Private equity investment has grown rapidly in 2021 with groups such as PE GI Alliance, Gastro Health and GI Alliance snapping up deals. Four gastroenterologists told Becker’s ASC Review how they predict private equity will affect the GI landscape and patient care.
Gastroenterology is one of the most active sectors in healthcare provider mergers and acquisitions (M&A). Acquisitions by private equity (PE) firms and PE-backed companies have surged as these outfits form platform groups and acquire physician practices. PE firms and strategic acquirers are attracted to the multiple ancillary revenue sources enjoyed by gastroenterology practices, such as pathology, ambulatory surgery centers (ASCs), and anesthesia. Meanwhile, an aging population portends growing demand for gastroenterological services, and broader awareness of the benefits of early colorectal screening indicates that demand for services will also increase among younger populations.
Private equity-backed Gastro Health, GI Alliance and PE GI Solutions are major players in the gastroenterology industry. Here’s how the companies stack up across seven areas, as confirmed to Becker’s via email.
Penfund, an independent provider of junior capital to North American middle market companies, announced the completion of a second lien debt and equity co-investment in Gastro Health, LLC (“Gastro Health” or the “Company”). Penfund is the lead investor for a new US$90 million second lien credit facility and also invested US$10 million in equity, both of which supported the acquisition of Gastro Health by OMERS Private Equity (“OPE”). Headquartered in Miami, Florida, Gastro Health is the second largest gastrointestinal (“GI”) physician practice management platform in the United States.
GI Alliance, the nation’s largest independent gastroenterology services organization, announced further expansion in Illinois and the Greater Chicago Area through a partnership with South Suburban Gastroenterology. GI Alliance now represents over 1,000 providers, including over 590 gastroenterologists across ten states.
Gastro Health, a national leading medical group specializing in digestive and liver health, has partnered with a group of 17 hospital-based gastroenterologists who will now become part of Gastro Health – Ohio, also known as Ohio GI, as of July 1. The group of board-certified gastroenterologists will make the move from a Cincinnati-based hospital system. With this addition, Gastro Health – Ohio will now expand from 22 to 39 gastroenterologists, and have six advanced practice providers, across nine clinical practice locations and three endoscopy centers.
Gastroenterology Associates, P.C., has become part of Genesis Health Group, the largest multi-specialty provider group in the region, effective June 28. Joining Genesis are physicians Young B. Huh, M.D., and Richard L. Weyman IV, M.D., along with their clinic staff, who will remain at their current location. The physician practice and Center for Digestive Health outpatient endoscopy procedure center will continue to jointly occupy the building.
GI Alliance, the nation’s largest independent gastroenterology services organization, announced expansion into Utah through a partnership with Utah Gastroenterology. GI Alliance now represents over 1,000 providers, including over 580 gastroenterologists across ten states. For over 20 years, Utah Gastroenterology has provided comprehensive, compassionate, personal digestive care to patients throughout the state of Utah. With a team of 19 GI-trained physicians and five advanced practice providers, Utah Gastroenterology has grown to become the largest provider of high-quality, lower-cost, independent GI care in the state.
GI Alliance, the nation’s largest independent gastroenterology services organization, has expanded into Colorado through a partnership with Colorado Gastroenterology. GI Alliance now represents more than 1,000 providers, including over 560 gastroenterologists and physicians and 450 advanced practice providers across four regions and nine states. Colorado Gastroenterology, with three locations in Denver and Aurora, offers a full spectrum of gastrointestinal services, from routine preventive and diagnostic procedures to treatment of the most complicated gastrointestinal and liver conditions.
In 2019, executives at United Digestive published a foundational article in Clinical Gastroenterology and Hepatology that described the market forces driving a wave of consolidation among independent private practices. This follow-up article builds on that foundation to discuss the acceleration of consolidation over the past 2 years, continuing market forces, and the effects of coronavirus disease 2019 (COVID-19) on private practice.
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