it seems like in the, in the big specialties where there's still a lot of independence and decent margins like you've got orthopedics, some of these really going great GI continue to go pretty well. On the flip side, some challenges in some of the ob gyne roll ups and some of the more challenging margin specialties, obviously you've had this really interesting evolution in the anesthesia practice area. Any thoughts on specialties and what you think investors might be excited about going forward?
- [06:32]
C
Yeah, before I answer that one, you're right. If I had to mention just one area where there's close to cooling, but there's still plenty of deals getting done. It is an OB GYN and then pediatrics as well. Those are really, really hard margin specialties to where it's really hard to help them as an investor. It's really hard to help them in cost reduction and some of the other things that investors can do to help an organization to grow and improve margins. So you're absolutely right on that. And it's interesting where you mentioned GI GI is fascinating because we would put that in the study. And yet even though there have been, there's been private equity investment in GI physician practice platforms for years, I mean literally GI alliance has just had its third recap. This has been going on for a really long time, yet you still only have about 10% of the market that's consolidated. And so you still have a ton of fragmentation even in some of these specialties that have been on the radar of private equity for a long time. But then I hit another category that's kind of newer. And so in actual answer to your question about where there's some enthusiasm, you have some of these new areas. Urology is a slightly newer area of interest. You have the home based platforms that aren't necessarily home health, but they are home care in a variety of fashions. Those are starting to really pick up and get some really interest from investors. And then anything that can help in that movement towards value based care or towards outpatient, and we've been talking about that for years, but it continues to be true. If the platform, both the specialty and then the platform within the specialty, if they are poised to take advantage of that migration, which is not stopping and not expected to stop anytime soon, that's where you get the most investor enthusiasm.
- [08:56]
B
Thank you very, very much. And take a moment, Amber, on the surgery center world, what are you seeing there? Because I know you're still deeply involved in the surgery center world and still watch what's going on with some of the big, big chains in the big management companies. What are you seeing there?
- [09:16]
C
Surgery centers just continue to be such an important part of everyone's strategy. And I use everyone intentionally. I know it's kind of a bold word, but I use it intentionally because you have health systems, even the health systems that were the slowest to move to the outpatient basis, they can't avoid the fact that they need to build out their ambulatory care strategy. And so even the score slowest movers have been forced to build out an ASC strategy, often joint ventured with local physicians. You absolutely See an ASC strategy being part of a lot of the surgical platforms for these PPM platforms. So the classic ASC specialties, ophthalmology, orthopedics, gi, et cetera, you see them incorporating an ASC strategy even more intentionally into their platforms. Not just a, you know, almost careless, just a straight investment. It's not that simple anymore. It's part of the strategy. It's how do we make sure that our physicians are helping to recognize that patients do better in an ASC setting? What can we do in terms of our compensation? What can we do in terms of our, our employees and our overall structure of our organization to move patients into this setting? Because payers want them moved into this setting, CMS wants them moved into this setting. So it's become just such and it not just becomes this conversation around the importance of ASCs has been going on for decades, but it's not stopping and it continues to be a really important part of the strategy and conversation for pretty much any player in healthcare.
- [11:19]
B
Thank you very much. And one last question. Is the firm and you still end up representing on the large to mid to even mid market size sellers. Are there any things that sellers should be thinking about now in terms of preparing themselves for a transaction that maybe they hadn't been thinking about a few years ago or that they shot, they should be particularly focused on?
- [11:46]
C
Yeah, you're absolutely right. We continue to. As much as we work on the buy side of these transactions, we do have a lot of sell side representation including for some practices that we've worked with for years. It's one of the most fun things that we get to do is when you've worked with a practice for years and you are helping them get to to that stage when they are ready to take on outside investment for whatever reason. And absolutely, of course you have to get your regulatory house in shape. That's a no brainer for anyone thinking about going to market. But it's not just as simple as it used to be of let's do a self assessment on regulatory risk and let's try to clean up the shop before we look for our perfect partner. It really is much more sophisticated than it used to be in that you have to think about how you as a practice are poised to take on value based care, how you are going to fit into the strategies of some of the, if you're a smaller practice, how you might fit into the strategy of one of the larger PPM businesses. And of course the smaller you are, the less expectation that you're going to already have the infrastructure to immediately flip to value based care, for example. That's less of the expectation. But the larger you are and the more that you envision yourself as a practice being the platform, like the center of a hub and spoke model for a private equity investor, the more that you envision yourself in that role, the more you really do need to have this infrastructure already built out to make sure that you have the maximum amount of opportunities when you go to market. Because if you've already built out your infrastructure, you've already started to dip your toe into value based care. You already have an ASC strategy, you've already invested in some interesting benefit plans that will help on your shortage of labor. If you've already done these things, then you're going to be in much better of a position to be able to attract the most sophisticated of investors that can take you to that next level. Which is not to say that you can't approach the market and think about the market as a seller if you haven't done those things. But then those are the differentiators of those who are going to add on to someone else's strategy versus those who are going to be the strategy and be the platform.
- [14:34]
B
Is there a size differentiation on being a platform versus not, or is it a lot more than that?
- [14:40]
C
It's both. I mean, it's really hard to build a platform around a practice of five or six doctors that are solely in one market. In the platform, there's a lot of platforms that are built on just one single state, but you really need to have demonstrated an ability to scale and to grow, even if it's just within that one state. So it is both. It is both a demonstration that you've been able to add on and still create the core and made a bunch of individual kind of acquisitions or joining physicians be more as a whole than they were as a group of individuals. So that's one salient feature. And then of course, it's those other differentiators that I mentioned that all go together to make the most attractive platforms.
- [15:36]
B
Right. But it also becomes, I think your point is so well taken. It's not just size, it's leadership too. You've got somebody that really wants to lead and drive and grow and so forth too. And that has the capability to do so.
- [15:47]
C
Absolutely.
- [15:48]
B
Amber. It's always one of the highlights of my week to get a chance to visit with you. Amber Walsh, executive committee at McGuire woods one of the brightest, best professionals I've ever had a chance to work with. Amber Walsh Fantastic. Thank you so much for joining us today on the Becker Business and the Becker Private Equity Podcast. Thank you very much.
- [16:06]
C
Thank you. Scott.
- [16:12]
D
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