Gastroenterology Physician Practice M&A Industry Update
Read more about M&A activity and trends in this sector
Gastroenterology Physician Practice M&A
Download PDFSeveral factors driving consolidation of gastroenterology physician practices by both strategic healthcare organizations and private equity funds.
- The gastroenterology physician practice market remains highly fragmented with only a few multi-state providers across the U.S and the specialty is rapidly emerging as one of the most dynamic areas in terms of physician practice consolidation.
- Investment activity is primarily driven by strong ancillary revenue streams and enhanced reimbursement leverage, which highly value the scale in this specialty.
- The momentum in deal volume is expected to continue in the coming years as the independent practices consolidate to achieve the benefits of scale and to bring modernization to the practices, with EHR systems, endoscopy equipment, software, and other ancillary services.
- Private equity groups and their portfolio companies have particularly remained acquisitive in the space over the past few year, acquiring gastroenterology practices to establish regional dominance and leverage economies of scale.
- PE-backed GI platforms, including GastroHealth, and United Digestive, have now undergone a second round of recapitalization and several other platforms are expected to experience a “second bite” in the near term.
- With platform ownership transitioning over the past year and the entry of new private equity funds, the market has experienced a significant influx of new capital and intense competition to acquire existing practices.
- Strategic buyers have also demonstrated their strong confidence in this sector, as evidenced by the recent acquisitions of prominent practices such as GI Alliance, Covenant Physician Partners, and PE GI Solutions.
GI physician practice M&A activity(1)
Deal activity since 2022
Key factors driving consolidation activity in the sector
1
Fragmented market
The specialty is highly fragmented and is largely served by smaller practices, which can be rolled up to form larger entities with favorable scalability.
2
Favourable macro trends
Rising prevalence of GI related conditions, stable to increasing reimbursement rates and favorable payor mix present significant growth opportunities.
3
Diverse revenue streams
Potential to provide ancillary services in-house, such as weight loss, infusion, imaging, anesthesiology, ASC, pathology, etc., makes the specialty more attractive for potential buyers.
4
Regulatory environment
MACRA demands higher quality reporting from GI organizations, and in order to meet these requirements it becomes imperative for smaller practices to merge.
5
Centralizing back-office functions
Combining back- office functions including IT, RCM, accounting, scheduling, HR, etc. helps the practices achieve economies of scale.
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Gastroenterology Physician Practice M&A
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