Hamza Asumah, MD, MBA, MPH
Private equity has become healthcare’s favorite villain. But the story isn’t that simple.
Yes, there are horror stories. Yes, there have been disasters. But there have also been success stories no one talks about.
The real question isn’t whether private equity is good or bad. It’s whether the next wave will build sustainable value or extract and collapse.
How We Got Here
The private equity wave in healthcare really accelerated in the mid-2000s, particularly in dental. The thesis was elegant: thousands of solo practices owned by aging dentists who needed succession plans but had no buyers.
The pitch: “Sell us your practice. We’ll give you cash now. You keep practicing. We’ll handle the business operations—billing, HR, marketing, purchasing. And when we sell the platform in 5-7 years, you’ll get a second payout.”
Compelling, especially for doctors approaching retirement with no exit strategy.
The operational model: buy multiple practices, consolidate back-office functions, negotiate better rates with suppliers and payers, improve efficiency, and sell the aggregated platform to another PE firm or take it public.
This is a “roll-up” strategy. And when executed well, it creates genuine value—economies of scale, better technology, professional management, access to growth capital.
When executed poorly? It becomes a cost-cutting exercise that burns out clinicians, alienates patients, and destroys long-term value while extracting short-term profits.
The Numbers Tell a Story
PitchBook data: $58 billion was invested in healthcare services in 2024. Not slowing down—accelerating.
PE-backed platforms now control approximately 30% of the dental market. Thirty percent. That’s not a niche phenomenon. That’s industry transformation.
And it’s not just dental anymore. Massive activity in:
- Dermatology (high margins, cash-pay cosmetic procedures)
- Gastroenterology (lucrative procedures with strong reimbursement)
- Ophthalmology (mix of medical and retail revenue)
- Women’s health (underserved market with strong patient loyalty)
The pattern: PE targets specialties with predictable revenue, procedural volume, and growth potential.
Where It Goes Wrong
Let’s talk about the failures, because they’re real:
Productivity Pressure: When PE takes over, there’s often pressure to increase output. See more patients. Shorten appointment times. Maximize utilization. That sounds good in a spreadsheet. In reality, it burns clinicians out fast.
A 2023 study found physicians in PE-backed practices reported higher burnout rates and lower job satisfaction than those in independent practices. Burned-out doctors leave. Replacing them is expensive. Quality suffers. The death spiral begins.
Cultural Erosion: Independent practices often have strong, distinctive cultures. The PE playbook sometimes steamrolls this with standardization—same branding, same workflows, same patient scripts.
You lose the local touch. You lose what made patients loyal in the first place. That’s hard to quantify on a balance sheet, but it’s devastatingly real.
Compliance Risk: When you’re optimizing for volume and efficiency, corners sometimes get cut. Maybe it’s rushing patient interactions. Maybe it’s aggressive billing practices. Maybe it’s recommending unnecessary procedures.
And when regulators investigate or plaintiffs sue, that becomes a catastrophically expensive problem.
What Success Actually Looks Like
But here’s what the critics miss: there are PE-backed healthcare platforms doing this well.
Heartland Dental: 1,900+ locations. Strong clinician retention. Significant technology investment. Culture focus. They’re not perfect, but they’ve built sustainable infrastructure that supports independent dentists rather than crushing them.
EyeCare Partners: Consolidated hundreds of ophthalmology and optometry practices while maintaining clinical autonomy and investing in advanced diagnostic equipment most solo practices couldn’t afford.
VillageMD (despite recent challenges): Attempted to build a value-based primary care platform at scale—a genuinely difficult problem worth solving.
What do these success stories have in common?
They invest in capabilities, not just cost reduction. They build technology infrastructure. They maintain clinical autonomy. They focus on long-term sustainability, not just quick exits.
The Next Wave: Integration or Implosion?
The easy roll-up plays are done. The low-hanging fruit has been picked. The next wave of PE healthcare investment will separate winners from losers.
The Losing Approach: Financial engineering without operational improvement. Load up with debt. Cut costs aggressively. Extract maximum cash. Sell or collapse before the house of cards falls.
This approach is already showing cracks. Several large PE-backed healthcare platforms have struggled post-acquisition. Some have filed bankruptcy. Others have seen massive write-downs.
The Winning Approach: Capability building. Technology leverage. Brand development. Culture investment. Sustainable growth.
This means:
- Building AI and data infrastructure that genuinely improves clinical outcomes and efficiency
- Developing proprietary care protocols that differentiate quality
- Creating brands patients actively seek out and trust
- Investing in clinician wellness and retention, not just productivity
- Building platforms that can transition successfully to value-based care models
The Verdict
Private equity isn’t inherently good or evil. It’s a tool. A source of capital and expertise that can either build or destroy.
The PE firms that succeed in healthcare’s next chapter will be the ones that understand:
You can’t extract value that doesn’t exist. You have to create it first. That means genuine operational improvement, technology investment, and quality enhancement—not just cost cutting and debt loading.
Clinicians aren’t interchangeable widgets. Retention matters. Culture matters. Autonomy matters. Burn them out and your platform collapses.
Patients have choices now. The brand equity you’re buying can evaporate quickly if experience and quality decline.
The next five years will determine whether private equity becomes healthcare’s sustainable transformation partner or its cautionary tale. The capital is there. The opportunities are real.
The question is whether PE firms will build for lasting value—or just extract and exit before the music stops.
Dr. Hamza Asumah 
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