Private equity interest in the health care sector is at an all-time high, spurred by the digital health revolution, value-based care, and an increased demand for a range of consumer-driven health services.

Troutman Pepper's health care private equity team expects private equity investors to continue pursuing deals at a record pace this year, following a busier-than-usual 2021. 

"We are seeing significant interest in digital health, value-based care models and consumer-driven health care, including care in the home, and we expect this growth to continue," said John W. Jones, partner and chair of the firm's Health Care Private Equity Practice Group. "The pendulum has been shifting to make the 'at-home care model' part of the patient's continuum of care over the last 10 years, and the pandemic has only accelerated the demand for these services."

Importantly, federal and state regulators and the markets are responding in a positive manner to these changes, and Jones said he is seeing a direct impact on the number and pace of transactions.

"In terms of the outlook for 2022, we continue to see strong demand in certain health care subsectors with robust multiples and significant enterprise values," Jones said. "We should expect certain headwinds, and will need to continue to monitor inflation and cost of capital as well as tax and regulatory reform and their potential impact on deal-making."  Labor shortages and supply chain issues will also have an impact on targets and their operations and will need to be evaluated when assessing value, he said.