Q1-2023 Primary Care Update

Q1-2023 Primary Care Update

Investment activity within primary care in Q1 2023 continued to benefit from persistent momentum behind risk-based payment models and value-based contracting arrangements. The private equity community has recognized the impact primary care providers can deliver, across both adult and pediatric populations, in terms of containing downstream costs.

Provident expects consolidation activity to accelerate across the sector as PE-backed platforms move quickly to add scale which can be leveraged to negotiate value-based contracts with payors. Primary care remains one of the most fragmented sectors within physician services, providing meaningful opportunity to pursue buy-and-build strategies and capitalize on the macro tailwinds driving growth.

Retail companies continue to value primary care and we expect those groups to continue their activity in transforming primary care from the traditional fee-for-service model. CVS Health announced plans to acquire Oak Street Health in February 2023 in a deal valued at $10.6 billion. Amazon closed its acquisition of One Medical in February 2023 while Walgreens continues to fund its partnership with VillageMD. Walmart has continued its expansion of Walmart Health by adding 28 health centers in 2023 on top of the 16 they have already opened in Florida. Dollar General announced its plans to expand into healthcare in 2021 and delivered on that initiative in January 2023 with the opening of 3 pilot clinics in Tennessee.

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