By Published On: March 10, 2020

Two key factors provide a view of current and future consolidation speed: 1) the acquisition of platform practices of 10 or more physicians and 2) the geographic footprint of those acquisitions.

Large Platform Practice Acquisition Up 400%

Gastroenterology platform acquisition exploded in 2019 when 12 platform acquisitions represented a 400% increase over 2018 and tripled all platform activity over the prior three years. In the last two years, platform acquisitions have dominated the transaction mix at over 70%. Add-on acquisitions (practices with less than 10 physicians) are more commonly acquired and “added-on” to strengthen the initial platform practice and extend its geographic coverage.

The Rush to Secure New Geographic Areas (NGAs)

The location of the twelve 2019 gastroenterology platform acquisitions is shown below with their physician count in parenthesis. This one-year geographic expansion is unusually large, fast and widespread. This is a clear indication that participating PE firms are pursuing an aggressive strategy to establish their geographic footprint.

  • Birmingham, AL (20)
  • Philadelphia, PA (64)
  • Evanston, IL (45)
  • Washington, DC (55)
  • Seattle, WA (24)
  • Phoenix, AZ (50)
  • San Antonio, TX (13)
  • Indianapolis, IN (16)
  • Savannah, GA (10)
  • Fairfax, VA (18)
  • Colorado Springs, CO (25)
  • Little Rock, AR (12)

PE has now invested in nineteen key geographic markets throughout the United States (circled areas). We identify these key market entries as New Geographic Areas (NGAs). Of course, NGA market size can vary significantly based on population and practice makeup.

In the 2016-2018 period, only five New Geographic Areas (NGAs) were entered. In 2019, fourteen NGAs were entered spread evenly throughout the US. We believe there will be a significant increase in prospecting activity around those platforms and in new geographies yet to be entered.

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Photo: Eric YetterEric Yetter

FOCUS Managing Director and Healthcare Team Leader

Direct: 615-477-4741

Eric Yetter is an investment banker focused on healthcare. His practice includes healthcare provider services, home health and hospice, and behavioral health. Mr. Yetter has completed a variety of healthcare transactions, many with private equity firms and PE-backed companies. His past clients include leading physician groups, healthcare facilities, and institutional healthcare investors. Mr. Yetter founded Physicians First in 2016, recognizing the emerging need for investment banking and advisory services for owners of physician practices, surgery centers and clinical businesses. The next four years saw record levels of physician-owner M&A activity and Physicians First became one of the nation’s most active advisors for transactions between private equity firms and medical practices. In 2021, Mr. Yetter agreed to merge Physicians First with FOCUS and lead the firm’s healthcare team. Mr. Yetter also has healthcare operating and investing experience. He was an early executive at Covenant Physician Partners (previously Covenant Surgical Partners), an acquirer and operator of ambulatory surgery centers and physician practices. The company built and operated an outsourced laboratory, an anesthesia business, and a revenue cycle management company. Covenant has grown into a major player in healthcare services and is currently backed by private equity firm KKR. Prior to Covenant, Mr. Yetter held operating roles at Volkswagen Group of America and Brainlab, Inc., an image guided surgery company. While at Brainlab, Mr. Yetter worked with leading neurosurgeons and hospitals to implement cutting edge technology and improve patient outcomes. Mr. Yetter is a licensed attorney (currently inactive) and earned JD and BS degrees from Vanderbilt University, graduating with high honors. He is a FINRA licensed investment banker.
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