We have been reporting regularly on the increasing role that private equity has been playing in the healthcare industry and the oversight initiatives that a number of states have taken to address certain concerns resulting from this trend.
In a just-published article, Modern Healthcare cites data from Pitchbook and reports a 46% decrease in private equity investments in healthcare this year compared to 2025. However, there has been an actual increase in PE investments in vision and fertility care providers, and investments in ambulatory surgery centers, diagnostic laboratories, and clinical staffing have held steady.
The Modern Healthcare article cites increased state regulation as a key factor in this significant slowdown, pointing to a number of states – including Arizona, California, Connecticut, Delaware, Illinois, Maine, Vermont, and Washington – that are now requiring advance notice of transactions, disclosures of deal term, and limitations on the role that PE investors can play in the operation of healthcare entities. Similar legislation has failed to pass in other states, with commentators noting that PE investments increase access to capital and expertise to address the increasing importance and cost of technology (including artificial intelligence) that might not be available but for these investments.
While not cited in the Modern Healthcare article, we believe that the current cost of capital and the delayed time period for investors to realize an exit have also been key factors in the slowdown in PE healthcare deals. We will continue to monitor and report on this important issue.
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