If there were any doubts about the resilience of the healthcare industry and its ability to withstand a global pandemic, those doubts have been put to rest. After showing signs of recovery in the second half of 2020, healthcare merger and acquisition (M&A) activity boomed during the first quarter of 2021 across multiple sectors, with a total of 596 transactions announced (representing a 42% increase over the same quarter last year).

The resurgence was fueled, in large part, by high transaction multiples and an abundance of weary, smaller providers seeking the stability and capital resources of private equity (PE)-backed platforms and other strategic buyers. According to Health Capital Consultants, Q1 2021 PE transaction volume came in lower than expectations given the strong activity in the latter half of 2020. However, they point to an unusually high concentration of transactions in the second half of 2020 (including transactions postponed at the outset of the pandemic and transactions that otherwise might have spilled into 2021 but for anticipated tax changes following the November elections, all of which closed in the second half of 2020) as artificially inflating the numbers and, in turn, expectations. The same consultants also remark that the average value of PE transactions (measured by seller revenue) increased from the same quarter last year. PE activity is expected to remain strong and increase through the remainder of 2021.

Another factor driving M&A activity is the continued investment in new technologies and delivery models, as their implementation has accelerated to meet evolving patient demands in the wake of COVID-19. This need for innovation often serves as the impetus for providers to seek strategic partnerships and M&A opportunities.

Physician Practice Management

A significant number of the transactions announced in early 2021 were within the physician practice management space. Hot specialty areas are ENT, ophthalmology, dental, orthopedics and women’s health. Candescent Partners-backed ENT Partners LLC purchased three ENT practices located in Illinois and Maryland. On the ophthalmology front, EyeSouth Partners (backed by Shore Capital Partners) acquired Midwest Eye Center, a practice with 28 physicians; and EyeCare Partners (backed by Partners Group) added EyeCare Associates of East Texas’s four clinic locations. In the dental space, Charlesbank Capital Partners acquired a majority interest in MB2 Dental Solutions, which has 275 partnerships with dental practices. Finally, regarding women’s health, M&A activity in this area includes InTandem Capital Partners’ equity investment in San Diego Fertility Center.

PE firms were not the only ones investing in physician practices, however. As noted by Irving Levin Associates, health systems and managed care companies also acquired physician practices. Ochsner Health added Louisiana Women’s Healthcare (33 physicians) and Optum (NYSE: UNH) acquired Massachusetts-based Atrius Health (725 physicians).

Ambulatory Surgical Center (ASC)

The ASC sector also saw solid activity during Q1. Ascension Capital, the investment arm of Ascension and Towerbrook Capital Partners, invested in Regent Surgical Health to serve as its national ASC development partner to facilitate future growth. Meanwhile, HCA Healthcare (NYSE: HCA) announced it is investing in 10 to 12 new ASCs on its first-quarter earnings call.

Post-Acute Care

Within the post-acute care sector, although overall deal activity decreased from the prior quarter, activity in the home health and hospice space increased from Q4 2020. Notable transactions included HCA Healthcare’s acquisition of an 80% interest in Brookdale Senior Living’s (NYSE: BKD) home health and hospice business, Brookdale Healthcare Services, for $400 million. PE firms showed a continued interest in this space, with Pharos Capital Group-backed Charter Health Care Group’s purchase of Physmed Home Health Care, Serene Care Hospice, and Providence Home Health and Hospice; and New Harbor Capital’s acquisition of Michigan-based Advent Home Medical, which provides at-home respiratory care.

Digital Health

The behavioral health sector likewise showed increased M&A activity in Q1, as providers sought additional resources to meet the rising consumer demand for accessible and quality behavioral healthcare. On January 13, Talkspace, a leader in virtual delivery of behavioral healthcare, announced its merger with Hudson Executive Investment Corp. (Nasdaq: HECCU), a special purpose acquisition company (SPAC), in a $1.4 billion transaction.

The Talkspace merger is just one example of M&A activity in the digital health space. Indeed, the virtual and digital health space continues to soar as providers and consumers alike adapt to remote-based alternatives to traditional healthcare settings. Only a month after the Talkspace merger, Sharecare, a digital health company promoting general health and wellbeing services, merged with another SPAC, Falcon Capital Acquisition Corp. (Nasdaq: FCAC), valuing the company at $3.9 billion. In March, Ambulnz, Inc. (d/b/a DocGo) – a company delivering healthcare professionals to patients’ doorsteps for at-home, non-emergency care –  announced that it, too, was entering into a SPAC merger with Motion Acquisition Corp. (Nasdaq: MOTN), in a transaction valuing the company at $1.1 billion. And at the start of Q2, SOC Telemed, which specializes in acute care telemedicine and went public just last summer through a SPAC merger, acquired Dallas-based Access Physicians, an experienced multi-specialty acute telemedicine provider, in a transaction valued at $194 million, creating what the companies describe as “the largest pure-play provider of acute care telemedicine in the nation.”

Even as the country returns to some semblance of post-pandemic normalcy, commentators generally agree that the increased demand for telehealth solutions is here to stay. Amazon, perhaps serving as a bellwether for the sector, recently announced that its telehealth platform, Amazon Care, which is currently only being offered to Amazon employees and their families, will expand nationally as a potential workplace benefit.


Although M&A activity on the whole increased from Q4 2020, activity within the hospital sector declined substantially, dropping 43%. For the most part, hospital deal activity so far in 2021 has consisted of large health systems absorbing smaller hospitals; for example, HCA Healthcare announced the acquisition of Georgia-based Meadow Regional Medical Center for $73 million in January. Aspirus, a nonprofit rural health service, also announced in January its acquisition of seven hospitals owned by an Ascension Health System subsidiary. Aspirus owns other hospitals, clinics, home health and hospice care entities, pharmacies, critical care, air-medical transport companies and nursing homes. On May 3, HCA also announced the sale of four hospitals in Georgia for $950 million to Piedmont Healthcare, a nonprofit health system based in Atlanta.

Predictions for the Remainder of 2021

If the Q1 2021 is any indication of how overall M&A activity will fare for the year, 2021 will doubtless be a record-breaking year. While PE investment continues to proliferate within the healthcare industry (and is climbing back up after a slight dip, with commentators noting an 8.6% increase in PE activity from February to March), so far it appears this is the year of digital health and SPACs. Watch for more headlines describing blank-check partnerships around innovative healthcare products and services.

If you have questions about any of the information listed above, please contact one of the authors.

About Our Healthcare M&A Team

Since 2005, the Healthcare M&A Team at Bass, Berry & Sims has represented healthcare clients in transactions with a combined value in excess of $136 billion. Representing providers and non-providers,  our attorneys have developed a thorough understanding of the legal and regulatory constraints affecting the healthcare industry. The industry engenders unique challenges in the areas of due diligence and evaluation of potential risks and liabilities. We offer an unmatched combination of sophistication and value and are focused on serving and adding value in the middle- and lower-middle market, and are uniquely positioned to provide the cost-effective yet sophisticated transactional solutions the current environment demands. Our results-oriented, business-minded deal attorneys work seamlessly with our nationally ranked healthcare regulatory attorneys to help healthcare companies, private equity funds and their portfolio companies achieve their strategic goals. Most notably, we pride ourselves as being deal facilitators and real-world risk analyzers. As a result of this experience and depth, the firm continues to be recognized as a choice firm for healthcare transactions. To learn more about our team, industry experience and value-add, click here.