Private equity has its eyes on gastroenterology. Here's why.

Private equity has staked its claim in gastroenterology.

From GI Alliance to United Digestive, most major GI groups are backed by private equity. But what is drawing private equity to gastroenterology specifically? 

"This trend has seen growing momentum in the past five years. The field presents an attractive PE target, as a significant portion of gastroenterologists remain in independent practices with ownership in ambulatory endoscopy centers," Rami Abbass, MD, a gastroenterologist at University Hospitals in Mentor, Ohio, told Becker's in 2021. "The growing regulatory environment, high cost of capital, administrative burdens and challenges of partner recruitment have made private equity attractive to some practices."  

Gastroenterology is the most-represented specialty among ASCs, making up 32 percent of all cases, according to VMG Health's "Multi-Specialty ASC Benchmarking Study" for 2022. Gastroenterology also has high utilization of evaluation and management codes. It's a popular specialty with lots of potential for growth, making it especially attractive for private equity. 

"Private equity certainly has made mincemeat of a few different industries and healthcare," Robbie Allen, former CEO of One GI, told Becker's. "I think they, by and large, have done a decent job in GI. They've brought focus to a really fragmented specialty. GI is historically skewed very independent; there are very few large mega groups. The money that's being focused and put in by private equity tends to drive the private equity style model of improving the industry, which is to focus on three, maybe four, things over a period of three or four years, and really drive value on those things with a very conscious effort, which tends to sharpen the tools. It can force and accelerate changes that are already happening in healthcare and I think, by and large, that's what it's done. There's no question it's here."

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