Insight

Podiatry Physician Practice M&A Overview

KPMG Corporate Finance LLC’s 2020 healthcare practice year in review

Walter Olshanski

Walter Olshanski

Managing Director, KPMG Corporate Finance LLC

+1 646-874-4878

 

U.S. podiatry market overview

The podiatry physician market in the U.S. is expected to benefit from the aging population and the increase in arthritis and diabetes.

  • An estimated 75 percent of Americans experience foot or ankle problems.(1)
  • The burgeoning geriatric population, rising prevalence of chronic diseases such as diabetes, arthritis and obesity, and increasing awareness about the importance of routine foot health and care is driving growth in the market.
  • In 2016, 14 percent of Americans were estimated to have diabetes and roughly 15 percent of diabetic patients experience foot ulcers(1),(2)
  • By 2040, an estimated 78.4 million (or 25.9 percent of the projected total adult population) adults aged 18 years and older will have doctor-diagnosed arthritis.(3)
  • The number of adults 65 and older is projected to rise from 55 million in 2019 to 88 million by 2050, thus providing new opportunities to podiatry practices.(4)
  • There are approximately 13,320 active doctors of podiatric medicine in the U.S., which represents an average of one physician for every 20,408 Americans.(5)



Podiatry physician practice M&A activity overview

The fragmented U.S. podiatry physician practice market, dominated by groups with less than 3 physicians, represents an attractive consolidation opportunity.

  • There are approximately 4,500 podiatry physician practices in the U.S. and more than 96 percent of these practices are comprised of five or fewer physicians(7).
  • Historically the podiatry market has remained largely untouched by outside investment and general merger activity, leaving significant room for consolidation.
  • As solo podiatry practices face diminishing margins, private equity interest has increased as they recognize the opportunity to consolidate and achieve economies of scale.
  • As a result, podiatry is seeing increased interest from financial players including recent investments by Albaron Partners, Shore Capital and NMS Capital.


Key factors driving consolidation activity in the sector

Fragmented market

The sector is highly fragmented and is largely served by smaller private practices, presenting an opportunity to embark roll-up strategy.

 

Diverse revenue streams

Presence of ancillary services such as diagnostic vascular and nerve testing, cosmetic treatments, physical therapy, and in-office dispensing of foot care products, makes the specialty more attractive for potential buyers.

Favorable macro trends

An aging American population and rising awareness of podiatry services will boost the growth of the specialty, thus fueling the interest of buyers in the sector.

Increased bargaining power

Larger podiatry practices have more resources to allocate towards marketing expenditures and negotiations with managed-care organizations to be included in their provider network.


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Footnotes

  1. IBISWorld Industry Report – Podiatrists in the US
  2. America’s Health Rankings – United Health Foundation
  3. CDC – National Statistics - Future Arthritis Burden
  4. U.S. Census Bureau
  5. Illinois Podiatric Medical Association
  6. Practices with main specialty of Podiatry per Definitive Healthcare
  7. Practices with main specialty of Podiatry per Definitive Healthcare
  8. Capital IQ, Mergermarket, and Press releases.

 

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