Washington, D.C. – The American Investment Council today released a new report on private equity investment in two critical U.S. health care issues: access in rural communities and research for deprioritized pharmaceutical trials. In 2020, private equity fueled almost $80 billion into 735 health care companies. This report, the second in a series with PitchBook Data, examines how private equity is expanding health care access in rural communities by investing in urgent care centers.
“Private equity is playing a powerful role in expanding health care access to Americans living in rural communities,” said AIC President and CEO Drew Maloney. “Especially this year, the importance of private equity’s investment in urgent cares cannot be understated: private equity–backed urgent care centers have been vital for COVID-19 testing and will be pivotal for vaccine distribution — in some rural communities, they may be the only options for miles.”
Rural America has a profound health care deficit, and much of that problem boils down to a lack of resources: relatively few providers, less insurance coverage, and fewer health care professionals compared to urban and suburban areas. Urgent cares are a convenient, increasingly popular way for Americans to receive routine and emergency care, but only one percent of urgent care centers operate in rural communities. Private equity is filling that gap by investing in urgent care providers that have identified business models that work in rural and underserved communities. Private equity deals in outpatient clinics such as urgent cares have expanded in the past five years, with more than 250 deals completed in 2020 for more than $15 billion in value.
The second half of the report looks at private equity’s role in pharmaceutical innovation. A relatively new trend for private equity, investors are increasingly supporting promising drug candidates that have lost priority status and lack financial resources for continued development. Private equity investors have formed partnerships with pharmaceutical companies, and these joint ventures, backed by private equity capital, give drug candidates a second chance to make it through regulatory hurdles and into patients’ hands.
Bain Capital and Pfizer teamed up in 2018, for example, to form Cerevel Therapeutics, which now houses several pre-clinical and clinical stage compounds targeting central nervous system disorders impacting millions of Americans, such as Parkinson’s, Alzheimer’s, Epilepsy, Schizophrenia, and substance abuse disorders.
The full report with additional data and case studies can be found here.