Health Care Investors Conference: 2025 Recap

Bass, Berry & Sims hosted the 15th annual Health Care Investors Conference (HCIC), co-sponsored by Deloitte, Gallagher and Houlihan Lokey, on October 29.

Each year HCIC brings together hundreds of leading health care industry executives and investors from across the country to gain insights from leading private equity (PE) sponsors, operators and policy voices. This year's conference highlights included a cautiously optimistic outlook defined by disciplined growth, technology enablement (particularly artificial intelligence) and the continued evolution of value-based care and site-of-service shifts.

HCPE Pulsepoint Update: Key Trends & Market Insights from Leading Health Care Investors

Angela Humphreys (Bass, Berry & Sims) moderated a conversation among Jett Aubrey (Havencrest Capital Management), Peter Erickson (Avesi Partners) and Brian Peterson (Silversmith Capital Partners). The opening session provided a forward look at the key factors likely to shape M&A activity in 2026 and the specific subsectors targeted by PE funds.

An overarching question in the PE sphere has been “when will the dam break on deals?” Panelists responded that there is no dam to break as the market has settled into more realistic expectations following several volatile years. Although macroeconomic headwinds persist, a significant volume of capital remains available for deployment in the middle market. Competition for quality assets remains intense, however, and investors emphasized the need for disciplined, proactive deal sourcing. Although [average] valuations have declined from the frothy highs of the post-pandemic cycle, panelists viewed this normalization as healthy for long-term market sustainability.

Panelists discussed the following subsectors:

• Physician Practice Management (PPM): Panelists agreed that PE activity in PPM has cooled amid lingering valuation challenges and reduced exit opportunities. Risk-based arrangements that meaningfully reduce health care costs are now attracting the most attention. Traditional roll-up strategies have lost momentum and many of the largest independent groups in key specialties have already been acquired by major platforms, leaving fewer large-scale targets in the market.
• Behavioral Health: Consensus among the panelists was that behavioral health remains one of the most attractive areas for investment. The integration of behavioral and physical health is the “holy grail” of the sector, an area ripe with opportunity but still constrained by operational and structural barriers. Demand remains robust, driven by clinician shortages, regulatory support and persistent unmet patient needs.
• Home Health & Medicaid: As the U.S. population ages, investors are increasingly focused on home-based care models that promote independence and lower the costs of care. Providers will see a flood of demand and PE can offer a valuable opportunity to scale grassroots operations and meaningfully improve patient quality of life.
• Artificial Intelligence (AI): AI was a hot topic of the conference, as discussed further in later panels. However, this panel cautioned attendees about investing in AI at this early stage of adoption. Panelists emphasized that meaningful integration rather than marketing buzz is key to value creation.

The Future of Health Tech

Moderated by Shelley Thomas (Bass, Berry & Sims), this panel featured Tom Cowhey (athenahealth) and Hal Andrews (Trilliant Health), in a discussion about how technology is redefining the delivery of health care services. Panelists emphasized that the definition of “health tech” is continuously evolving related to the provider and patient experience. Cowhey described technology's role as simplifying the provider experience by digitizing records, easing administrative burdens and expanding patient access through digital tools. Andrews urged the industry to reconsider how they think about health care technology, specifically whether its purpose is to fix a structural issue or simply to improve efficiency.

AI & the Provider Experience

AI dominated much of the conversation. Many clinicians remain skeptical of AI tools, particularly when their benefits are unclear or raise compliance concerns. Both panelists agreed that AI's greatest potential lies in highly repeatable, objective processes such as coding, documentation and call center operations. “AI works best where we all agree on the rules,” Andrews said, adding that more subjective decisions should be made by humans. Although ambient AI solutions are emerging and both Cowey and Andrews agree are the future of meaningful change in health, adoption has been slow, particularly among older physicians resistant to change.

Consumerization, Trust & the Road Ahead

The panel also examined the growing consumerization of health care and its effect on patient trust. Cowhey cited data showing particularly low trust among households earning under $100,000, driven by lack of affordability and access. He cautioned that major retail and technology entrants – such as Amazon, CVS and LabCorp – are filling gaps in convenience while fragmenting care. Andrews added that as interoperability expands under the federal TEFCA framework, technology firms like Google are positioning themselves to shape how consumers access and control their health data.

Looking ahead, Cowhey predicted that AI will soon be embedded in most health care technology products, improving efficiency and accuracy. Andrews emphasized that meaningful cost containment will come from state-level, value-based reforms and price controls, not federal enforcement. Both agreed that true progress in health care technology will depend on aligning incentives, standardizing data and restoring trust between patients, providers and payors.

AI in Health Care

Adam Hewson (Deloitte) presented on AI in Health Care. Although AI is not necessarily new, Hewson noted that the tipping point was the release of commercial large language models. Today, the health care industry uses AI at more than twice the rate of the broader economy. While the health care industry has been willing to utilize AI to grow and increase efficiency, it has not come without its problems, such as measuring the impacts of their initiatives and data-related issues.

Hewson outlined three key plays for health care organizations interested in creating value and competitive edge in the industry to consider:

• Efficiency Play: improving operational performance by doing more with less.
• Experience Play: providing fit-for-purpose and customized experiences for patients.
• Capability Play: developing and enhancing enterprise digital and data capabilities that are enabled by generative AI.

Hewson noted that PE firms are now inquiring as to (1) where the information is being used and (2) where the value is being captured. Lastly, Hewson presented several key questions related to AI to consider during the deal process:

• AI in Diligence & Deal Thesis: How are funds assessing AI readiness and embedding genAI into value creation levers during diligence?
• AI as a Strategic Risk Filter: Are there business models at risk of disruption from AI – and how should investors evaluate that threat during underwriting?
• Build vs. Buy Strategy: How should portfolio companies think about buying AI tools to defend margins vs. building to differentiate?
• AI Op Model – Funds vs. Portfolio: What capabilities, tools and governance should reside at the fund level vs. being owned by portfolio companies?

Post-Acute, Health at Home & Hospice: Insights Across the Care Continuum

Kurt Baumgartel (CareRing Health) and Jesse Moore (Care Hospice) took time to discuss growth strategies and issues across the continuum of post-acute, home-health and hospice sectors with Brandon Breslow (Houlihan Lokey) moderating. Despite several headwinds, the post-acute care, home health and hospice space looks to remain a lively market going forward. However, investors will need to prioritize ensuring that their existing infrastructure along the continuum of post-acute care is continuously improving and ready to meet upcoming challenges. The panel primarily focused on growth strategies and hurdles to run a vibrant care coordination model.

The panelists continue to view M&A as a powerful tool for building existing service lines and increasing market density. The panelists stressed, however, that culture and the due diligence process are critical when implementing an M&A strategy. Investors need to ensure on the front end that the culture of a target is congruent with their existing operations. Buyers should identify what is important to their potential targets and assess whether it can be a value add to the seller team. Furthermore, during the diligence process, identifying key compliance issues and clean-up items to address during the integration process is critical. Finally, any M&A plan needs to consider post-closing integration and engagement. Timing is critical, especially when it comes to staffing and open communication with existing employees regarding compensation and benefits should be a priority to ensure a smooth transition.

When asked what keeps the panelists up at night, both agreed that reimbursement and other regulatory changes have led to some market volatility. Additionally, ensuring appropriate staffing levels has proven increasingly difficult. Demand continues to increase as patient populations age; however, nurses and doctors continue to get older as well. Finding the right people for your team will prove to be a significant hurdle in the future. Furthermore, it is becoming more difficult to keep up with increasing wage demands on the non-provider side of the business.

Inside Infusion: Executive Insights on Growth & Regulation

Moderated by Shannon Wiley (Bass, Berry & Sims) and Colby Catania (Houlihan Lokey), Doug Gertner (IVX Health) and Shane Reeves (TwelveStone Health Partners and Tennessee State Senator) discussed key market trends and regulatory challenges in the infusion industry.

Durability at a Premium: Both panelists agreed that infusion companies and their investors should place a premium on durability, especially now that the early growth and consolidation phase is winding down. Investor focus has shifted away from aggressive growth toward insulating key business relationships with payors, referral sources and vendor relationships. The infusion sector is constantly changing with new drugs coming to market and drug coverage expanding. Having a well-insulated company allows flexibility to adjust as needed to be ready to seize opportunities.

Shift Away from Traditional Care Sites: Ultimately, the infusion market is still relatively young. Most infusion therapies are delivered in a hospital and affiliated out-patient department setting (particularly oncology infusions). However, payors are continuing to push for lower cost sites of care like ambulatory infusion centers (AICs) and the home. Additionally, patients typically prefer the convenience and experience of home infusion or a retail-style infusion center. AICs are increasingly becoming the preferred route for payors due to the lower cost, proven safety and ability to monitor patient outcomes in a safe environment.

Continuation Vehicles: A New Prescription for Health Care Investing

Sean Fitzgerald (Houlihan Lokey), Matt Bubis (Kinderhook Industries), Bryan Bylica (Bass, Berry & Sims) and Mike Zeleniuch (Apogem Capital) discussed the role of continuation funds as a new tool in PE's toolbox.

Over the past decade, continuation funds have evolved from a niche solution into a major force in PE dealmaking, with roughly $260 billion raised in connection with continuation fund transactions since early 2023. Once viewed with some skepticism, continuation funds are now recognized as an increasingly mainstream tool for general partners and sponsors seeking to provide their investors with a liquidity option without requiring an exit from any of the fund's underlying investments. Panelists agreed that the continuation fund model's momentum is unlikely to slow, particularly in the health care sector, where the steady pace of acquisitions and the long runway for growth make the continuation fund structure a natural fit for financial sponsors looking to continue their ownership of high-performing assets.

Although other models exist, the most common continuation fund transactions involve the general partner of a fund transferring one or more of that fund's portfolio companies to a continuation fund (i.e., a newly formed SPV managed by the same general partner). Existing limited partners are given the option to “roll” their indirect interests in the subject portfolio companies into the continuation fund or to sell their indirect interests in the subject portfolio companies in connection with the transaction in exchange for immediate liquidity. The cash necessary to fund the payments to selling limited partners is often provided by new investors who were not previously invested in the original fund acquiring interests in the continuation fund. These new investors are often motivated by the ability to buy into a platform or portfolio company with a proven track record under the general partner's management. The sponsor and portfolio company management often are required to reinvest a large portion of their existing ownership and carried interest in the original fund or portfolio company to ensure their interests are aligned with those of the new and rolling investors.

When executed well, the continuation fund structure provides investors with optionality that is typically unavailable in a traditional PE exit transaction (i.e., the ability to elect whether to “roll” or to receive liquidity in respect of the subject portfolio company) and provides sponsors and general partners with an avenue to replenish capital reserves without requiring them to exit successful investments. The panelists emphasized that the benefits of continuation fund transactions in health care are particularly compelling given the sector's sustainable revenue models, defensible cash flows and ongoing consolidation trends. In addition, refreshing a financial sponsor's coffers with additional unfunded commitments can provide additional fuel for the continuation of roll-up or de novo strategies common in health care. However, the panelists also underscored certain strategic considerations and potential risks associated with continuation fund transactions, specifically the possibility for valuation conflicts between selling and rolling limited partners (which often require the general partner to obtain a fairness opinion); the importance of certain disclosures, including of conflicts of interest associated with the transaction (since the general partner is on “both sides” of the transaction); and the potential for confusion or misalignment regarding changes to carried interest and fee structures in the continuation fund. Ultimately, the consensus of the panelists was that continuation funds, when properly governed and structured, offer a durable tool for financial sponsors and fund investors in health care to capture incremental value from proven assets while managing liquidity and timing pressures.

AI in Health Care: Perspectives from Investors & Operators

Moderated by Meredith Collins (Bass, Berry & Sim), panelists Debo Adesina (Albaron Partners), Eric Mattson (Excellere Partners) and Scott Rosen (Transformation Capital) continued the discussion on AI in health care.

Panelists first answered the question of whether AI is overhyped. Panelists agreed that AI in health care is past the novelty phase but still navigating a hype cycle. While acknowledging elevated valuations, panelists emphasized that AI is now structurally embedded across subsectors, and it is here to stay. One panelist zeroed in on AI as an operational imperative: investments succeed when they run efficiently, and where AI reliably delivers efficiency, particularly in revenue cycle and workflow automation, it is no longer optional.

Health care's structural shortages and cost pressures make the sector's need for AI more acute than other industries. With growing demand and a shortage of clinicians, companies that are able to create solutions to address these issues present an attractive opportunity for investors. Panelists all agreed that AI has the potential to be that solution. However, they also acknowledged the risks associated with AI in health care. Highlighted risks include AI's uncertain trajectory, cybersecurity's growing intersection with AI and regulatory velocity. Panelists cautioned against tools that substitute for professional judgment, highlighting patient acceptance and quality standards as gating issues. Additionally, one panelist highlighted the difficulty of successfully integrating AI in the face of opposition from employees, providers and patients. Operational adoption remains the choke point; clinicians are the critical constituency to win over, followed by patient reassurance, supported by training and change management.

The panelists also shared advice from their forays into investing in AI. One panelist favored investing in hybrid models that reach market quickly while iterating. The other panelists favor established cash-flowing platforms that can integrate AI to compress the path from treatment to collections, with targeted use cases in provider enablement, life sciences R&D acceleration and clinician productivity. All expressed skepticism toward point solutions like scribing, preferring more dynamic platforms, such as vertically integrated RCM. The most attractive AI platforms have defensible data, quality business models and “good neighborhoods,” meaning subsectors like pharmacy and payor services that have an appetite for innovation.

When asked to predict what successful investment in AI will look like in five years, panelists concluded that discipline would differentiate winners: start with the biggest budgets, solve specific high-value problems, move with velocity and secure distribution. Firms not over-rotating to AI, but methodically integrating it where it drives measurable outcomes, are best positioned.

Emerging Company Spotlights

Throughout the day, conference attendees also heard from some of the nation's most exciting emerging companies who are deploying unique models to shape the delivery of care.

Brim Analytics is a software platform that uses AI to automate and accelerate the process of chart abstraction, which involves extracting structured data from unstructured clinical notes. It is used for medical research, clinical trials and tumor registries by combining large language models with user oversight to ensure accuracy and traceability.

PathPoint Health is a specialized clinic focused on improving metabolic health and preventing chronic conditions by providing integrative, whole-person care. They create personalized care plans tailored to goals such as weight management, blood pressure control and cholesterol improvement.

Spiras Health is a nurse practitioner-led care provider that brings specialized clinical services into the homes of individuals with complex chronic conditions. They use in-home assessments, telehealth, remote monitoring and regular clinician touchpoints to manage patients with conditions like COPD, CHF, hypertension and diabetes. Through predictive analytics and attention to social determinants of health, they partner with health plans and providers to reduce hospital and ER utilization, enhance care coordination, improve medication adherence and lower total cost of care.

Fireside Chat: Health Care Policy – A Look Ahead

Adam Boehler (Rubicon Founders) closed out the conference alongside Angela Humphreys (Bass, Berry & Sims) in a wide-ranging conversation on health care policy. Drawing on his experience serving as the director of the Center for Medicare and Medicaid Innovation, as well as the Senior Advisor for Value-based Transformation to Health and Human Services Secretary Alex Azar, Boehler commented on the future of health care policy, focusing on collaboration between the public and private sectors, value-based care and AI.

When asked about the recent trend of state governments passing laws aimed at limiting PE involvement in health care, Boehler framed the current federal policy environment as focused on fraud, waste and abuse rather than on PE as a class. In his view, tax status is not a proxy for value: investor-backed companies and nonprofits alike should be judged against the same performance standard. Against that policy backdrop, the discussion turned to how government and industry can partner effectively: Boehler pointed to COVID-19 as a case study in effective public–private collaboration, with the federal government best suited to set rules and operate at scale while the private sector delivers operational execution. Early efforts to address the pandemic—like federally staffed testing sites—were not scalable because the government's role is to enable and enforce scale, not to drive market efficiency. He noted that durable collaboration tends to occur where solutions can impact large “wholesale” problems, not one-off complaints.

Speaking of value-based care, Boehler rejected the “VBC is dead” narrative. He emphasized bipartisan continuity across administrations and steady expansion beneath the headlines, although urging a reconsideration of financial capitation and a renewed focus on patient choice. Capital markets, he observed, have rotated from rewarding growth-at-all-costs to profitability, creating opportunities where public markets underpriced long-term stability. Investors should avoid crowding into consensus subsectors and instead look for less trafficked areas where they can hold patiently and create operational edge.

Boehler closed by sharing advice for investors in the health care market, with a focus on navigating AI disruption. He predicted that AI would have an internet-like adoption curve: durable platforms, early failures and reinvention, with regulation shaping but not stopping innovation. He noted that there is an opportunity to enhance diagnostics by integrating lab testing, radiology and AI. Boehler sees technological advances in diagnostics as a pathway to address workforce constraints and shift medicine toward cross-disciplinary collaboration and earlier, more precise intervention. He urged investors to use AI to elevate teams to higher-order work, prepare for turbulence and build durable value at scale, where government collaboration is most effective and policy tailwinds are likely to persist.

Key Conference Takeaways

In summary, the health care industry remains an attractive opportunity for savvy investors. Below are some of the critical takeaways from the conference.

• The M&A Market Is Normalizing: disciplined sourcing, realistic valuations and operational excellence are differentiators.
• AI Is Moving from Hype to Utility: prioritize rules-based, repeatable use cases with clear ROI; wining clinician trust will be key to its expansion.
• Continuation Funds Are Becoming Standard: aligning valuation and design governance for durability is critical for success.
• Talent & Reimbursement Remain Binding Constraints: build resiliency into staffing models and payer strategies.

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