Q4 2023 Primary Care Update

Q4 2023 Primary Care Update

Primary care continues to gain significant interest from investors with a thesis on continued development of value-based care models. Despite a challenging macro-economic climate, M&A activity has persisted in this sector as investors and larger practices seek to align themselves with organizations that are well-positioned to capitalize on these tailwinds to succeed in a value-based care environment.

The bulk of M&A activity has continued to be driven by private-equity backed platforms who are leveraging the capital and strategic resources provided by their sponsors to expand their patient base, push into new markets, and build scale to more effectively negotiate with payors and establish attractive value-based contracting arrangements.

Other factors influencing the market landscape and M&A within primary care include the implementation of the new CMS HCC model, v28, to replace v24 which will be phased out from 2024 – 2026. CMS’ rationale for this shift is to implement a coding system that more accurately predicts costs, focuses on the most prevalent conditions, and eliminates conditions that did not have “well-specified” diagnostic coding criteria.

While the full impact of this change is yet to be determined, the market expectation is for this to decrease risk scores by ~2.0% nationwide, creating a more challenging landscape to generate shared savings in risk-based payor arrangements.

Provident has recently published a comprehensive Sector Update & Outlook presentation (link below) that summarizes the impact of these changes alongside other trends and factors influencing market activity in the Primary Care space.

To print and download the full Primary Care Update report, please click below…

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