Cencora’s co-investment in OneOncology alongside TPG, and Cencora’s CEO, Bob Mauch, noted that “the addition of RCA will allow [Cencora] to expand our MSO [management services organization] solutions and drive differentiated value across the healthcare system for manufacturers, providers and patients.” Later the same month, Cardinal Health announced the acquisition of a majority stake in GI Alliance from its physician owners and affiliates of Apollo Global Management for $2.8 billion, citing the acquisition as allowing it to expand into gastroenterology and add to its specialty offerings. GI Alliance will operate as a platform within Cardinal Health’s Pharmaceutical and Specialty Solutions segment, and Cardinal Health has the option to acquire the balance of the company after three years. Could it be that these notable transactions will launch renewed activity in the PPM sector in 2025? Will 2025 be the year of sponsor-to-sponsor trades as additional PE-backed platforms that have been in a holding pattern finally come to market? Strategic buyers in the space continue to need growth opportunities, but perhaps more importantly PPMs have been using 2024 to shore up their operations and expense management. Valuation expectations also should rationalize in 2025 as sponsors need exits, and experienced PPM investors should have plenty of opportunities to double down where others are backing off – particularly in less consolidated provider verticals. Those willing to gamble in times like these often reap the rewards, and the need for efficient management and improved care delivery in the PPM space is not going away any time soon. The continuing value-based care, home health and primary care initiatives also should provide creative investors opportunities in the space. Only time will tell, but these factors may signal the return to a smoother run for the PPM sector in the year ahead. 5. The Black Diamond: AI In Healthcare BY EMILY BURROWS, NESRIN TIFT & ROY WYMAN In 2025, the ongoing integration of artificial intelligence (AI) in healthcare is set to transform the industry, driven by advancements in AI technologies and the increasing demand for efficient, patient-centric solutions. For investors, this represents a significant opportunity to capitalize on a rapidly growing market. One of the most notable trends is the application of AI in healthcare workflows, which is aimed at alleviating administrative burdens and enhancing clinical efficiency. For example, the adoption of AI-powered ambient listening scribes is expected to increase in an effort to reduce the time clinicians spend on documentation, allowing them to focus more on patient care. Another key trend is the use of AI to improve patient safety. For example, AI-driven surveillance tools are being developed to help healthcare organizations manage infection prevention more effectively. However, these expanding uses of AI in healthcare require vigilance toward evolving healthcare regulations and data protection laws in order to ensure compliance. Companies deploying machine learning tools in healthcare should be aware of data privacy and security regulations, consumer protection laws including prohibitions on false and misleading advertising, and health information transparency and anti-discrimination laws that may be implicated by AI tools in the absence of human oversight. In the absence of a federal legal framework directly regulating AI use, particularly machine learning, it is expected that U.S. states will continue to legislate the use of AI, including in the healthcare space. State attorneys general are likely to continue examining AI companies’ uses of personal data in AI models and inaccurate claims regarding the use or effectiveness of AI-based products. As AI continues to evolve, its role in healthcare will expand, offering innovative solutions that are designed to improve patient outcomes, operational efficiency, and the overall quality of care; however, such innovation must be balanced with compliance with applicable laws and regulations. Companies leading in AI healthcare solutions are likely to gain a competitive edge by navigating these legal landscapes effectively, ensuring compliance, and building trust with healthcare providers and patients.
4 | BASS, BERRY & SIMS
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