The pandemic has created financial challenges for hospitals, long-term care providers and specialty services providers. Operating costs for staffing in hospitals hardest hit by the pandemic have eroded margins. Medicare and private insurers have cut reimbursement. Federal policies that discourage hospital consolidation and encourage greater price transparency have bipartisan support. Affordability and uneven access are growing concerns to voters. The transition from fee-for-service to value-based care via alternative payment programs has been disappointing prompting policymakers to re-think their strategies.
Collectively, these conditions handicap traditional providers of care: those affiliated with multi-unit systems have fared better in sectors where demand is strong and reimbursement manageable, but for others, or for opportunists, access to capital for growth has been problematic. Thus, the opportunity for private equity.