Gary W. Herschman, Member of the Firm in the Health Care & Life Sciences practice, in the firm’s Newark office, was featured in the whitepaper “PE Poised to Expand Investment in ENT/Allergy: Q&A with Dana Jacoby and Gary Herschman,” published by Vector Medical Group with data provided by Pitchbook. (Read the full version – registration required.)
Following is an excerpt
PE firms have already dialed up the pace of overall dealmaking in healthcare since the start of 2021. What do financial sponsors find so appealing about where ENT/allergy in particular fits within the wider physician practice space?
There are several reasons why private equity sponsors find ENT/allergy attractive targets for investment. For a start, the sector is extremely fragmented. There are approximately 10,600 ENT/allergy physicians’ practices, with 53.8% operating in physician practice groups vs. hospitals or health systems. Moreover, many of the ENT groups across the country remain small and independent at fewer than 25 physicians, while 54.3% of the practices are single-specialty ENT—meaning they are not aligned with a multi-specialty practice for support or infrastructure. These conditions present enormous opportunities for smaller groups to consolidate and substantially improve their financial performance by benefiting from the many economies of scale of a larger corporate infrastructure. As a result, financial sponsors have been targeting physician specialties that utilize (or can utilize) multiple ancillary services, and ENT/allergy practices offer several ancillary opportunities: ambulatory surgery centers (ASC), allergy testing, audiology testing, hearing aids, sleep disorder clinics, and ENT pediatric centers, to name a few.