William Douglass, group head and managing director of CIT Healthcare Finance, a division of CIT Group, shared observations on healthcare private equity investment trends during the past few months.
1. M&A activity slowed in early 2016. In 2015, the healthcare sector recorded the highest M&A volume ever, with approximately 1,400 transactions conducted. However, the first quarter of 2016 saw slightly less activity compared to the first quarter of 2015, said Mr. Douglass.
2. Behavioral health, healthcare real estate see increased investment activity. PE interest has increased in the behavioral health sector due to the rising demand for these services and new regulations in the insurance industry that prohibit insurers from discriminating against mental health claims. Healthcare real estate, specifically related to skilled nursing, assisted living and medical offices, is also experiencing increased investment activity, according to Mr. Douglass.
3. Changing markets present new opportunities. Demand for healthcare services remains strong, though delivery of care is shifting to the lowest cost setting. This has created an opportunity for private equity investors to target certain sectors that require greater scale, investment and improved efficiency to survive, said Mr. Douglass.
CIT Healthcare Finance’s report can be accessed in full here.
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