Health

Healthcare (Private)

Deals Activity: Moderate

Restructuring Activity: Moderate

Private healthcare continues to support the NHS in the aftermath of the pandemic, but financial and operational issues remain.

Deals activity in Healthcare (Private)

  1. 1. Increased interest from private equity has helped maintain a steady flow of deal activity in recent years.
  2. 2. We anticipate deal activity will remain steady as PE houses consider exits and operators look to consolidate as a means of improving business performance.

Restructuring activity in Healthcare (Private)

Healthcare (Private)

During the pandemic, the private healthcare sector rose to the aid of the NHS and continues to work supporting the clearance of waiting list backlogs. Despite this, the sector faces several pressing issues from a financial and operational perspective.

A rising cost base is an issue for the private and public healthcare sectors, amidst increased scrutiny from the Care Quality Commission (CQC). To address concerns raised by the CQC, the public sector has increased resources to deliver care. This trend is now becoming visible in private healthcare, driving increased costs to deliver high quality and safe care. To maintain profitability, the sector needs to find efficiencies in the delivery of care while ensuring high standards are met.

As we emerge from the pandemic, the public sector continues to enlist private help to perform more straightforward elective medical activity. Whilst this work is broadly welcomed, the caseload offered to the private sector by the NHS is unlikely to be as profitable as the typical service delivery. Consequently, gross profit margins are likely to be lower than historical averages.

Private care homes have experienced a bruising couple of years, with a reduction in resident numbers combining with a huge uptick in operating costs. Labour availability, especially following Brexit, continues to be a major challenge throughout the care sector. Finding and retaining suitably qualified staff is increasingly expensive, eating into already thin margins.

Notwithstanding immediate operational pressures, the sector overall is in reasonably good shape. An aging population continues to place pressures on the healthcare system, stimulating investment, both in the public and private spheres.

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