Private equity’s investment in health care has rapidly increased over the last few years, particularly in the acquisition of physician practices, senior living facilities, and dental practices, Reuters reports. By way of example, in the first three quarters of 2022, Pitchbook estimates there were 725 sponsor-led deals in health care services, which exceeds 2020’s entire deal number of 721.
Why is health care so attractive to private equity? PE firms can receive high returns on investments in health care in a short period of time. However, to do so effectively, potential investors must be aware of the heightened responsibilities that accompany the entrance into the health care sector, specifically, the adherence to health care regulations and compliance pertaining to billing and collecting for health care services.
Recent trends have shown that U.S. enforcement agencies, such as the U.S. Department of Justice, have put a heightened scrutiny on private equity firms directly involved in or owning portfolio companies in the health care industry. Owners of health care businesses (including private equity firms with a controlling interest) must be aware of all the risks and responsibilities of purchasing and managing a health care practice to ensure a strong health care compliance program and avoid unwanted legal repercussions. The article provides key compliance considerations for private equity investors. Read more.
