Healthcare News of Note: Healthcare private equity deals amounted to a strong $90B in 2022

• In 2022, healthcare private equity deals reached nearly $90 billion, the second highest on record.
• Concerns about increased workloads, staffing shortages and burnout have been felt most acutely by less experienced nurses, according to a newly published study.
• Patients seeking care in safety-net clinics are accruing chronic diseases at high rates in middle age, indicating a need for earlier and improved prevention efforts.

Over the past few weeks, I have found these industry news stories that should be of interest to healthcare finance professionals.    

1.  2022 was the second-best year on record for healthcare private equity deals

In 2022, healthcare private equity deals reached nearly $90 billion, making it the second-best year for healthcare deal-making on record behind 2021, according to an April 10 news release by Bain & Company about its Global Healthcare Private Equity and M&A Report 2023.

“The uncertainty from these macroeconomic and geopolitical dynamics — and now mounting turbulence in the banking sector — is far from resolved, but rising asset valuations and scale corporate merger and acquisition (M&A) deals late in 2022 suggest continued faith in healthcare investments,” wrote the authors of the report’s Welcome Letter. “The S&P 500 healthcare index recovered in the fourth quarter and closed 2022 down only 4% from where it ended in 2021.”

Report authors noted: “Looking ahead to 2023, funds are tapping into new sources of capital, looking to carve-outs and public-to-private deals, and looking to sub-sectors that may perform differentially well in the current market environment.”

Sectors to keep an eye on

According to the report, there are four sectors to watch in 2023. Here are synopses of two of them:

1. Biopharma and life sciences. “In 2023, the bar is high to win the right deals as competition for these assets holds strong and valuations have run up, even within the current macro context.”
2. Value-based care. “Sustained macro trends continue to drive value-based care adoption across a spectrum of care models. While investment activity remains focused on primary care and Medicare Advantage, opportunities across other payer and specialty segments are expanding.”

Additional insight from HFMA

The article “3 ways healthcare providers should vet potential private equity partners,” by Gary Bruce, JD, MBA, a healthcare attorney with Schwabe, Williamson & Wyatt, was published in the December issue of hfm magazine.

Paul Keckley, PhD, offered three recommendations for finance leaders on how to approach investing in PE in his column “PE investing trends healthcare finance leaders need to watch,” published in the April 2022 issue of hfm.

2. New study on nurse burnout and stress hopes to inform nursing workforce policy

A report published in the April 14 issue of the Journal of Nursing Regulation has identified “the personal and professional characteristics of nurses experiencing heightened workplace burnout and stress,” which authors believe could help to “inform policy aimed at fostering a more sustainable and safe U.S. nursing workforce.”

Overall, nearly 51% of 29,472 survey respondents reported feeling emotionally drained, 56.4% “used up,” 49.7% fatigued and 45.1% burned out a few times a week or every day.

The findings confirm that concerns about increased workloads, staffing shortages and burnout “have been felt most acutely by less experienced nurses,” wrote the authors.

“RNs with 10 or fewer years of experience were significantly more likely to report an increased workload during the pandemic compared to their more experienced peers, leading to higher rates of reported burnout and stress,” they added.

“In the past 2 years, this has resulted in a net decline of 3.3% of the nursing workforce across all levels. Although the RN workforce decline is a bit lower (2.7%), the absolute decline in frontline RNs is striking. In 2022, a nationally weighted estimate of 97,312 RNs reported they left nursing during the COVID-19 pandemic. Alarmingly, RNs with 10 or fewer years of experience, who were a mean age of 36 … left at an even faster pace (3%) and accounted for nearly 41% of the total dropoff in practicing RNs.”

The authors also wrote, “This analysis confirms some of the potential drivers of these trends, such as significant increases in nurses’ workload during the pandemic (62%). However, even more importantly, it provides critical contextual evidence to better understand implications for the U.S. nursing workforce moving forward.”

HFMA podcast addresses clinical workforce issues

For more information about shortages of clinical workers and offering help to those who remain, listen to the April 17 episode of HFMA’s Voices in Healthcare Finance podcast, “Sleepless in the C-suite: Workforce, Part 2.”

3. What can be done to provide the services safety-net clinic patients require?

“Patients seeking care in safety-net clinics are accruing chronic diseases at high rates in middle age, indicating a need for earlier and improved chronic disease prevention efforts,” according to a study of 725,107 adults ages 45 and older, published in the April 11 issue of JAMA Network Open.

The following is a synopsis of some of the findings:

• Asian and Spanish-preferring Hispanic patients exhibited the lowest initial levels of chronic disease accumulation and more gradual rates of accumulation. White patients showed the highest initial levels of chronic disease accumulation and more accelerated rates of increase over the study period. Black and English-preferring Hispanic patients demonstrated trajectories “very similar” to white patients.
• Those with income less than 138% of the federal poverty level (FPL) accrued conditions at a higher rate by the end of the follow-up period compared with patients whose income was consistently 138% or more of the FPL.

Potential ways to address health issues

The report authors wrote, in part: “Critical strategies CHCs [community health centers] will need to use to address multimorbidity complexity, particularly for cardiometabolic and mental-somatic combinations of disease evident in patients seeking care at safety-net clinics,” include the following:

• Frequent adoption of care delivery models such as care management
• Integration of behavioral health services into primary care
• Connection to wraparound services and community-based programs

HFMA bonus content

• Read the article “Final rule for Affordable Care Act marketplace plans could expand contracting opportunities for certain types of providers in 2024,” by Nick Hut, senior editor with HFMA.
• Review HFMA’s just-published fact sheet on Medicare’s FY24 proposed rule for skilled nursing facilities.