November 2025
Healthcare Consolidation

A couple of years ago we looked at private equity (PE) in the American healthcare space. The practice involves investors making leveraged buyouts, or using pooled funds to acquire a stake in a medical practice, physician group, hospital system, or other healthcare entity. The aim is to boost the acquired organization’s value by restructuring or strengthening its operations or management, then selling it for a substantial profit in a relatively short period of time, about three to seven years. Investors have the benefit of seeing their market share grow through expanding consolidation or “add-on” acquisitions. The potential for business growth and scalability with tax incentives and substantially large payouts can make private equity an attractive option for physicians and new or struggling practices. Improved process efficiencies, newer technologies, and reduced administrative costs are also benefits, as is the promise of greater physician autonomy and the reasonable assurance of economic stability in an uncertain market. There is an increasing demand for healthcare services in the U.S., and the potential for profit grows with that. As such, private equity has made its way into most areas of healthcare, from specialties like gastroenterology and dermatology, to outpatient clinic and home health settings, as well as technological and administrative services like equipment, IT, and medical billing. 

By the Numbers 

Our October 2023 issue reported that in 2021 the amount invested in the U.S. by private equity investors for healthcare-related acquisitions totaled well over $216 billion according to PitchBook capital market data. The number of PE transactions in that record year was estimated at over 1,400, with total acquisitions for the previous decade close to 8,000 (over $1 trillion in total deal values). Of note, private equity transactions rose across all industries after the pandemic, but the highest growth concentration (one in every three buyouts) was in technology, including financial tech, healthcare, and business services, according to management consulting firm Bain & Company. Significant buyouts in healthcare included health tech company Athenahealth for $17 billion and medical supply company Medline for $30 billion.

We found more stats that provide some context for PE’s evolution in the healthcare sphere in recent years.  

• According to the American Hospital Association (AHA), the trend has been physicians moving away from private practices and into private equity, hospital-employed, or other, arrangements. From 2019 to 2023, 65 percent of physician practice acquisitions were by private equity groups or firms (14 percent were by physician groups, 11 percent by health insurers, 6 percent by hospitals and health systems, and 4 percent by other services).
• The American Medical Association (AMA) reported that the number of physicians in private practice had declined from 60.1 percent in 2012 to 42.2 percent in 2024. The number of physicians working in hospital-owned practices increased from 23.4 percent in 2012 to 34.5 percent in 2024. About 4.5 percent of physicians characterized their practice as private equity owned in 2020 and 2022, and this increased to 6.5 percent in 2024.

The United States led globally in private equity buyouts between 2018 and 2022, with $263 billion in deals compared with Europe at $103 billion and Asian-Pacific countries at $79 billion. And while private equity remained a strong presence globally for the first half of 2022, disclosed buyout values did drop in the second half, particularly in Europe. Stressors in that year included inflation, high labor costs and shortages, and geopolitical tensions due to Russia’s invasion of Ukraine. Still, 2022 was the second highest on record for disclosed deal value, with optimistic growth in the areas of life sciences, public-to-private deals and carve-outs, as well as five buyouts in the Asia-Pacific healthcare space at over $1 billion. According to S&P Global Market Intelligence data, 2023 had the lowest annual deal value ($7.26 billion) in three years for private equity and venture capital investments in healthcare services specifically, a 59 percent drop from the previous year’s $17.75 billion. Of note, the healthcare services category represents a sizable portion of healthcare platform deals (about 40 percent). The number of deals in this area fell by about 33 percent to the lowest levels since 2019. Impacting these deals were high interest rates, rising service costs, and labor availability. 

More recently in 2024, we saw a surge in global private equity due to large deals, with five transactions in the biopharma space surpassing $5 billion. The U.S., however, was still the largest market, making up 65 percent of PE deal values for the year. Areas of growth included healthcare IT with providers and PE firms seeking systems to improve efficiency and workflows, and investors focusing on mid-market funds, carve-outs, and exit value maximization to raise values. Also in 2024, S&P Global noted a nearly 50 percent rise in private equity and venture capital deals for healthcare technology, from $10.37 billion to $15.62 billion. The first quarter of 2025 saw these healthcare tech deals at $2.91 billion, 22 percent higher than in the same quarter last year. 

In January through mid-August of 2025, over $145 billion was invested in private equity-backed “megadeals.” That value is expected, potentially, to hit 2021’s estimated record of $230 billion by the end of the year. The boom is due in part to high levels of uncommitted cash reserves, or “dry powder,” held by top 25 PE firms, and high valuation for what are considered prime target assets. There is also a confidence regarding companies whose cashflows might remain strong through tariffs and a potentially unstable economy. 

The Benefits and Criticisms 

Opinions on private equity and its place in healthcare continue to be mixed. We mentioned the accumulation of capital, the stability of consolidation in an unpredictable and competitive market, and the reduced operational costs. The tax incentives also allow investors to deduct interest earned on their loans as a deductible business expense, and profits from sales may be taxed as capital gains at 20 percent. There’s the potential for greater efficiencies with improved work processes and management strategies. Advanced data analytics and newer, more innovative technologies that monitor patient outcomes and compliance can help advance care while easing the workload burdens on clinical staff. Additionally, physicians have an opportunity to forego the administrative, managerial, and other nonclinical duties inherent in a practice and narrow their focus to just medicine. They may have the option to expand care services and even garner a higher salary. 

A common ongoing criticism of the private equity arrangement is the patient-care-as-commodity claim. Some argue that the “financialization” of healthcare and a drive for short-term profits on behalf of PE investors often compromises the quality and access of patient care, as well as the long-term stability of the healthcare organization and its care solutions. Critics worry that cost-cutting measures and organizational restructuring will result in fewer and less effective services or equipment, or that those costs will ultimately get passed on to patients. There may be staff cuts, challenging clinical workload quotas, and policy and procedural changes made by those with little knowledge or background in clinical practice management. Additionally, a lack of federal regulation and oversight over this new management can engender a lack of transparency or accountability on behalf of those now running the show and responsible for the majority of operational, financial, and even clinical decision-making. Further, the ability of a healthcare institution to repay the acquisition loan and avoid the threat of bankruptcy depends on its ability to earn consistent and reliable revenues. 

Of note, the recent failures of large private equity deals like Steward Health Care in Massachusetts and Hahnemann University Hospital in Philadelphia are likely contributors to a sweeping negative perception surrounding private equity in healthcare. Jared Rhoads, a senior lecturer of health policy at The Dartmouth Institute for Health Policy and Clinical Practice points out that these outcomes can serve as cautionary tales, but that they aren’t the whole picture. “We do not have a full, transparent account of all internal deliberations and financial strategies in either case,” he says. Additionally, Rhoads states that commentaries and opinion pieces denouncing PE significantly outnumber original, evidence-based studies on the subject. He cautions that these pieces cite mainly the same few studies, leading to misconceptions about the amount of actual “evidence” available. 

How Do You Measure Quality? 

An analysis of studies on the impact of private equity on healthcare service quality found mixed results. One study in JAMA Internal Medicine published in late 2023 revealed that 60.8 percent of physicians surveyed considered the involvement of private equity in healthcare a negative, with 28.8 percent calling it “neutral.” About 10 percent of respondents viewed PE deals in a positive light. Another study in psychiatric medicine, where private equity ownership has increased in recent years, scoring showed lower staff ratios but a higher performance on quality measures including restraint use, follow-ups, and admissions. That study reported no evidence of lower quality among PE-owned psychiatric facilities, although it also indicated that existing measures were limited. 

At nursing homes, unfavorable results were found using multiple scoring indicators. These included reduced nursing staff hours, high clinician turnover, and increased mortality rates. Additional studies at nursing homes revealed more favorable results like decreased acute myocardial infarction rates and better appointment availability. 

It’s perhaps wise to resist the labeling of PE in healthcare as simply “good” or “bad,” cautions one JAMA article, stating that it’s important to consider the nuances in perception when it comes to defining “quality” and evaluating quality scores. There is some complexity in viewing quality in terms of general measures or indicators, like staffing, turnover, and readmissions (to name just a few) and considering quality in terms of health outcomes. Do poor scores in an indicator mean poor health outcomes? The authors reference a review of studies that analyze PE in healthcare (Alexander Borsa et al.) and state that of 27 studies in the review, only one found that “harmful” quality (here meaning a poor score on an indicator or benchmark) translated to a “harmful outcome” (e.g., mortality). In addition, they state that patients may have a difficult time accurately observing, let alone assessing, the value of their care. Other potential issues include tight observation windows, the potential for biases in quality assessment tools, and limited sample sizes. Borsa’s review found that the available research into the quality of care related to PE-acquired entities was largely limited to studies of nursing homes, hospitals, and dermatology practices. The article notes the potential for misconstrued findings in such a small sampling. 

Regulation 

There has been legislation proposed by federal and state governments in the last few years in an attempt to regulate PE-related deals in healthcare. These efforts are still in the beginning stages and, it’s suggested, could be better informed once more research is available about PE’s impact on different healthcare settings. There is also a need for research on the impacts of current regulatory interventions including implementation of purchase disclosure policies and the prohibition of PE in certain markets. 

The Federal Trade Commission’s threshold for reporting is at $126.4 million for 2025 (an increase from $111.4 million in 2023), meaning transactions under this value are not reportable and thus fly under the radar. PE firms do not have to disclose the details of their acquisitions and are able to keep management practices close to the chest, which can create a lack of transparency and accountability and also compromise the quality of the organization’s care services. 

Recent legislation:

• Washington: January 21, 2025: Concerning the corporate practice of medicine (SB 5387) – making it unlawful for “an individual, corporation, partnership, or any other entity without a license to practice medicine, own a medical practice, employ licensed health care providers, or otherwise engage in the practice of medicine.” (This bill has not yet been signed into law and currently sits in the Washington State Senate.)
• Massachusetts: January 8, 2025: An Act Enhancing the Market Review Process (H.5159) – signed by Massachusetts Governor Maura Healey – strengthens the oversight of major market groups including providers, insurers, pharmaceutical manufacturing companies and private equity firms, among others.
• U.S. Congress: July 26, 2024: Health Over Wealth Act (S.4804) – introduced by Massachusetts Senator Ed Markey, “to increase transparency and scrutiny of PE and for-profit companies that own healthcare facilities.” (This bill has not yet passed.)
• U.S. Congress: June 11, 2024: Corporate Crimes Against Health Care Act of 2024 (S.4503) – introduced by Massachusetts Senators Elizabeth Warren and Ed Markey “to prevent exploitative private equity practices,” imposing penalties for PE principals and requiring physicians to disclose PE investments when they apply for federal funding. (This bill remains with the Committee on Finance as of 06/11/2024.)

Areas of Growth 

Clinical specialties like otolaryngology, dermatology, and ophthalmology have seen increasing numbers of PE investments, as have orthopedics and gastroenterology, due to roll-up potential, an established patient base, and reimbursements that tend to exceed primary care. Behavioral health is also a target owing to opportunities of consolidation for both outpatient and inpatient providers, scale, shared platforms, and a growing demand for mental health services. Outpatient, ambulatory, and urgent care services are attractive to PE investors as patients are shifting to lower-cost options for treatments. These services offer the convenience of extended hours and outpatient procedures. Telehealth, digital health, and health technologies go beyond traditional care by reaching more patients and complementing the post-COVID trend of spending more time in the home. Home-based healthcare is at the top for healthcare services deals, according to PitchBook, with the highest number of acquisition deals in the first quarter of 2025. 

Among U.S. states, California has the highest proportion of PE and venture-capital enterprises with a 6.7 percent private equity penetration rate. Massachusetts comes in second with a rate of 6.11 percent, then Utah at 4.98 percent. 

For reference, see “Private Equity & Healthcare,” ProVisions, October 2023: https://agents.proassurance.com/provisions/oct23#equity 

As healthcare systems consolidate and primary care delivery models evolve, Advanced Practice Registered Nurses (APRNs) are assuming unprecedented clinical responsibility.  

Between 2010 and 2017, the APRN workforce more than doubled from 91,000 to 190,000 practitioners, with current growth rates projected at 6.8 percent annually through 2030.¹ Today, over 355,000 nurse practitioners are licensed in the United States, with 88 percent educated and prepared in primary care settings.²   

This rapid expansion—coupled with over half of states now authorizing full practice authority for APRNs—represents a significant shift in the healthcare liability landscape that insurance professionals must understand. 

The Evolution from Collaboration to Independence 

The APRN role originated in the 1960s to bridge healthcare gaps in underserved communities, initially requiring physician supervision. The 2010 Institute of Medicine report The Future of Nursing accelerated the profession's evolution by recommending that APRNs practice to the full extent of their licensure. As these professionals transition from collaborative to independent practice—now able to own clinics and employ physicians—their liability exposure naturally increases.  

According to the Nurses Service Organization’s (NSO) claim report, indemnity payments for APRN claims are rising, with 232 closed claims exceeding $10,000 between 2017 and 2021.³ 

Where Claims Originate 

Understanding the practice settings where APRN liability emerges is essential for risk assessment. The NSO data reveals that 31.5 percent of claims occur in physician office practices, 20.3 percent in long-term care facilities, 13.8 percent in APRN-owned clinics, 8.6 percent in behavioral health facilities, 5.2 percent in emergency departments, and 3.9 percent in community clinics.³ This distribution reflects the profession's broad reach across healthcare delivery systems. 

The Diagnostic Error Problem 

Diagnostic errors represent the most significant liability risk for APRNs, accounting for 37 percent of all claims.³ Research on physician malpractice reveals that most diagnostic errors occur early in the patient encounter during initial assessment, diagnosis processing, and test interpretation, with many patients experiencing multiple errors along their care journey.⁴

For insurers, this suggests that APRNs practicing in specialties requiring significant diagnostic acumen—such as primary care where cancer screening is routine—may present elevated risk profiles. The ambulatory setting, where 55 percent of diagnostic error claims originate, deserves particular attention given that most APRNs work in outpatient environments.⁴ 

Communication Failures: A Hidden Liability Driver 

A retrospective analysis found communication failures in 49 percent of medical malpractice claims, involving both provider-to-patient and provider-to-provider breakdowns.⁵ Care transitions and patient handoffs create particularly high-risk scenarios.  

One study examining claims associated with patient transitions from healthcare facilities identified these handoffs as fertile ground for miscommunications, errors, and near-misses that contribute to patient harm.⁶ 

An often-overlooked liability concern involves informal consultations or “curbside consults.” The case of Warren v. Dinter (2019)* established that a physician providing treatment advice to an APRN without formally examining the patient still owed a duty of care to that patient. The patient died of sepsis three days after the physician advised against hospital admission, and the court found the physician negligent despite never establishing a formal provider-patient relationship. 

This precedent has implications for both APRNs seeking informal guidance and specialists providing it, creating complex liability questions in collaborative care models.⁷ 

Productivity and Risk: Dispelling Myths 

For insurers evaluating APRN practices, research offers reassurance about volume-based risk. Studies examining whether increased patient visits or procedural volume correlate with higher malpractice rates found only marginal increases in claims as patient volume grew, while the claims rate per 1,000 patient encounters actually decreased.^8,9  

This suggests that high-volume APRN practices do not automatically translate to proportionally higher liability risk. 

Implications for Insurance Professionals 

As APRNs assume greater clinical independence within consolidating healthcare systems, their risk profile increasingly mirrors that of physicians. Insurers should focus on: 

• Practice setting and specialty mix, particularly those involving diagnostic complexity
  
• Communication protocols during care transitions and consultations
• Documentation quality and EHR utilization practices
• Collaborative relationships with high-claim-frequency providers
• Error disclosure policies and patient communication strategies 

The APRN profession’s rapid growth and expanding scope represent both an opportunity and a challenge for the insurance industry. Understanding these evolving liability patterns enables more accurate risk assessment and premium setting while supporting loss prevention efforts that benefit all stakeholders in the healthcare delivery system. 

The activities and duties a licensed healthcare professional is permitted to perform within a state, along with supervision requirements and authority to administer vaccines and prescribe medications, is known as their “scope of practice.” A key trend we are seeing in modern healthcare today is the rapidly expanding scope of Advanced Practice Clinicians (APCs)—including Nurse Practitioners (NPs), Physician Assistants (PAs), Certified Registered Nurse Anesthetists (CRNAs), and Certified Nurse Midwives (CNMs). 

Historically, APCs were primarily seen in the primary care setting to fill the physician labor shortage. Today, APCs work in a wide range of settings, including hospitals, community clinics, and private practices. In in-patient settings, they increasingly perform advanced clinical roles, specializing in fields such as cardiology, oncology, and dermatology. 

Contributing Factors 

There are several factors contributing to the expanding scope of practice for APCs.  

The Association of American Medical Colleges (AAMC) predicts a significant physician shortage by 2036, and with 1 in 5 Americans projected to be 65 or older by 2030, the demand for healthcare services is increasing. In response, many states are expanding the scope of practice laws for APCs. In fact, 27 states have granted full practice authority to NPs, allowing them to practice, diagnose, and treat patients independently.  

Studies suggest that care led by advanced practice nurses can be more cost-effective than physician-led care and may result in greater patient satisfaction and reduced waiting times. In addition, the growth of telehealth and remote patient monitoring, accelerated by the COVID-19 pandemic, has enabled APCs to reach more patients, monitor conditions remotely, and provide access to care, particularly in underserved and rural areas. 

Challenges and Controversies 

Despite their rapid growth, APCs (specifically APRNs) are the subject of ongoing debate. APRNs often encounter barriers related to provider credentialing, hospital admitting privileges, and reimbursement issues. Physician advocacy groups, such as the American Medical Association (AMA), have also opposed expanding APRN scope of practice, citing concerns over patient safety and cost. 

Physicians have raised initial concerns regarding legal exposure and training, according to Becker’s Hospital Review, as well as the ambiguity around the APC’s roles and responsibilities when it comes to patient care.   

Risk Mitigation 

Wendy Alderman, Senior Risk Management Consultant, notes that understanding each state’s scope of APC practice is a good starting point for risk mitigation, as full practice authority can bring broader exposures. “Of course, the strategies for managing risk and patient safety mirror those used for physicians,” says Alderman. “However, I believe APCs’ exposure is an emerging risk, and time will tell whether the same risks are applicable to them.” 

As the APC workforce expands, insurers should stay alert to how these providers are used and ensure that policies align with state laws and actual clinical roles. “Because plaintiffs’ attorneys often name everyone involved in a patient’s care, both APCs and supervising physicians may face equal scrutiny in a lawsuit,” notes Alderman. “Open communication between risk managers and underwriters about provider roles and responsibilities strengthens mitigation strategies and supports sound policies.” 

The Future of APCs 

The job outlook for APCs is exceptionally strong and will likely continue to outpace other clinical roles in medicine. By 2036, tens of thousands of new nurse practitioners and physician associates will be needed to meet rising healthcare needs. In fact, employment for PAs is expected to grow 28 percent and NPs 46 percent by 2033, far outpacing other professions. Should more states adopt full practice authority for APCs, those numbers will continue to rise. To stay up-to-date on the scope of practice for your state, visit the National Conference of State Legislatures. According to Alderman, effective risk management starts with anticipating issues before they grow, especially as APCs take on a larger share of patient care. 

Some states employ a restricted practice model, which prohibits APCs from engaging in the practice of medicine without physician supervision. Other states employ a reduced practice model, which requires that APCs collaborate with physicians in order to engage in the practice of medicine, providing APCs with considerably more autonomy than the restricted practice model. Finally, some states follow the full practice model, which grants certain APCs full authority to engage in the practice of medicine.