Key trends for Healthcare MA 2025 strategic considerations

Private equity (PE) investments in the healthcare sector are projected to experience significant rebounds in 2025. Healthcare PE trading value reached $61.3 billion in 2024, 1 and 2025, focusing on the expected stabilization of interest rates, increased demand for technology-bearing care solutions, and assets that previous sales focused on. Despite these opportunities, the sector is becoming increasingly complex, increasing regulatory oversight, rising cost pressures, and challenges in expanding innovation. Navigating these hurdles requires deep expertise and strategic planning.

This article outlines the key trends shaping the M&A landscape of healthcare in 2025 and provides insights into how PE companies position themselves for sustainable growth in this dynamic market. The trend is driven primarily by these important factors.

Interest rate environment: We predict that lower interest rates will stimulate market activity. But even if prices remain stable, we hope that trading production will accelerate as investors and businesses exercise patience for a long period of time and advance their strategic plans. 2 Regulatory Environment: Proposals 3, 4, 5 of several state laws combine with federal initiatives to monitor the quality of care to monitor ownership of PEs. This strengthening has been highlighted by recent developments including two bankruptcy filings, including a massive multi-state profitable health system over the past year, bankruptcy of one of the nation's largest operators of seven skilled nursing facilities, eight, and the passage of the ACT “strengthening the health market review process” in Massachusetts. Investing in strategic M&A activities, including streamlining service lines and proper sizing of resources, will drive operational efficiencies and increase EBITDA.

Improved efficiency after acquisition becomes an important driver for ROI

Why this trend is important
Focusing on post-acquisition value creation has intensified as PE investors face pressure to deliver higher returns in a challenging macroeconomic environment. In healthcare, this leads to workflow optimization, focusing on integrated teams, dismantling silos, reducing operational redundancy, and addressing workforce challenges such as staffing and burnout through a comprehensive workforce strategy. In 2025, we expect to rely on optimized integrations, including technology-driven operational improvements, automating revenue cycle management, strengthening revenue recognition models, streamlining service lines, site integration, and provider adjustments.

How companies can respond?
The possibilities for increased efficiency are clear, but the complexity of unlocking these synergies often requires specialized expertise. Companies that can identify and expand operational efficiency across portfolio companies will reach new levels of profitability and improve patient outcomes. FTI consulting has operational integration expertise along with unique tools that companies can leverage to identify opportunities and create a roadmap for optimal integration. The FTI consulting team recently supported the organization through a comprehensive turnaround strategy. This includes closure of low-performance locations, consolidation and streamlining of key positions, restructuring clinical staff and provider compensation models, and accelerated cache collection cycles. The successful implementation of these initiatives resulted in the organization achieving significant performance improvements, increasing the coordinated TTM EBITDA from $4 million to $10 million.

From an expert
“By optimizing the management process, enhancing patient engagement and building strategic relationships with stakeholders, practices can not only improve revenue, but also provide better care for patients. While diligence, targeted training and commitment to excellence, the results are worth the effort.”

Medical technology is looking to attract the attention of growing investors

Why this trend is important
The adoption of technology in healthcare continues to accelerate, with PE increasingly targeting high-tech businesses. In 2024, we recorded healthcare investments in PE and venture capital, a 219% increase from 2023.10. As these organizations continue to mature, growth potential and future exits are looking forward to 2025. I'm looking forward to 2025. Sectors such as telehealth, remote monitoring, and AI-driven analytics are expected to dominate trading activities as companies look for scalable and innovative solutions to meet growing demand for accessible and efficient care. In this changing industry landscape, value is realized in patient-centric organizations, bringing digitally possible care to the forefront, promoting a differentiated, seamless experience.

Learn more about FTI Digital Health Insights

How companies can respond?
As businesses are looking to invest in healthcare technology solutions, it is essential to understand the unmet needs of patients, healthcare providers and healthcare systems. By addressing these gaps and investing in health technology solutions that seamlessly integrate into the broader health IT ecosystem, businesses can take advantage of their great growth potential. FTI Consulting's digital health team has the expertise to assess the digital market readiness and help clients identify target companies, customers and growth opportunities for health technology portfolio companies.

From an expert
For investors who have not yet built a presence in the health technology sector, this is the perfect time to establish a health-focused investment strategy and position themselves at the forefront of the next wave of innovation and growth. Kendall Pelander, digital health leader at FTI Consulting, shares that “increasingly more investors are prioritizing building IT portfolios and adding Portcos to establish funds for Health IT leaders, focusing on specialist practices, particularly behavioural health and women's health.

The area of ​​expertise will continue to look at the activities

Why this trend is important
PE companies continue to invest in provider businesses, and due to fragmented markets and potential integration, they are increasingly focused on specialized services such as fertility clinics, behavioral health and outpatient infusion centres. Increased costs and reduced refunds have increased pressure on specialized providers.

Professional services are expected to be proactively reimbursed for interest from PEs as payers and governments aim to encourage low-cost settings and provide access to vulnerable people. Certain programs offer the potential for higher predictable refund rates, such as the CMS Merit-Based Incentive Payment System (MIPS). Since 2024, CMS has expanded its MIPS Value Pathway (MVP) to include more specialisations, including gastroenterology, urology, and women's health. This expansion will increase opportunities for improved quality care and revenue growth.

How companies can respond?
At the heart of achieving meaningful growth, companies must identify opportunities for increased efficiency, adopt long-term views on value creation strategies, and be flexible in responding to changing demands and opportunities within the industry. By focusing on integrating scalability, innovative care models and integrating services with market demand, investors can not only improve financial performance, but also promote measurable results that deliver long-term value in these high-growth sectors.

From an expert
Tom Kelly, leader of FTI consulting at Healthcare Financial Advisory and Operational Business Transformation Services, highlights the evolving dynamics of specialized healthcare, saying, “Specialized healthcare is an attractive space for PEs, but it requires more than just integration than just unlocking its potential. In our experience, companies that have achieved long-term success are companies that prioritize efficient scaling through operational improvements, strategic payer relationships, and smart integration. As reimbursement models evolve and cost pressures increase, those who are ahead of industry change with a proactive, data-driven approach create the most sustainable value.”

Final thoughts
As healthcare M&A landscapes evolve amidst changing regulations, rapid technological advancements and increasing market pressure, organizations must adopt customized strategies to address their unique challenges and objectives. Partnering with experts that bring a subtle, industry-specific perspective is important in mitigating risk, streamlining integration, and unlocking long-term value. By aligning strategic and operational priorities, healthcare organizations can better navigate these complexities and position themselves for sustainable success.