• Rumblings of Medicaid Changes. More so than in years past, it appears significant structural changes in the Medicaid program are being proposed and discussed. A number of proposals focus on dialing back Affordable Care Act Medicaid expansion through various mechanisms that could limit coverage or available funding. Caps or block grants to states in lieu of coverage for qualified individuals and services have again become a popular discussion topic. And Project 2025 has proposed lifetime limits on Medicaid benefits. Such changes could produce a challenging environment for behavioral health, personal care, IDD and long-term care. Conversely, such changes could produce opportunities for companies to bring scale, technology or other efficiency advantages, as well as further incentivize value-based care initiatives. It also should bring careful attention by investors to a state-by- state analysis of risks and opportunities, rather than viewing Medicaid as a monolithic opportunity (or challenge). • Potential Reversals of Biden-Era Developments. More positively for post-acute investments, there is an expectation that a roll-back of regulatory and worker-friendly provisions will come with the new administration. Most believe repeal is likely for the Medicaid Access Rule’s “80-20” requirement to pass 80% of Medicaid payments to direct care workers. Similarly, nursing home staffing requirements set for 2026 are unlikely to survive. In general, less regulatory burden and oversight are predicted and will be factored into investment assessments across the sector. • Medicare Advantage. Conventional wisdom holds that a Trump administration and Republican Congress will favor, and potentially accelerate, the transition from traditional fee for service Medicare to Medicare Advantage (MA) plans offered by private insurance. The first Trump administration supported increased access to MA plans and enhanced benefits for seniors in MA plans, which was a point of emphasis in Trump’s latest campaign. Of note, there are some voices willing to buck conventional wisdom, arguing MA plans will not be favored by the new administration because they subsidize additional benefits for MA enrollees, making support for MA plans more expensive to the federal government, and at odds with attempts to lower Medicare costs. This alternative theory would suggest investments more aligned with traditional fee for service. • The Expansion of Care at Home. COVID-19 accelerated the trend toward in-home care and its popularity with patients and ability to reduce costs are well known. During the presidential campaign, dueling versions of support for in-home care emerged but the notion of support was bipartisan. The Harris campaign proposed expanding Medicare to provide home care services. The Trump campaign responded with a plan to strengthen programs that allow seniors to age at home and to shift resources to at-home senior care. The path to expanded care at home is unclear, but increased support for care at home is likely. This expansion bodes well for a permanent implementation of the Hospital at Home demonstration project, which provides for hospital reimbursement for services provided in the home. 4. Could PPMs Resume a Smooth Run? BY ANGELA HUMPHREYS & RYAN THOMAS It is no secret that over the last 18-24 months, physician practice management (PPM) platforms have fallen out of favor with certain PE investors. Increased interest rates, physician alignment issues, uncertainty in reimbursement, increased state-level scrutiny of PE investment in healthcare providers, LP concerns about over-exposure to the space, and the hangover in seller valuation expectations from an all-time high in 2021 have resulted in many PE firms pulling back from investments in PPM platforms absent a unique feature such as value-based care or technology play. This also has resulted in several failed PPM deals in 2024 as well as sponsors postponing platform exits that they otherwise would have launched in past years. That said, the end of 2024 saw the announcement of two interesting acquisitions by non-traditional buyers. In November, drug wholesaler Cencora, Inc. announced the acquisition of Retina Consultants of America (RCA) from Webster Equity Partners for $4.6 billion and a potential additional $500 million in contingent consideration. The transaction follows
3 HEALTHCARE PRIVATE EQUITY: 2025 OUTLOOK & TRENDS IN M&A |
Powered by FlippingBook