2025 Healthcare M&A Outlook: Physician Practice Growth, Consolidation, and Equity Insights

Zak Eisenberg is the Vice President of Merritt Healthcare Advisors, which provides investment banking services to healthcare services organizations. In his role, he manages the strategic development and execution of ASC, surgical hospital, and physician practice transactions. Zak specializes in sourcing and analyzing transactions and capital and negotiating and structuring investments. Previously, he was a Biofund Venture Analyst at New Orleans Bioinnovation Center, a biotech and life science-focused venture capital firm, and led the analysis team at a renewable energy-focused private equity firm.

Here’s a glimpse of what you’ll learn:

• [1:46] The rise of healthcare transactions and emerging investment opportunities in 2025
• [3:23] How rising interest rates have impacted consolidations, practice valuations, and PE perceptions
• [12:36] Evaluating the pros and cons of expanding a surgical center versus opening an ASC
• [14:30] Considerations for defining small, medium, and large physician practices

In this episode…

With rising interest rates, increasing consolidation, and changing payer models, many physician practices wonder how to position themselves for growth in 2025 and beyond. How can healthcare leaders adapt to protect practice value and capitalize on emerging growth opportunities?

In today’s transactional climate, healthcare M&A executives Zak Eisenberg, John Nantz, and Barry Tanner emphasize the importance of specialization, strategic growth, and recognizing market shifts. Rather than relying on base compensation, physician groups can offer candidates shared equity to align interests for growth. As physician practices consider whether to expand their surgery centers, Zak, John, and Barry state that practices with tight margins and a loyal patient base can expand existing centers into ASCs for a more controlled and profitable environment.

In the final installment of the Transaction Healthcare webinar series, Kayla Marty gathers closing thoughts from Zak Eisenberg, John Nantz, and Barry Tanner about the future of healthcare M&A. Together, they debate how market dynamics have reshaped practice valuations, how to scale small practices, and emerging investment opportunities in 2025 and beyond.

Resources mentioned in this episode:

• Zak Eisenberg on LinkedIn
• Merritt Healthcare Advisors
• Merritt Healthcare Advisors email: contactus@merrittadvisory.com
• John Nantz on LinkedIn 
• Redwood Advisors 
• Barry Tanner on LinkedIn
• Kayla Marty on LinkedIn
• McGuireWoods

Quotable Moments:

• “I think the opportunities in healthcare are growing, I would say, almost exponentially.”
• “I think now’s a good time to be a bit bolder and figure out what you want.”
• “You still have lots of very small practices in, let’s say, mental health.”
• “There are now platforms in most physician specialties, not all of them, but in most of them.”
• “More outpatient care. How do you measure and compare where you’re going to go to seek care?”

Action Steps:

1. Offer equity to attract and retain physician talent: Providing ownership stakes aligns physicians’ incentives with long-term business growth and increases retention. This approach is effective in competitive hiring environments and for practices expanding service lines or launching ASCs.
2. Evaluate ASC expansion versus geographic growth: Conduct a financial and strategic analysis to determine whether investing in a surgery center or a new location offers better returns. This helps practices allocate capital efficiently while maximizing patient access and physician engagement.
3. Pursue partnerships with self-insured employers: Aligning directly with employers can improve margins and create more predictable revenue streams than traditional payer models. These partnerships also allow for innovative, value-based care delivery that benefits patients and providers.
4. Tailor recruitment strategies to specialty and market conditions: Recognize that practice size, revenue potential, and available talent vary significantly by specialty and geography. Customized growth plans ensure that recruitment efforts are both realistic and aligned with long-term practice goals.
5. Position your practice for future consolidation: Understanding how buyers value small versus large practices prepares you to optimize operations and timing for a successful exit. Strategic scaling can lead to stronger valuations and more favorable acquisition terms in the future.

Sponsor for this episode…

This episode is brought to you by Merritt Healthcare Advisors.

Merritt Healthcare Advisors is an investment bank with a unique focus on healthcare providers and their businesses.

Merritt leverages the healthcare industry expertise of its owner-operators, clinicians, investors, and advisors to develop surgical facilities that perform safe, efficient, and cost-effective procedures.

To learn more, visit https://merritthealthcare.com/.

Episode Transcript

Intro  0:00  

Hello and welcome to Transaction Healthcare. I’m Zak Eisenberg, Vice President at Merritt Healthcare Advisors. Merritt Healthcare Advisors is an investment bank with a unique focus on health care providers and their businesses. Transaction Healthcare is a podcast focused on addressing questions and concerns at the intersection of healthcare transactions and business.

Zak Eisenberg  0:25

Zak Eisenberg here, this is a special episode from a webinar we delivered. It was so interesting that we wanted to share this part of it with you on the podcast. It’s brought to you by Merritt Healthcare Advisors. We’re a healthcare focused investment bank. We don’t work on anything else, mostly with provider businesses. Usually we’re working with physician entrepreneurs, helping them to raise capital or sell their business, or sometimes helping them to buy other practices or invest in other types of ancillary service lines. Now we’re happy to share this part of a webinar with you, featuring John Nantz, partner and founder at Redwood Advisors, Kayla Marty, a partner at McGuireWoods, and Barry Tanner, the interim CEO at Boomerang Healthcare.

Kayla Marty  1:09  

I’d like to just ask each of you all for some closing thoughts on a couple of things. The one we started out the conversation with how, how do we see think growth looks, how do we think alignment looks all the way through the life cycle of how do you transition? So, Barry, I’d love to get your kind of final take on the outlook for 2025 positive mix negative for growth overall, right? It doesn’t have to be transactions, but overall growth, because we have heard a lot of pessimism, pessimism in the market, I

Barry Tanner  1:46  

think we’re going to see a lot of transaction I’m positive about it. I think we’re going to see a lot of transactional activity, because I think the whole period on a lot of investments has been much longer than anyone had anticipated. So I think we’re going to see a lot more investments attempting to come to market in 25 and probably a little bit beyond that. But I also think there are some some really emerging investment opportunities. I think the opportunities in health care are growing, I would say, almost exponentially. I think people are more discerning about their care, they’re more demanding about their care. They are going to take advantage of lower cost and higher quality. So I think one of the things I’ll pick up on something that John said, which is, there’s a lot more self insured people right now, and I think businesses are going to crop up about, how do self insured businesses take full advantage of the opportunities that exist within the health care market right now, more outpatient care. How do you, how do you how do you measure and compare where you’re going to go to seek care? And so I think, I think there’s more opportunity today in 2025 in health care than I’ve seen in a long time. And I think we’ll see a lot of transactional activity as well. Kayla,

Kayla Marty  3:17  

awesome. Okay. John, positive, mix, negative. I’m

John Nantz  3:23  

going to do that. How’s that is that, can I break your right there? I’m kind of with Barry, actually. So I do feel like, I mean, look, I think the interest rate increase and then some of the bus in the industry, I think, have put a big damper on us. Like, if you go back the last two to three years, I think that’s that’s been the root causes of of the shift that we saw, because it was getting pretty heady there for a while. I feel like we’re finding that firm base, you know, to Barry’s point. I think people are ready to come to market, and I think there will be some transactions. And I think I think that net, net. I think I think you look at AI, you look at the demographics, you look at site of care, and I think it mostly is positive for this space. I think it really is like we’re talking about physician offices, we’re talking about ASCs, that part of the continuum, that’s a that’s where you want to be, right? That’s where the volume growth is going to be. So there’s kind of a tailwind here. And like I said, I think the value based arrangements are starting to come to fruition. I think that should be a positive. I think there are some new strategics. You know, Barry was involved in a deal where, you know, the buyer was not, I think, what anyone would have originally expected. So there’s some meaning people looking at the healthcare market from a different lens that I think adds demand for strategic demand, which is helpful. So I think the net of all this is largely, is net, net positive. And, yeah, and like I said, I would just encourage everyone, you know, I think now is a good time to be a bit bolder, you know, and figure out what do you want to accomplish, and how do you get there. And again, you know, just to repeat myself. Health. But folks like Zak, folks like Barry and myself, who you know, think about this a lot, are happy to help, right? And if so, if we can help, have a conversation with someone, just reach out, right? It’s not a we’re happy to speak with physicians or the managers of physician practices to to get you going in the right direction. Yeah. And

Kayla Marty  5:17  

Zak, do you want to wrap us up on your thoughts on good, bad and ugly, and then also address any items from the Q and A that you think would be useful,

Zak Eisenberg  5:27  

sure. So I would say mix, from my perspective, and I think it really depends on where you’re looking in the market, what size of the businesses, because I think over the last five years, we’ve seen a major culling of practices because of COVID because of increased interest rates. So you’ve just seen and this, again, it’s not necessarily just true for healthcare, although I think COVID had a particularly strong impact on healthcare businesses as compared to other industries. But when interest rates go up, businesses that are over levered suffer and usually go out of business, and you’ve seen that in the financial sponsor space, which is partially why private equity as a group has received some bad press. It’s essentially a lot of those businesses were over levered, and increase in interest rates has really hurt those businesses. What is interesting is that, as opposed to several years ago, where it seemed like many specialties in the provider landscape had not yet really started to consolidate. I think this is still very much true today, where there is massive opportunity for consolidation, you still have lots of very small practices, and let’s say mental health, where many of the practitioners, I think roughly half, are still solo practitioners in that space. And this is, this is true in many of the specialties, but as opposed to, say, 10 years ago now, or even five years ago, there are now platforms in most physician specialties, not all of them, but in most of them. So one of the more recent ones is neurology. There are only two platforms in neurology. But the reason I’m bringing this up is that, why I’d say multiples were slightly frothy five years ago is that, and you take cardiology as an example, there were no practices of real size and scale in cardiology five to 10 years ago, and now there are, and so investors are not going to be paying the same price for round two of this model that you saw in round one. Um, because I think first of all, they’ve seen some of the pitfalls, but also many of the practices that are being sold now, whether it’s in cardiology, orthopedics, are what are we think of as either regional expansions or add on acquisitions. I think it’s lots of people call them bolt on acquisitions for existing platforms, and just by their nature, those are going to be valued at a lower, lower multiple. So do I think, from a macro perspective, consolidation is going to continue Absolutely, there’s still lots of reason to do transactions. The reason why I say mix is because I think for the position side, some of the macro trends are depressing. Multiples today, and I don’t think that is necessarily going to change. You are starting to see some winners again. There are examples where this is not the case, some different types of pair models. So to John’s point earlier about employer driven models, those are newer and so if you have a unique business model and way you’re approaching the market, you can still command very, very attractive multiples. But your typical practice, let’s say, with five to 10 physicians that in government and commercially driven is going to command a lower multiple today, for many of the reasons we’ve talked about than they demanded five years ago. And I don’t think that’s going to change five years from now. In fact, I think it will actually drop in the future for many of the reasons we’ve we’ve talked about, so it can still be an attractive prospect to sell Absolutely. And there’s, there’s a lot to be optimistic about from that perspective. And Kayla, I think you had mentioned there were a couple of Q and A’s here, maybe, maybe we pick one out. And I see some, someone asked a. Question about about a practice they’re working with. So this gentleman is a is a consultant, and they’ve been working with a practice that has a an in office surgical center, and they’ve been weighing the pros and cons of expanding the footprint geographically versus expanding the current facility into an AC. The margins are tight, with a very captive market, which makes sense, and they’ve struggled to hire doctors to expand, given that they can make 2x just doing locums work. So this, this is a common from my perspective, a common challenge with bringing physicians into, I’d say, an outpatient setting or into a private setting. And I think Barry said it really well earlier, but we’ve all talked spoken about it to one extent or another this evening, which is, how do you tie those physicians into the growth of that business, and the primary way that you can do this is through equity. Now the problem for this facility, if it’s in office, it’s owned by the practice, and so maybe your client, because this gentleman’s a consultant, doesn’t want to bring these new physicians into their practice, so an AC could give you the opportunity to really sell some of the equity in that AC, to attract those positions, to bring their volume. It’s good business for them, and it’s likely better for the patient and the system, as far as deciding on AC versus geographic, and Barry, I’d be curious your thoughts on this. And John, my thinking is, well, if you’ve, if you feel you’ve really tapped out the patient market in your current geography, then it can make sense to move to a new a new geographic location, but if you haven’t, perhaps it’s better to really double down on your existing location, expand and drive new positions in. But it really to me, it comes down to a financial analysis where you would look at the pros and cons of each what is the cost of shifting to an AC versus opening a standalone new location within in office surgical suite that John and Mary? What are your thoughts on that? Yeah,

Barry Tanner  12:36  

read the question. I think for a small first of all, urology is actually a really sort of hot specialty these days, and I think I would think as a practice the size you described it, I would focus more on bringing and trying to get it to a three to five person urology practice, assuming the market could could sustain it, but at least two to three. And I would do that by look, I know people want a base, but I think if you have the right physician, and they can get a very significant percentage of their collections, then I think that could be a very attractive and you could do way better than even though locums, I know can pay very well if you’re con, if you’re confident in your ability to and your work ethic to see patients, I would say a reasonable base with a significant upside, or a percentage of collections, could be a significant motivator to bring in another one or perhaps two physicians and then, And then, sort of reassess where you are certainly, certainly getting into the IoD side of the business with that many physicians. I think it that’s a nice ancillary for urology today, and I think that’s something that you really you probably need at least three busy urologists to do well with a on IOD, but I think that’s probably the first two things that I would look at doing,

Kayla Marty  14:05  

yep and and maybe one last question before we wrap up, one of the attendees asked when we’re speaking about small practice, mid practice, large practice, can We put some numbers on what we view on that. Maybe, John, you could speak to that, just to make sure we’re being clear about our our comments. Yeah,

John Nantz  14:30  

well, and I think the and I think where the key comes in is sort of what you know, what your exit path might look like. But I would, I mean, like people might debate this, so I would probably say, you know, below three to five physicians is, is more what I would consider small I’m seeing, if Barry and Zak agree with me, but I think, I think I’m getting some head nods. But, you know, definitely one to probably even three is on the smaller side, probably all the way up to five. You could take that up to 10, right? I see, I’ve seen some people label below 10 is. Smaller. And the implication there is, in most cases, those practices are going to be what we call an add on or bolt on, and so unless you’re in a new specialty, right the way that you’re going to get bought, probably by a bigger group, and you’re going to get, you know, you’ll get a decent multiple, but it’s not going to be the multiples that the bigger guys are getting, who have more capabilities, a lot more scale. And then, you know, beyond 30 to 50 is large, right? I think is, is where I would, you know, again, you can kind of debate, as you could say, maybe 100 but typically, I don’t see a lot of people call 125 docs a medium sized practice. So that’s kind of where large starts. And then you got kind of medium in the middle, and I think so that’s kind of the rough sizing. And then John,

Zak Eisenberg  15:45  

can I just add one? One caveat there, at least to me, is, I think it’s very specialty specific. So take vascular space. There are only 6000 vascular surgeons, roughly, in the country, something like that. That’s much different than, say, ophthalmology, where there are 10s of 1000s, and it’s also different than primary care. So to me, part of it is the number of doctors, and I think the numbers you gave are a great signal across all specialties. But the other indicator is really revenue, not necessarily margin, but revenue, because it’s a it’s an indicator of patient volume and patient visits. That really is a driver of of size as well. So anyway, I wanted to add that perspective too. John, thank you.

Barry Tanner  16:47  

Yeah, I would say, I would say three doc. I would just to add my own in there. I would say, three doctors or less is a small practice. 3 million or less in revenue is a small practice. And then when you start getting north of that, you sort of get closer to medium. I would also say it’s a measure of governance. Small practices tend to operate a little bit like ships passing in the night. Sometimes, when you get up to the north of three you start, you start to get some semblance of more formal governance within a practice. And that’s when, to me, you become sort of more of a medium size practice. Yeah.

Zak Eisenberg  17:25  

And the same attendee asked to be specific, sir, for psychiatry, mental health is an interesting space. I think certainly I agree with Barry and John here with the number of doctors, but I would also, because it’s generally a lower margin space, as compared to, say, a surgical specialty, I think at least 10 million in revenue is where I would think that transitions from small to large in psychiatric and then also, I would think About, yes, the number of psychiatrists. But also, more broadly, the number of practitioners which some psych psychiatric practices only have psychiatrists, in which case I think 1010, or so is where you transition out of small in that space. But if you’re pairing it with mid levels or other types of providers, say LCSW therapists, or if it’s an interventional psychiatric practice with ketamine or or TMS procedures or ECT procedures, if people are still doing that, then it could be, it could be even less in terms of the number of psychiatrists, because maybe they’re not seeing the patient every time. So it’s, it’s very, I’d say it’s very, case by case, is what I generally would say. But yeah, for mental health in particular, and psychiatric I tend to think you need a larger number of physicians to to actually drive, drive stability and drive economies of scale. Awesome.

Kayla Marty  19:12  

Thank you so much, Zak and I’ll wrap us up and Zak or John, please feel free to give any remaining comments. But thank you so much for joining us. The recording is available or will be available. If you know anyone else that wasn’t able to join us tonight, but is interested in hearing the discussion that can be shared, please email Zak or John. They can get you a copy of the recording. And thank you so much Barry also for joining us. Zak or John, anything you would add to wrap up.

Zak Eisenberg  19:43  

Now, thanks everyone for coming and John, it was great to have our third I think we can call it annual. Now check in So, Barry and Kayla, you’ve been great. Thank you, Kayla, for moderating. This has been this has been fun. Yeah.

John Nantz  19:58  

Thank you guys. Really interesting.

Barry Tanner  20:00  

Yeah, thank you. Thanks everyone. Thank you guys.

Outro 20:03  

And that wraps up another episode of Transaction Healthcare. Hit the subscribe button to get notified when we release new conversations. And if you are someone interested in learning more about these topics, visit us at merrittadvisory.com, or send us an email at contactus@merrittadvisory.com