“There is hope that there is potential generosity in getting the deal done by assuming that the new administration is in favor of it.”
Glenn Valenbaum
“There is hope that there will be a potential generosity in getting the deal done, given the assumption that the new administration is a parent's business,” Barenbaum said. However, there is a mixed signal and a lot of uncertainty regarding the administration's approach to healthcare in the US in February 2025. The Federal Trade Commission and the Department of Justice have issued a statement expressing their intention to maintain existing guidelines (Merger Guidelines for 2023). While the deregulation environment may appear to strengthen healthcare M&As, it may be worrying about the impact of widespread use of tariffs as a trade policy.
However, current vaccine skepticism by the administration's health and human resources director, Robert F. Kennedy Jr., is concerned for many in the healthcare sector. Feedback from within the healthcare ecosystem suggests the potential for pivots in healthcare policy approaches. This is a transition from providing healthcare that focuses on traditional medicines to more holistic treatments.
This could also lead to a more focus on preventive health through better nutrition, citing recent discussions about revisiting the food pyramid and investigating US food production practices. The recent ban on FDA's Red Dye No. 3 could be part of a broader trend to address the root causes of health issues rather than simply treating symptoms. The relationship between food consumption patterns and health outcomes, especially in conditions such as diabetes and heart disease, is highlighted as a region that is likely to attract attention, and could indicate more transactions in wellness-focused companies.
However, the administration has enacted and proposed a freeze on research grants to the National Institutes of Health, the Centers for Disease Control and Prevention, and various US universities, and has an immediate impact on research being conducted at these institutions. McGurl said these effects necessarily include various private enterprise partnerships with these institutions and institutions, as well as medical research in the United States.
Focus on patient empowerment
These changes, which could focus on the way healthcare and related treatments are provided by the new administration, will guide the focus of private equity investments and will more closely embrace the trends of overall health and health consumerism. McGurl said there is a significant private equity interest, particularly in the integration of medical spas and aesthetic business, addiction treatment, home care, adolescent autism services, traditional outpatient psychiatry and behavioral medicine. McGurl added that these moves are likely to lead to a significant increase in structured relationships between private equity and healthcare systems, as they focus on managing operational margins across facilities and service lines.
The link to all these factors is a shift towards metabolic health approaches, marking a departure from traditional drug-based treatments and a transition to self-health, Bedder said. This shift in emphasis can be seen as a challenge to traditional healthcare delivery, i.e. inconsistent patient needs and provider availability. This amputation historically limited the ability of US patients to access care when they needed it most.
Together with this push towards more accessibility, the intersection of consumer technology and healthcare services is rising through devices such as the Apple Watch, WHOOP, The Worain Ring and other wearables. Modern healthcare tools like these allow consumers and providers to actively track patient vital signs and make informed decisions about their care delivery preferences. Consumer interest in these products and service platforms is expected to continue to gain interest in 2025.
These developments demonstrate the evolution of the role of medical technology, with focus shifting from provider-centric to patient-centric solutions. Consumer transparency and control represent a major shift from traditional models in which patients relied solely on health professionals for health insights. McGurl hopes healthcare sector startups focusing on patient-centered products, services and related health technologies will attract significant investors' attention for the balance from 2025 onwards.
Expansion and limitations of virtual health
The dramatic peak in the use of virtual health has made virtual health companies a common goal of M&A interests. However, Barenbaum said uncertainty about virtual health regulations expansion is currently curbing market activity, but the uncertainty has not delayed trading. Iris Telehealth's acquisition of Innovatel was announced on January 21, with Iris highlighting the impact of virtual health integration in the behavioral health sector as one of the largest virtual health telepicalator providers in the United States.
Medicare will extend telehealth services until September 30, 2025, with the focus being on the fact that federally qualified health centers and rural health clinics will be able to effectively provide services until January 1, 2026. Virtual health is limited, but virtual care may still remain a valuable treatment option, especially as first-line treatment aid.
“I think we will continue to have some level of virtual healthcare delivery options,” Bedder said.
