Value-Based Healthcare: Growing Demand for Integrated Care

Value-based healthcare is a growing area of investor interest, encompassing a variety of models that focus on quality of care, provider performance, and patient outcomes. Among these models, provider groups that pair preventative care with support for underserved patient populations offer particularly strong investment opportunities.

In this article, senior professionals in our Healthcare & Life Sciences Group discuss why value-based care is capturing investor attention and how leading providers are integrating high-touch preventative care models with technology to deliver attractive value-based solutions at scale.

Preventative Care Delivers Value for High-Cost Patient Populations

Continued innovation in Medicare is creating greater demand for value-based care providers, with the Centers for Medicare and Medicaid Services having a stated goal to shift 100% of Medicare beneficiaries to value-based payment programs by 2030. This is driving substantial investor interest in provider groups with expertise in managing risk and improving outcomes for complex, high-cost patient populations. Providers focused on patient outcomes that can be successful across multiple different risk models are particularly attractive.

“Leading into the early 2020s, the market saw significant investment in Medicare Advantage-focused providers,” says James Clark, a managing director. “That segment continues to evolve, while new opportunities are emerging for different provider groups to participate in alternative payment models like Accountable Care Organizations (ACOs) and direct contracting with Medicare.”

These models enable providers to share in the cost savings they generate by delivering high-quality, preventive care that reduces downstream, higher-cost utilization. “Proactive health management reduces inpatient hospital stays and other costly care,” says Nick Owens, a managing director. “Because prevention is essential to effectively managing patient medical spend, primary care providers play an integral role in value-based care arrangements.”

Against this backdrop, a variety of care models can be successful if they are proven to improve health outcomes and drive savings.

“While several strategies are appealing, many leading providers are combining preventative care with support for specific population needs or chronic disease states, such as kidney or cardiovascular care,” notes Clark.

A Spectrum of Opportunities for Investors

Within the value-based care landscape, investors are evaluating companies across the risk spectrum. These different classes of opportunities include fee-for-service providers that are early in the transition to risk, value-based care enablers, at-risk providers participating in value-based arrangements, and fully integrated providers taking global risk through captive ACOs.

Throughout this ecosystem, several common characteristics are critical to long-term success. “Top companies are improving the patient experience and driving better outcomes through patient-focused care models that effectively coordinate care across an interdisciplinary team of clinicians,” explains Clark.

In addition, investors are looking for providers that have made significant investments in technology and data tracking, which helps coordinate optimal clinical care across multiple providers and specialties while ensuring strict compliance. These technologies, along with significant in-house training, can also ensure consistent care protocols and operational consistency across markets, which is critical for effectively taking risk at scale.

“Sophisticated data tracking can deliver shared savings while tracking precisely where those savings are being generated,” says Dan Linsalata, a managing director. “The most sought-after companies in this sector are utilizing technology to demonstrate that their savings are being generated by clinical outcomes as opposed to optimized coding.”

Better Care, Reduced Costs

Investor interest in value-based healthcare is on the rise, featuring diverse models that emphasize care quality, provider satisfaction, and patient value. Notably, provider groups that offer attractive M&A opportunities are focusing on preventative care for underserved populations as well as innovative technologies that help support providers in managing risk.

“Leaders in this space are creating better health outcomes while driving savings, and we're excited to see the continued growth of these companies,” says Clark.

To further discuss M&A across value-based care, please contact our senior professionals.