Private equity healthcare acquisitions – February 2023

In light of the growing investor interest in healthcare and the risks associated with private equity ownership of healthcare companies, the Private Equity Stakeholder Project is tracking private equity-backed healthcare acquisitions. Below is a list of private equity healthcare buyouts, growth investments, and add-on acquisitions completed or announced during February 2023. We will continue to track acquisitions on a monthly basis.

See January 2023 acquisitions here.

See all our 2022 acquisitions updates here.

Webster Equity gets into rural healthcare, and more

Webster Equity has acquired Total Family Medical (TFM), a leading Louisiana rural health clinic.[1] According to its website, TFM is a Medicaid-focused practice with an emphasis on low-income patients.[2]

Webster acquired TFM through a newly formed platform company called MyTown Health Partners. This appears to be the first acquisition Webster has made with MyTown, which describes itself as “bringing together national leaders in the rural and urban healthcare space with the common goal of providing accessible healthcare treatment to these medically underserved communities.”[3]

Rural health clinics (RHCs) like TFM are Medicare certified clinics located in rural, underserved areas that must meet a set staffing standards and outpatient primary care services. RHC certification allows clinics to access enhanced Medicare and Medicaid reimbursement rates.[4]

Webster’s creation of a rural-focused platform reflects private equity’s growing interest in rural healthcare investing. Firms are increasingly investing in hospitals and other companies that specialize in rural healthcare, as well as creating dedicated investment funds. See PESP’s recent report “Private Equity Descends on Rural Healthcare” (February 2023).

In addition to TFM, Webster made two other acquisitions in February: NJ-based Pediatric Affiliates and Cardiovascular Institute of Central Florida (CVICFL). Pediatric Affiliates is one of New Jersey’s largest pediatric groups, which runs six locations across the state with a focus on underserved patient populations.[5] CVICFL, which Webster acquired as an add-on to its platform Cardiovascular Associates of America, has 5 locations in Central Florida.[6]

Palladium Equity nabs foster care, behavioral health providers

Palladium Equity-owned Health Connect America (HCA) has acquired two companies: Virginia-based First Home Care and North Star Counseling of Central Florida. First Home Care operates therapeutic foster care programs at four locations in Virginia. North Star provides behavioral therapy services and targeted case management focusing on children and their families and is based in Kissimmee, FL. [7]

HCA and its subsidiaries treat a range of behavioral health needs, including conduct disorder, substance use disorder, autism, and emotional disturbance. It operates in Mississippi, Tennessee, Alabama, Georgia, Florida, North Carolina, and Virginia.[8]

HCA has grown substantially since Palladium acquired it, including five new add-on acquisitions in the past year and a half. Recent acquisitions Georgia HOPE, Pinnacle Family Services and Healing Educational Alternatives for Deserving Students (HEADS), which focus on therapeutic foster care, and behavioral health services for at-risk children and their families.[9]

This is not Palladium’s first foray into services for disadvantaged youth; in the same fund as HCA, Palladium also owns EverDriven (formerly ALC Schools)[10], a transportation company for foster students, students with disabilities, and students experiencing homelessness.[11]

Private equity investment in foster care, including therapeutic foster care, has previously garnered scrutiny for conditions that were harmful to youth. The largest for-profit foster care and disability services company, Sevita (formerly known as the Mentor Network), has faced numerous allegations of abuse, neglect, and deaths at its foster care and residential programs over the last two decades. Five private equity firms have owned the company throughout the entire period. Its current owners, Centerbridge Partners and the Vistria Group, have collected almost half a billion dollars in debt-funded dividends from Sevita in the last four years. [12]

Another embattled therapeutic foster care company is Sequel Youth & Family Services, which operates residential programs for at-risk youth, including youth in foster care and the juvenile justice system. Sequel has been owned by different private equity firms for at least 15 years. Reports of abuse and neglect at Sequel homes as well as pressure and investigations by state and local governments have led to over a dozen facility since 2019, including seven closures that occurred amid investigations by state and local agencies.[13]

Given that two of the country’s largest for-profit foster care and youth behavioral health companies have such records, HCA’s rapid expansion under Palladium Equity raises serious concern. Private equity firms should not be able to exploit vulnerable youth for profit. Advocates, regulators, and policymakers must closely scrutinize HCA and its subsidiaries to ensure that it does not follow the pattern of Sevita, Sequel, and others.

February 2023 Add-On Acquisitions

February 2023 Buyouts

February 2023 Growth Investments

[1] “MyTown Health Partners Acquires Total Family Medical,” EIN Presswire press release, February 6, 2023. https://fox2now.com/business/press-releases/ein-presswire/615454918/mytown-health-partners-acquires-total-family-medical/

[2] Total Family Medical website, accessed March 27, 2023. https://totalfamilymedical.com/.

[3] “MyTown Health Partners Acquires Total Family Medical,” EIN Presswire press release, February 6, 2023. https://fox2now.com/business/press-releases/ein-presswire/615454918/mytown-health-partners-acquires-total-family-medical/

[4] “Rural Health Clinics (RHCs),” Rural Health Information Hub, accessed March 27, 2023. https://www.ruralhealthinfo.org/topics/rural-health-clinics.

[5] Physician Growth Partners, “Physician Growth Partners advises NJ-based Pediatric Affiliates in agreement with Webster Equity Partners,” press release, February 23, 2023. https://www.globenewswire.com/en/news-release/2023/02/23/2614746/0/en/Physician-Growth-Partners-advises-NJ-based-Pediatric-Affiliates-in-agreement-with-Webster-Equity-Partners.html.

[6] AM Consulting, “Cardiovascular Associates of America Expands to Florida in partnership with Cardiovascular Institute of Central Florida,” EIN Presswire, February 9, 2023. https://www.einnews.com/pr_news/616084734/cardiovascular-associates-of-america-expands-to-florida-in-partnership-with-cardiovascular-institute-of-central-florida

[7] Palladium Equity Partners, “Health Connect America, Inc. Acquires First Home Care and North Star Counseling of Central Florida,” press release, February 22nd, 2023. https://www.palladiumequity.com/2023/02/22/health-connect-america-inc-acquires-first-home-care-and-north-star-counseling-of-central-florida/.

[8] Health Connect America, https://www.healthconnectamerica.com/. Accessed March 25, 2023.

[9] Laura Lovett, “Palladium Equity-Backed Health Connect America Makes 5th Acquisition in 18 Months,” Behavioral Health Business, February 22, 2023, https://bhbusiness.com/2023/02/22/palladium-equity-backed-health-connect-america-makes-5th-acquisition-in-18-months/.

[10] Palladium Equity Partners, “Palladium Equity Partners, L.L.C. Acquires ALC Schools, LLC and Red Rock Technology, LLC,” press release, March 2, 2020. https://www.prnewswire.com/news-releases/palladium-equity-partners-llc-acquires-alc-schools-llc-and-red-rock-technology-llc-301013782.html.

[11] EverDriven, “EverDriven Aims to Meet Surge in Alternative Transportation Demand,” press release, August 5, 2022. https://www.schoolbusfleet.com/10178516/everdriven-aims-to-meet-surge-in-alternative-transportation-demand.

[12] Eileen O’Grady, “The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth,” Private Equity Stakeholder Project, January 2022. https://pestakeholder.org/reports/the-kids-are-not-alright-how-private-equity-profits-off-of-behavioral-health-services-for-vulnerable-and-at-risk-youth/

[13] Eileen O’Grady, “The Kids Are Not Alright: How Private Equity Profits Off of Behavioral Health Services for Vulnerable and At-Risk Youth,” Private Equity Stakeholder Project, January 2022. https://pestakeholder.org/reports/the-kids-are-not-alright-how-private-equity-profits-off-of-behavioral-health-services-for-vulnerable-and-at-risk-youth/