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Physician medical group M&A peaked in fourth quarter for 2020

Analysts predict that the uptick will continue and that this year could be record-setting for physician practice deals.

Mallory Hackett, Associate Editor

The fourth quarter of 2020 had the most physician medical group M&A activity for the year, increasing 15% from the previous quarter, according to data from

Compared to the 52 acquisitions recorded in the third quarter last year, the physician group M&A market accelerated in the last part of the year with 60 publicly announced transactions.

Still, activity decreased by 5% compared with the fourth quarter of 2019.

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Along with an increase in the number of transactions in the fourth quarter, the dollar amount also rose to more than $1.9 billion, compared to $896 million in the third quarter.

The large quarterly total was the result of Aspen Dental Management's $1.1 billion acquisition of ClearChoice Management Services, a dental services organization, from Sun Capital Partners. Aspen Dental Management is backed by two private equity firms: Ares Private Equity Group and Leonard Green & Partners L.P.

Sun Capital Partners was also involved in the second-largest physician deal of the quarter, this time as the buyer. The private equity firm purchased Miami Beach Medical Group, a primary care provider to Medicare Advantage plan members in South Florida, from Gauge Capital, LLC, for $500 million.

Nearly three-quarters of the deals announced in the fourth quarter involved private equity firms and their portfolio companies. AEG Vision, a portfolio company of Riata Capital Group, was the most active buyer, with three announced deals.


The data shows that the physician medical group sector is attracting investors from outside the healthcare market, according to Lisa Phillips, the editorial director at Irving Levin Associates, which collected the data.

Also, the coronavirus pandemic renewed focus on the healthcare market in general.

Comparatively, hospital M&As were down in 2020 from previous years, according to Kaufman Hall's 2020 M&A in Review report.

However, taking into account the impacts of the COVID-19 pandemic, the year's 79 transactions were described as "remarkable" for even coming close to the 92 deals from 2019. In fact, the Kaufman Hall analysts say the pandemic acted as a catalyst for future strategic partnerships and transactions, and they predicted an uptick moving forward.

In support of that prediction, 44% of healthcare CFOs say the pandemic will drive an increase in partnerships across the healthcare ecosystem, according to the 2021 BDO Healthcare CFO Outlook Survey. Further, 31% said they were looking to acquire physician practices in 2021.

An increase in deals would allow well-positioned organizations to branch out into new markets, while those in precarious financial situations and seeking buyers will be given a lifeline, according to the Kaufman Hall analysts.


The Federal Trade Commission announced last week it is launching a study of how physician group acquisitions impact competition.

To gather data, the commission issued orders to Aetna, Anthem, Florida Blue, Cigna, Health Care Service Corporation and United Healthcare to share patient-level claims data for inpatient, outpatient and physician services across 15 states from 2015 through 2020.

The study is a part of a larger initiative from the FTC to revamp its merger retrospective program, which functions as a way for the commission to judge if it was too lenient or harsh in allowing or challenging a merger. The goal is that the results will help it become better equipped to predict the repercussions of a merger before it goes through.


"The M&A momentum from the fourth quarter has carried over into 2021 and we could see a record year for physician practice deals," said Lisa Phillips at Irving Levin Associates.

Twitter: @HackettMallory
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