Key Takeaways
- • More than half (58%) of cancer specialists practice within health systems, and 53% of oncologists reported burnout as of 2024, according to the article's citations.
- • Between 2003 and 2022, 10% of the estimated 6,919 U.S. oncology clinic locations became affiliated with PE-backed companies, spanning 45 states, per AMA-published statistics cited by the article.
- • Notable transactions include the $2.1B acquisition of OneOncology by AmerisourceBergen and TPG and the $2.49B acquisition by McKesson of a 70% controlling interest in Core Ventures, the administrative arm of Florida Cancer Specialists and Research Institute.
- • PE deals are typically structured as leveraged buyouts with 60%-90% of the acquisition price financed with debt, often carried on the practice's balance sheet, and use managed platform structures due to corporate practice of medicine rules.
- • The article warns that PE partnerships carry misalignment risks, including a typical 5-7 year investment horizon, compensation pay cuts, and guideline-driven pathway pressures, making upfront negotiation essential.
Summary
An article in ASCO's JCO Oncology Practice examines the growing role of private equity (PE) in oncology, framing it as an emerging alternative for community practices facing mounting financial and operational pressures. The authors cite declining payment rates, workforce shortages, high-cost drug inventory management, and administrative burdens. They note that more than half (58%) of cancer specialists now practice within health systems, and that 53% of oncologists reported burnout as of 2024, with 20% reporting depression, second only to emergency medicine.
The article identifies shifting economics for hospital-based care. Starting in 2026, the Centers for Medicare & Medicaid Services (CMS) will extend site-neutral payment policies to drug administration services in certain hospital outpatient provider-based departments. The Health Resources and Services Administration (HRSA) also approved a 340B rebate model pilot for eight manufacturers starting January 1, 2026, which the article notes has since been paused by the courts. The authors argue these changes may challenge hospital-based oncology reimbursement and cash flow. Independent practices, which lack negotiating leverage with payers, face significant costs for value-based care, IT, drug purchasing, and capital investment, and PE can offer contracting expertise, economies of scale, capital access, group purchasing, and research network collaboration.
According to American Medical Association statistics cited in the article, PE-backed transactions spanned 45 states from 2003 to 2022, with the largest shares in Florida (19%) and California (16%). PE-affiliated clinics exceeded 20% of all clinics in seven states, including Tennessee (28%), Florida (27%), and Nevada (26%). The article also points to the OneOncology and Florida Cancer Specialists transactions, along with sales of Vantage Oncology and GenesisCare. Community oncology networks such as the US Oncology Network, Cardinal's Integrated Oncology Network/Navista, The Oncology Institute of Hope & Innovation, and American Oncology Network have grown through PE partnerships, three of which are now publicly traded.
The article explains that oncology PE deals are typically structured as managed platforms because of corporate practice of medicine (CPOM) doctrine, often using a friendly professional corporation structure that carries CPOM risk if poorly implemented. Physicians typically receive cash and equity in the management company, but sale proceeds are partly funded through compensation reductions, and PE investment horizons of 5-7 years can misalign incentives. The authors caution that cost-cutting pressures in leveraged platforms may conflict with clinical decision-making and that strict guideline-based pathways can contribute to moral injury. States are increasingly scrutinizing PE health care transactions following high-profile PE-backed bankruptcies, and federal and state fraud and abuse laws, including the Stark Law and Anti-Kickback Statute, shape deal structures.
On valuation, the article recommends engaging valuation professionals, legal counsel, and strategic advisors experienced in oncology. The income, cost, and market approaches are the generally accepted methodologies, with the cost approach most common for medical oncology and the market approach more often applied to radiation oncology using EBITDA multiples.
The article identifies shifting economics for hospital-based care. Starting in 2026, the Centers for Medicare & Medicaid Services (CMS) will extend site-neutral payment policies to drug administration services in certain hospital outpatient provider-based departments. The Health Resources and Services Administration (HRSA) also approved a 340B rebate model pilot for eight manufacturers starting January 1, 2026, which the article notes has since been paused by the courts. The authors argue these changes may challenge hospital-based oncology reimbursement and cash flow. Independent practices, which lack negotiating leverage with payers, face significant costs for value-based care, IT, drug purchasing, and capital investment, and PE can offer contracting expertise, economies of scale, capital access, group purchasing, and research network collaboration.
According to American Medical Association statistics cited in the article, PE-backed transactions spanned 45 states from 2003 to 2022, with the largest shares in Florida (19%) and California (16%). PE-affiliated clinics exceeded 20% of all clinics in seven states, including Tennessee (28%), Florida (27%), and Nevada (26%). The article also points to the OneOncology and Florida Cancer Specialists transactions, along with sales of Vantage Oncology and GenesisCare. Community oncology networks such as the US Oncology Network, Cardinal's Integrated Oncology Network/Navista, The Oncology Institute of Hope & Innovation, and American Oncology Network have grown through PE partnerships, three of which are now publicly traded.
The article explains that oncology PE deals are typically structured as managed platforms because of corporate practice of medicine (CPOM) doctrine, often using a friendly professional corporation structure that carries CPOM risk if poorly implemented. Physicians typically receive cash and equity in the management company, but sale proceeds are partly funded through compensation reductions, and PE investment horizons of 5-7 years can misalign incentives. The authors caution that cost-cutting pressures in leveraged platforms may conflict with clinical decision-making and that strict guideline-based pathways can contribute to moral injury. States are increasingly scrutinizing PE health care transactions following high-profile PE-backed bankruptcies, and federal and state fraud and abuse laws, including the Stark Law and Anti-Kickback Statute, shape deal structures.
On valuation, the article recommends engaging valuation professionals, legal counsel, and strategic advisors experienced in oncology. The income, cost, and market approaches are the generally accepted methodologies, with the cost approach most common for medical oncology and the market approach more often applied to radiation oncology using EBITDA multiples.
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