Private equity firms have spent more than a decade building physician practice management platforms in specialties such as cardiology, orthopedics, gastroenterology and ophthalmology.
The playbook — acquiring a platform practice, adding on regional practices, then exiting within three to five years — is hitting resistance on the exit side, according to a Sept. 1 report from VMG Health.
Here are six things to know:
1. Hold periods are stretching. Citing PitchBook’s 2026 US Private Equity Outlook, VMG Health said only about 18% of a 2021 buyout cohort had exited by year four, compared with 32% of a 2017 cohort at the same point, which is a gap PitchBook projects to persist through year eight.
2. Regulatory scrutiny is increasing. New York and Minnesota have expanded pre-close notification and review of healthcare transactions involving management services organizations, and California enacted a similar law in January, according to the report.
3. Value creation is shifting. Add-on acquisitions alone are no longer enough to drive returns; platforms are increasingly focused on operational performance, infrastructure and organic growth, VMG Health said.
4. Financing remains tight. Interest rates are stable but still elevated compared to the near-zero environment of 2020 and 2021, raising the bar for buyers.
5. With traditional sponsor-to-sponsor sales harder to execute, more sponsors are turning to alternative structures to create liquidity without a full sale, though VMG Health described those as “bridges, not solutions” to a challenging exit environment.
6. That leaves strategic buyers, distributors, payers and health systems, as the exit path drawing the most attention, with VMG Health pointing to health systems as private equity’s likely next strategic buyer, following a pattern already seen in the urgent care market.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.
