Insight

Urology physician practice M&A overview

See what’s driving consolidation in the urology sector

Walter Olshanski

Walter Olshanski

Managing Director, KPMG Corporate Finance LLC

+1 646-874-4878

 

U.S. urology market at a glance

The urology physician practice market in the U.S. is comprised of 13,044 practicing urologists, servicing approximately 45 million patient visits per year

  • The urology market in the U.S. is highly fragmented with over 50 percent of practices serviced by one physician and less than 10 percent of practices across the U.S. having more than 10 physicians.(2)
  • Among the total 13,044 practicing urologists in 2019, 11,167 were actively practicing urologists.(1)
    • Over 52 percent of the practicing urologists are above the age of 55, potentially leading to a shortage of physicians within the next decade.(1) 
  • Urology practices are highly concentrated in various parts of the country. Currently, approximately 62.4 percent of counties in the U.S. have no urologists and only 10.4 percent of urologists practice in non-metropolitan areas.(1) 
  • The increasing incidence of urologic diseases, spurred by the aging U.S. demographic is expected to drive growth in the urology physician market.
    • The number of adults aged 65 and older is projected to increase from approximately 48 million to over 80 million by 2050(3)
    • The per patient cost of bladder cancer is the highest of all cancers, ranging from $96,000 to $187,000 in the U.S.(4)

Density of urology surgeons in the U.S.1

Quick Facts4

 

~81,440

new cases of bladder cancer in 2020

 

 

8-10 million 

patient visits for urinary tract infections annually

 

 

73

Average age at the time of diagnosis of bladder cancer

 

 

1 in 10

U.S. adults (18 and older) suffer from daily urinary incontinence

 


U.S. population overview3 (in millions)

Fragmented urology practice market in the U.S.2


Urology physician practice M&A activity overview

Several factors are driving consolidation of urology physician practices by both strategic healthcare organizations and private equity funds

  • Highly fragmented: The urology physician practice market in the U.S. is highly fragmented with only a few multi-state providers, and is ripe for merger and acquisition activity, investments and partnerships.
  • Ripe for consolidation: Consolidation is expected to be driven by the need to efficiently manage the operations of the practice, alleviate the administrative burden, introduce scale and size into the market, and to compete with large healthcare centers and systems.
  • Shift from strategic buyers to PE: The sector has been relatively untouched by significant investment and consolidation activity, specifically from private equity buyers.
    • While strategic buyers have historically dominated the consolidation of urology physician practices, private equity activity in the space is expected to ramp up.
    • For physicians, private equity investment is increasingly becoming an attractive alternative over strategic mergers as it offers economic value in the purchase price, ability to influence the strategy of the organization post-transaction, and incentive and alignment mechanisms for physicians post-transaction.

Urology physician practice M&A activity5

Deal activity since 2014

Deal activity by geography since 2014



Key factors driving consolidation activity in the sector

Highly fragmented market

The market is highly fragmented and is largely served by smaller, regional practices.

 

Favorable macro trends

Rising demand for services from an aging population combined with the low supply of urologists present significant growth opportunities.

Diverse revenue streams

Multiple sources of revenue that can be generated from a variety of ancillary services including ASC’s, advanced imaging centers, centers with radiation therapy, etc.

Favorable regulatory environment 

Sophisticated urology practices with scale should realize positive reimbursement outcomes through Merit-based Incentive Payment System (MIPS) as it continues to evolve.


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Footnotes

  1. The State of the Urology Workforce and Practice in the United States 2018 - American Urological Association
  2. Active practices with at least 1 physician and main specialty of urology per Definitive Healthcare
  3. U.S. Census Bureau 
  4. American Cancer Society; National Institute of Diabetes and Digestive and Kidney Diseases; National Center for Biotechnology Information
  5. Capital IQ, Company websites, Press releases, Irving Lewin, Pitchbook.

 

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