Sutures and Suitors: Private Equity Platforms in Healthcare

Background

Private equity (PE) firms increasingly use “buy-and-build” strategies, where a main platform company acquires smaller add-ons in the same sector. This approach has grown from 20% of PE deals in 2016 to over 50% in 2022, and the practice has become increasingly common in the United States.

Platform deals create value through shared resources and complementary strengths rather than just financial restructuring, a key difference between PE platforms and conventional standalone PE models. In healthcare, this allows for consolidating small clinics and facilities to achieve efficiency and scale. However, the existing literature does not distinguish between platform deals and standalone PE acquisitions, leaving gaps in understanding how integration affects performance and outcomes.

About the Study

The project examines:

• Why are PE investors showing growing interest in building healthcare platforms?
• How do platform strategies affect provider performance, pricing, and patient outcomes compared to standalone PE models?
• How is value created through scale (similar assets) and scope (complementary assets) synergies?

Methodology

The study uses empirical analysis combining descriptive and econometric methods. It will exploit variations in state regulations, such as Corporate Practice of Medicine (CPOM) laws and Certificate-of-Need (CON) rules, to identify entry and activity levels across healthcare segments

Intended Outcome

By distinguishing between platform acquisitions and standalone PE deals, this research seeks to offer new insights into the financial and operational effects of PE ownership, addressing key gaps in understanding its broader implications for the healthcare industry.