Private Equity, M&A and Consolidation

US healthcare has been consolidating for forty years, and the pace has not slowed. Hospitals merged into regional systems, then into multi-state systems. Hospitals and insurers bought physician practices, until roughly four in five US physicians worked for a hospital, health system or corporate owner. Private equity firms rolled up anesthesia, dermatology, emergency medicine, gastroenterology and many other specialties, and bought hospitals, nursing homes and hospices. The largest insurers became vertically integrated conglomerates: UnitedHealth Group owns an insurer, a PBM, a data and claims-processing business, and the largest physician network in the country. Some of these deals created real value. Others produced higher prices, worse care and spectacular failures: Steward Health Care, Envision Healthcare and Prospect Medical. This section covers why healthcare consolidates, how hospital mergers, physician roll-ups, PE hospital and real-estate deals and vertical integration work, what the evidence says about their effects, the antitrust and state-law toolkit, and how an experienced deal person reads a healthcare transaction.