Overall healthcare services private equity deal activity remains healthy, in our view. Although deal activity has fallen from the “bubble levels” in 2021 and 2022, it is generally in-line with pre-COVID levels — despite what has been the steepest rise in interest rates in the shortest period-of-time since the early 1980s. Behavioral health has arguably been a notable “bright spot” within healthcare services with a few recent platform deals, including Behavioral Innovations (acquired by Tenex Capital Management) and Caravel Autism Health (acquired by GTCR).

Key Takeaways

1. We expect that the pending Trump administration to be much more friendly to mergers and acquisitions in healthcare services. However, Trump will not be President until January 2025. In the meantime, the Department of Justice (DOJ) under President Biden, continues to push back on healthcare consolidation. In November, the DOJ filed an antitrust suit against UnitedHealth Group (NYSE: UNH) to prevent its proposed $3.3 billion acquisition of Amedisys (NASDAQ:AMED).
2. In our view, lowering healthcare costs will be an important area of focus for President-Elect Trump. During Trump’s first term, there was a focus on price transparency regulations that required hospitals and healthcare providers to publicly disclose their prices to encourage patients to be able to “shop” for care. However, a new report by the Health and Human Services Office of Inspector General (OIG) suggests that many hospitals are still not complying with these regulations.
3. The Centers for Medicare and Medicaid Services (CMS) plans to cut physician payments by 2.9% in 2025, despite considerable pushback from industry groups. However, CMS will preserve popular telehealth flexibilities that were scheduled to expire at the end of 2024 and allow for advanced payments to providers participating in the Medicare Shared Savings Program (MSSP).
4. Media reports suggest that CVS Health has discontinued a variety of infusion servicesin areas like antibiotics, inotropic medications, total parenteral nutrition, and acute home infusion programs. This appears to be part of a broader corporate efficiency and restructuring strategy led by activist investor Glenview Capital.

In the dynamic consumer health industry, staying ahead of trends is essential for informed decision-making and seizing opportunities. Bourne is active with multiple assignments across consumer health and other coverage areas. Please reach out to us for more information.

For more information on Healthcare Services, reach out to Aaron Olsen or Evan Goldstein.