Spotlight on Healthcare – A Special Industry Report (Fifth of a Series)

https://theleadleft.com/wp-content/uploads/2026/06/cropped-THE-LEAD-ICON.png
Content hub / Article / Commentary / Spotlight on Healthcare – A Special Industry Report (Fifth of a Series)

One of the most interesting features of the new healthcare landscape is the evolving relationship between patients and doctors. As we detailed in our first instalment of this special Lead Left series, retail giants are teaming with healthcare behemoths to capture patients wherever they go. That fits well with the 24/7, wanting everything all the time, mentality of the 21st century US consumer.

Doctors, on the other hand, increasingly want to focus on treating patients. As one of our healthcare M&A friends also recently told us, fewer physicians want to be entrepreneurs. Young medical graduates tend to be more idealistic, more focused on patient care and treatment, and less interested in the business side of their practices.

This trend favors private equity firms. The goal of many sponsor-backed roll-ups of physician practice organizations is to create larger, more corporate-style practices. There the docs can be employees, not managers, and not worry about the back office.

Indeed, as more women enter the medical profession, flexibility is key. Roughly half of all medical students are women. This will eventually rebalance their share of practicing physicians (currently about 35%). Women are concerned about lifestyle, flexible hours, and benefits – something the growth of PPOs can address.

Healthcare is a people business. The healthcare staffing sector, which has been around for decades, is seeing renewed interest from PE funds. Yet over the years this sector has had its challenges.

“The demographic trends suggest continued growth in demand for healthcare services but the provider base has not kept pace,” says Peter Magas, a managing director at healthcare-focused Beecken Petty O’Keefe & Company. “Along with expectations that the pace of doctor and nurse retirements will increase faster than new entrants, you have high demand for providers in alternative settings. This requires hospitals to seek temporary staffing solutions in order to meet required staffing ratios, fluctuations in volumes or staff shortages.”

Given the high cost of people, don’t staffing companies end up being more sensitive to business cycles? “We’re very cognizant of that risk ,” Mr. Magas said. “but if you offer great client service, control fixed costs and use prudent leverage, you can successfully manage, if not thrive, through different economic cycles.

Still, as David Baker of Capstone Headwaters reminds us, since human capital is such a large component of healthcare delivery, technology is key to expense control.

“It used to be the system paid higher costs for better outcomes,” he told us in an upcoming Lead Left interview with his partner, Rod Rivera. “That’s changed. Now, lower costs always need to be part of the package. Technology provides opportunity to conduct analytics to lower costs, such as, population health analysis, pharmacogenomics, or even mobile health devices.”

Making sense of private credit defaults

Webinar

Making sense of private credit defaults

What does private credit default data really tell us? Join our exclusive webinar featuring experts from KBRA, Moody's, Fitch Ratings, and S&P Global to find out.
Register
Credit Journal-Private Credit

Report

Credit Journal-Private Credit

Fitch Ratings’ latest Credit Journal series is a subject-specific, curated compilation of in-depth research and commentary. This edition explores the growing world of private credit, including non-bank lending across business development companies.
Download
PitchBook's US PE Middle Market Report

Report

PitchBook's US PE Middle Market Report

The middle market is off to its best start to a year since 2021, but its share of PE keeps slipping.
Download
Private Debt Investor New York Forum

September 15-16, Hudson Yards, New York

Private Debt Investor New York Forum

Bringing together the investors, managers and advisers shaping the next phase of the market — 200+ allocators and $10.6 trillion of LP capital expected. Benchmark strategies, hear from leading LPs, and cut through market noise over two unmissable days.
Learn more

Latest news

    US Leveraged Loan Launch Activity Moderates in July

    The US leveraged loan market has recorded $14.01b of new launches through Wednesday, July 22, following $20.91b of issuance the…

    Read More

    US Direct Lending Spread Per Turn of Leverage Widens

    Wider spreads and slightly lower leverage provided lenders with better risk-adjusted pricing across all deal sizes in the second quarter.

    Read More

    Concentrated Effort

    Tech deals favored upper end of market, especially in 2021 when software valuations peaked. Source: KBRA DLD Research

    Read More