Private Equity Health Care Acquisitions – January 2022

In light of the growing investor interest in health care and the risks associated with private equity ownership of health care companies, the Private Equity Stakeholder Project will be tracking private equity-backed health care acquisitions. Below is a list of private equity health care buyouts and add-on acquisitions completed or announced during January 2022. We will continue to track acquisitions on a monthly basis.

See December 2021 acquisitions here.

Private equity firms spent the first month of 2022 doubling down on healthcare services that have seen particular investment interest over the last several years, namely eye care, dental services, and medical staffing.   

For example, private equity firms acquired at least six eye care companies in January. This is part of a growing trend of increased private equity investment in eye care, which has been ramping over the last few years as new investments in other specialty practices, such as dermatology, have declined.[i]

All nine eye care deals were add-on acquisitions, indicating that private equity firms are using platform companies to buy up smaller providers and consolidate the industry.

A similar trend can be seen in dental services; private equity firms acquired at least nine dental companies in January.

Private equity firms have increasingly been investing in the US dental industry through Dental Services Organizations (DSOs). DSOs are companies that handle the business side of dental practices, such as administrative, marketing, bookkeeping, and financial services. Private equity firms dominate the DSO market; nine of the top ten DSOs in the US are owned by private equity firms. 27 of the top 30 DSOs by number of affiliated locations are owned by private equity firms, accounting for 84% of practice locations affiliated with the top 30 firms.[ii]

Private-equity-owned dental companies have been found to employ cost cutting tactics that can hurt patient care, including pushing medically unnecessary or expensive procedures and understaffing while attempting to maximize patient volume.[iii]

See our report: “Deceptive Marketing, Medicaid Fraud, and Unnecessary Root Canals on Babies: Private Equity Drills into the Dental Care Industry”

In addition, private equity firms also acquired three healthcare staffing companies in January:

• Dynamic Infusion Therapy, which is owned by private equity firm RiverGlade Capital, acquired AccessRN, a nursing staffing company specializing in vascular services. The combined company will operate in 21 states and partner with 1,500 healthcare facilities.[iv]

• Littlejohn Capital acquired Alto Healthcare Staffing, which provides nursing staffing to nursing homes, travel nurses to hospitals, and medical assistance to doctors’ offices.[v]

• Acacium Group, which is owned by private equity firm Onex Partners, has acquired Favorite Healthcare Staffing.[vi] Favorite is the eighth largest healthcare staffing firm in the US, according to Staffing Industry Analyst, with 27 branch offices around the country.[vii]

Healthcare staffing companies have been a popular target for private equity firms. Limited regulation has allowed private-equity-owned staffing companies to charge higher rates for services than hospitals, sometimes leaving patients with surprisingly high medical bills.[viii]

Now, nursing staffing firms are facing scrutiny for allegedly charging exorbitant rates to hospitals during the pandemic. In January 2022, a bipartisan group of nearly 200 members of Congress wrote to the White House asking it to direct federal agencies to scrutinize staffing agencies for potential “anticompetitive activity” and violations of consumer protection laws.[ix]

January 2022 Private Equity Buyouts

January 2022 Private Equity Add-On Acquisitions

[i]https://crstoday.com/articles/mar-2021/private-equity-in-2021/

[ii]https://pestakeholder.org/wp-content/uploads/2021/08/PESP_DSO_July2021.pdf

[iii]https://pestakeholder.org/wp-content/uploads/2021/08/PESP_DSO_July2021.pdf

[iv]https://www.prnewswire.com/news-releases/dit-acquires-accessrn-solidifies-market-leader-position-for-vascular-access-services-301462879.html

[v]https://www.prnewswire.com/news-releases/littlejohn-capital-announces-acquisition-of-alto-healthcare-staffing-buoyed-by-industry-tailwinds-alto-poised-for-geographic-expansion-301456724.html

[vi]https://acaciumgroup.com/acacium-group-acquires-us-based-healthcare-staffing-company-favorite-healthcare-staffing/

[vii]https://www2.staffingindustry.com/eng/Editorial/Daily-News/UK-Acacium-acquires-US-based-Favorite-Healthcare-Staffing-60221

[viii]https://pitchbook.com/news/articles/pe-digs-in-as-battle-to-end-surprise-medical-bills-wages-on

[ix]https://www.modernhealthcare.com/labor/members-congress-call-investigation-nurse-staffing-agencies-pricing?adobe_mc=MCMID%3D01446777898254623873915025263144680713%7CMCORGID%3D138FFF2554E6E7220A4C98C6%2540AdobeOrg%7CTS%3D1643211248&CSAuthResp=1%3A%3A964639%3A7461%3A24%3Asuccess%3A3094B5B1B0F69436D90F162EDD29AE3A