Healthcare Private Equity: What You Need to Know


The healthcare sector is growing fast. There are many private healthcare facilities and providers; all offering specialized treatments, outpatient services, and more. However, most private healthcare practices and providers struggle to make profits or even acquire expensive medical equipment. And that is one of the main reasons that they need investment from private equity firms or investors. Keep reading to learn more.

Why Invest in Healthcare?

The healthcare industry is attracting private equity investors for several reasons. To start with, the sector has many areas of specialization, such as dentistry, general medicine, oncology, orthopedics, and more. With many areas of specialization, medical experts may need to partner with investors to start/grow a facility and split profits in the end.

But before you invest in a healthcare practice, you need to do due diligence. You should also get legal counsel from an experienced healthcare private equity service lawyer. The lawyer will help you navigate the complex process and guide you to acquire the right healthcare practice, guaranteeing returns after a short while.

Situations Making Healthcare Providers or Practices Invite Private Equity Investors

Many reasons push private hospitals or healthcare practices to partner or sell ownership to private equity investors or firms. Here are common situations or reasons;

Struggling to make money – If a hospital or healthcare practice is struggling to make money, it might be forced to sell some shares or the entire practice to investors. The facility might be struggling due to a lack of trained medical experts and advanced medical equipment. They can sell some shares to investors to get money to invest back into the facility.

It has become difficult to comply with regulations –  Compliance is essential in healthcare practice but comes at a cost. A hospital or practice may decide to sell shares or an entire facility to healthcare private equity investors if complying with regulations is difficult and expensive. If you are an investor, you should first talk to a healthcare private equity service attorney to explain the compliance situation and whether it is a viable investment.

A facility offering an innovative service, but needs financial support – Many healthcare practices are offering specialized services and products. Such facilities can decide to partner with investors to fund their practices so that they can acquire the right permits, medical equipment, and products. And many healthcare private equity service investors are looking for such opportunities.

Why Private Equity Investors Need Lawyers When Handling the Transactions

When acquiring a healthcare practice or hospital, you need to research. You need to find out why the facility is struggling and why they are selling it out. You may not have all the time to do due diligence, but a healthcare private equity service attorney will help you out. The lawyer will research the practice and advise on what to do to acquire it.

After verifying that the healthcare practice can be a good investment, the lawyer will help you create an offer and present it to the other side. They will negotiate for a fair price and prepare all the documents needed to take over the practice. The attorney will also review the ownership and financial documents of the facility. They will also handle all the paperwork and ensure the deal is done correctly in compliance with the set laws and regulations.

Strategies Private Equity Investors Use to Make Profits After Acquisition

After buying out shares or the entire healthcare practices, the investors will use some of the following strategies to make the facility profitable;

Investing in personnel and medical equipment – Healthcare practices struggle to make money if they don’t have the right medical equipment and trained staff. But after the acquisition, investors pump more money into the facility, allowing it to hire skilled medical experts and acquire advanced medical tools and equipment.

Focus on growing a specific aspect of the hospital – If a hospital was not offering specialized services, an investor can decide to focus on offering specialized treatments. Alternatively, they can decide to improve certain areas of the practice that were not doing well.

Rebranding and marketing –  if an investor acquires an entire healthcare practice that had a bad reputation or struggled to make money, rebranding can be a good idea. They should also market the rebranded facility to attract more and more clients.

Eric Lilly
the authorEric Lilly