Private equity investment in health care services rebounded in 2025.
But physician practice management (PPM) deals – a key driver of ambulatory surgery center (ASC) M&A – lost momentum as regulatory scrutiny intensified. That’s according to dealmaking research and intelligence firm PitchBook, which wrote about the latest health care M&A trends in its Q4 2025 Healthcare Services Report.
Overall, health care services deal activity rose 9.6% year over year to an estimated 747 transactions in 2025, according to PitchBook’s report. Even so, fourth-quarter activity was roughly 15% below the prior year’s level, with investors waiting for clarity around federal policy and reimbursement dynamics.
Specifically, PPM deal count fell 18% in 2025, driven by steep declines in several specialties closely tied to outpatient surgery volumes, according to PitchBook. Gastroenterology deals dropped 85.7% year over year, for example. Meanwhile, ENT fell 38.9% year over year, and dental was down 36.5%.
Those specialties have historically been core to ASC case mix and private equity-backed roll-up strategies.
Part of the slowdown is linked to increasing regulatory burdens around private equity ownership of physician practices in states such as California, with additional state-level scrutiny emerging elsewhere, PitchBook noted. Higher compliance complexity may be extending deal timelines and dampening investor appetite in certain markets, the report called out.
“According to Joel Rush, partner at McDermott Will & Schulte LLP, the PPM industry is ‘still working through [a] COVID-valuation and productivity bubble and that era of exceptionally high valuations for add-on acquisitions, given leverage involved and operational challenges,” authors of the report wrote. “‘Layer on top of that state-level regulatory activity with a keen interest in PE ownership and the corporate practice of medicine.’”
With that said, not all specialties cooled.
Musculoskeletal platforms saw deal activity rise 33.3% year over year, led by podiatry and hand specialists, which increased 200%, according to PitchBook.
The divergence suggests investment and M&A action may be shifting rather than cooling off entirely.
And while PPM dealmaking activity was somewhat depressed, exit activity came in strong last year. PPM exit count increased 57.1% in 2025, according to PitchBook, a potential signal that sponsors are clearing older assets from portfolios after holding periods extended through the pandemic-era valuation cycle.
More broadly, health care services valuations stabilized in 2025 as well. Public company EV-to-EBITDA multiples for hospitals and payers hovered near long-term averages of roughly 10 times, PitchBook reported, though provider multiples dipped in the second half of the year.
“Despite the drag on multiples in H2, provider stocks materially outperformed payer stocks as utilization remained strong in 2025,” the report authors wrote.
