Dermatology and Private Equity: Significant Potential Remains

By Andy SnyderPublished On: April 7, 2020

Based on our detailed tracking and analysis, the dermatology market is only 11.5% consolidated as of this publication.

Positive Fundamentals

Excellent supply and demand fundamentals, new geographies, and dermatology’s relative independence from hospitals suggest private equity will remain interested. Couple that with today’s higher risks and costs of practicing medicine, compelling financial components, and a more physician-friendly model, we expect continued consolidation.

Viewing the Market by Practice Size

Although there is a wide spectrum of practices with their own individual characteristics across the U.S., based on our experience we find their characteristics tend to cluster based on one simple factor … the number of active MDs. This may seem overly simplistic, but it is a good tool to help us understand the market dynamics at work.

As such we have identified four key physician clusters:

Single Physician Practices
Practices with 2-4
Practices with 5-10
Practices with Over 10 Physicians

Practices with 2-4 physicians account for the highest percent of acquisitions (40%) followed by single physician practices at 38%. The higher MD practice clusters are at 14% and 8%.

Consolidation Actualization Varies by Size

As would be expected, the larger practices are lower in number and have been acquired at a higher rate. As a result, almost 35% of practices with 10 or more physicians have closed a transaction with private equity.

To learn more about our healthcare investment banking services or to discuss your specific situation with no obligation please feel free to call. We are happy to share our knowledge and help you understand your options. All conversations are strictly confidential.

Eric Yetter

FOCUS Managing Director and Healthcare Team Leader

Direct: 615-477-4741

Andy Snyder, a FOCUS Managing Director, has ten years of consulting, management, and M&A advisory experience among various healthcare positions. He has significant experience advising physicians in medical practice and surgery center transactions – including the specialties of ophthalmology, gastroenterology, dermatology, and orthopedics. His current practice includes healthcare provider services, home health and hospice, and behavioral health. Prior to joining FOCUS, Mr. Snyder served as Managing Director and Physicians First, a boutique investment banking firm located in Nashville, TN. He completed a variety of healthcare transactions, many with private equity firms and PE-backed companies. In this role, he was responsible for business development and deal execution. His past clients include leading physician groups, healthcare facilities, and institutional healthcare investors. Mr. Snyder began his healthcare career at Covenant Physician Partners (previously Covenant Surgical Partners) where he was promoted to Director of Operations. Covenant is a physician services company that acquires and operates ambulatory surgery centers and physician practices. The company also built and operated an outsourced pathology laboratory, an anesthesia business, and revenue cycle management company. Based in Nashville, Mr. Snyder earned his M.B.A. from Vanderbilt University and his undergraduate degree from The University of Virginia. He is a FINRA licensed investment banker.