Gary Herschman, Paul Gilbert Quoted in “Private Equity Investment in Health Care Stays Strong”

Bloomberg News

Gary W. Herschman and Paul D. Gilbert, Members of the Firm in the Health Care and Life Sciences practice, in the firm’s Newark and Nashville offices, respectively, were quoted in Bloomberg News, in “Private Equity Investment in Health Care Stays Strong,” by Mary Anne Pazanowski.  Yulian Shtern, Associate in the Health Care & Life Sciences practice, in the firm’s Newark office, also advised on the article.

Following is an excerpt:

Private equity investment is burgeoning throughout the U.S., and health care is one of the “in” targets for investors.

More than $10 billion was invested in health-care deals in the first half of 2018, according to industry watchers. …

The amount of money available ensures private equity will continue its role in disrupting traditional models of health-care financing. …

August “just nudged out March” for the month with the most deal activity, Gary W. Herschman, a transactions attorney at Epstein Becker Green, Newark, N.J., told Bloomberg Law. A total of over 730 deals were announced and/or closed in the year so far, according to the curated year-to-date list.

The summer’s activity “is a harbinger for heightened activity” for the rest of 2018 and into 2019, Herschman said. …

Over 120 physician practice deals were announced and/or closed in 2018, Herschman observed. “August was yet another double-digit month” in this space, he said, noting that “industry insiders are forecasting many more transactions” through 2019. …

“There has been an uptick in acquisitions of smaller hospitals,” especially those located in rural areas and otherwise outside of major metropolitan areas, as smaller hospitals start to “pick teams,” Herschman said. He predicted there will be over 200 hospital/health system deals by the end of 2018.

Additionally, there was a “broad range of providers” involved in August deals, Paul D. Gilbert, of Epstein Becker Green’s Nashville, Tenn., office, noted. Nonprofit systems, academic medical centers, government-owned organizations, and publicly traded and private equity-backed systems all took part.

Hospitals’ "efforts to invest in certain markets while withdrawing from others, increase scale to better provide coordinated care, and—for many stand-alone hospitals—to preserve care by joining larger systems, likely will continue apace,” Gilbert said.

Hospital/health system deals are aimed at optimizing systems and networks, Gilbert said. Hospitals are growing their own carefully targeted markets, while transferring assets that don’t fit those markets to other hospitals, he said.

These transactions are designed to “create opportunities for reducing expenses by allowing providers to deliver better care in the most appropriate settings and locations,” Gilbert said. “The same is true for system-to-system mergers.”