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Welcome back, we are onto part III of my Private Equity rollup pieces.

We’re moving our attention to Urgent Care.

This is one of the more mixed bags industries I’ve taken a look at so far. There were a ton of PE-backed vet horror stories in my initial deep dive a few months back. But for Urgent care centers, I found a mix of positive outcomes, plus negative outcomes. Given the industry is rapidly growing (particularly in rural areas) and because some of these visits are lower costs to begin with, we might be seeing some more favorable outcomes for the consumer than healthcare centers that run up higher bills. The biggest risk IMO from PE investment in the space is 1) lower/worse staffing that drives 2) misdiagnosis.

A quick note before today’s piece:

Let’s get into it:

Urgent care new builds and tuck-ins have been rapidly transacting over the past 15 years. The U.S. urgent care market has expanded from 6,400 centers to over 14,000 since 2014 due to demand from rural hospitals closing, an increase in urgent care insurance claims, and a change in consumer preference to same-day doctor access. It is estimated that 18% of the 14,400+ urgent care centers in the U.S. are backed by Private Equity, a 11% increase y/y. Urgent care centers are either a way to treat non-life-threatening visits, or to serve as a funnel for hospital systems and primary & specialized care.

Urgent care rollups started scaling up in 2010, with large platforms following the classic rollup thesis of acquiring lower-multiple independents and expanding margin with scale. PE investments in urgent care totaled 182 deals from 2012 to 2022, or nearly half of all transactions in that time period, according to the University of California at Berkeley. There was a lot of growth into rural areas that lacked hospitals, Medicaid populations, and other services integrated into locations. Rural areas can be pretty attractive for Sponsors due to 1) low competition 2) lower rent and expenses compared to urban areas and 3) higher visits due to really being one of the few locations to go to, with a limited hospital or primary care competitive footprint.

While 18% of urgent care ownership are reportedly owned by PE groups, 40% are owned by, or in affiliation with, hospitals, owned by corporate entities such as health insurers like UnitedHealth Group which owns MedExpress. The top 10 providers are estimated to have ~20% market share. Hospitals are starting to buy more urgent care facilities because they’re realizing that integrated platforms are the best way to acquire and serve established patient bases and have a funnel for new patients to treat.

Urgent Care Ownership created a map of 1,886 urgent care centers owned by PE across the U.S. Urgent care centers have probably hit a ceiling in urban markets, so PE has increasingly expanded to rural markets with a need for treatment and lax regulatory frameworks.

Urgent care visits are thankfully not necessarily hospital level visits, but it’s the first stop when something is going wrong.

A lot of my trips been have geared towards “Do I have Covid?” or a stress-induced situation where my head wouldn’t stop throbbing back when I was in Credit. These are all times when you’re time crunched, vulnerable, and just need to race in and see someone. The stakes are high, so there’s some pricing sensitivity associated with that, but also potentially more availability.

“Funny” enough too, a lot of urgent care centers that saw an influx of new folks come in from covid saw decent retention and patients returning. No appointments are needed, operating hours can be lengthy, and waiting times can be lower.

Here’s a look at the platforms. There is a shocking amount of rollups and new-builds in the space:

Beyond this list, there’s been some bigger “success stories” with Concentra and CityMD.

Below are the specific locations that Urgent Care Ownership is tracking:

Tuck-in acquisitions are reportedly done at 4x-5x EV/EBITDA multiples, but I’ve seen Alan Ayes argue that these smaller chains (3-5 locations) can be done anywhere from 3x-7x EBITDA.

Meanwhile, the platforms (50+ locations) can transact at 10-15x.

According to research from the Journal of Urgent Care Medicine, some of the fastest-paced growth, has been in poorer and unhealthier southern states.

Given these competitive dynamics, the non-discretionary nature of having to visit urgent care, multiple arbitrage opportunities as you grow from a smaller chain to a platform, and relatively good cash collection, PE has naturally circled this industry like vultures.

From a synergy and profit expansion standpoint, some of the easiest cost save comes from staffing teams with nurse practitioners and physician assistants instead of doctors.

But the reason why I started this series is because I believe a lot of Private Equity cost-cutting is about making things look good on a short-term basis as you look to sell the business in 3-5 years, but in a way that degrades the business long-term. While I expected to hear some anecdotes re: that when googling around, I was really shocked by this post from reddit…

It’s clear that some of these businesses will look to increase profits by the following levers:

When investigating some of the problems at Urgent Care, the following potential problems continuously came up:

A peer-reviewed study of 300 urgent care referrals to the ER found 64% came with the wrong diagnosis and 55% didn't need ER care in the first place. This is why it’s a problem that most urgent cares are staffed by nurse practitioners and physician assistants who often don’t have physician supervision.

In one misdiagnosis, a man had a $27mm lawsuit against UnityPoint Clinic for misdiagnosing bacterial meningitis as the flu, that led to permanent brain damage and physical limitations. UnityPoint Clinic is owned by UnityPoint Health, a tax-exempt non-profit.

In another misdiagnosis, I found, a patient was able to get a nearly $800k settlement after being misdiagnosed for Lyme disease at a Patient First urgent care.

Surprise Billing Examples: A $1k bill he thought was covered: In 2021, a visit to CityMD for a 5-stitch biking accident turned into a surprise $1k bill after the center brought in an out-of-network plastic surgeon for treatment. According to the patient, the center said: 'Oh, yeah, they should be covered. He does this, he comes here all the time.'"

This quote stuck out to me: "It really irked me that — it's this classic thing you hear in this country all the time….When you do all the right things, ask all the right questions and you're still hit with a large bill because of some weird technicality that there's absolutely no way for you to understand when you're in the moment."

Employees complain as well: You can see the complaints across urgent care centers quite clearly on Indeed, where many of the workers at these centers have complaints about working at these firms:

One of the themes I’m continuously finding when digging into healthcare services is that a lot of the employees are facing burnout and depression from their careers. This is amplified when they feel like they’re severely underpaid. As someone who lives in “Real America” now, I’ve been floored with how little healthcare professionals can be paid relative to the hours and work they have to go through.

Naturally, we have to cover both sides, and some executives have said that PE investment has really propelled them to invest in new technology, invest in staff, and to let the industry specialists do their own thing and expand the business, acting as a shoulder to lean on when advice or capital is needed.

The other argument is that PE identified that rural communities weren’t being served with enough healthcare services, so they stepped in. I think that’s fair in many ways; with hospitals too far away for many folks, there was a clear void to fill in many rural areas. These new clinics served folks, while not overwhelming hospitals.

One of the areas we’re going to have to go deeper on in another post is looking at PE-backed emergency rooms, because while PE-backed Urgent care involvement is probably going to become more of a concern as it consolidates, PE has arguably been more of a tailwind for serving folks due to the industry being at an expansionary stage. BUT - I don’t think the medical care is necessarily good enough - downskilling your staff seems like the most clear-cut way that misdiagnosis can occur. Incentive systems where you’re trying to limit the time spent with patients (get them in and out the door as fast as possible) and where the diagnosis provided by medical professionals is more surface level can lead to patients paying the ultimate price. PE-backed locations dominating a certain market is what concerns me, but it also seems like consolidation of these semi-fragmented platforms is what’s coming next.

I’m a firm believer that short-term profit maximization incentives eventually leads to hollowed out, worse long-term businesses. One of the trends we’ve been seeing in the public markets lately is that a lot of PE-backed companies that are going public are not being well received by public market investors. This isn’t the case for everyone, but even the Medline IPO which had a decent start has now cooled off.

Limited competition, and misdiagnosis from having lower-cost/less-educated medical staffing are the biggest problems to me when looking at this pocket of healthcare.

While I flagged the perceived and real negatives here, I’m frankly very glad that I didn’t have as many negative anecdotes to share as I’ve found in other healthcare deepdives.

That leads me into another part of PE Healthcare involvement that I read recently:

I want to take some time to extend out beyond PE-backed urgent cares and look at Private Equity involvement in the ambulance market as well.

Matt Stoller and Dan Geller had a great piece recently called “Emergency Prices: How Private Equity Captured the Ambulance Market” that I’m referencing, so I’ll refer you all to their great work here.

Ambulances aren’t as easily constructible as cars, there’s a lot of nuance and life-saving equipment embedded with these vehicles to help save lives.

There’s also a ton of wear-and-tear on these vehicles given the high stakes. These vehicles are racing and stopping/starting as they race to transport people to hospitals and have an expensive truck-esque chassis as a result. And naturally given how fast these ambulances are racing on the open road, they’re more likely to crash.

The average ambulance only lasts 5-7 years due to wear and tear from work miles.

Obviously, this is passed onto the consumer. In 2023, Evanston, IL raised its ambulance fee from $1,500 to $2,000 with an additional $15 mileage charge.

A bigger problem post-covid too is getting your hands on a new vehicle.

These vehicles face lengthier than usual backlogs because of production bottlenecks. There’s a lot of materials and labor shortages that many industries have seen since covid.

This is a broader problem, with other emergency vehicles like firetrucks and evac helicopters also consolidating.

One name that stands out in particular is REV Group, which went on a growth spree starting in the mid 2000s after getting acquired by American Industrial Partners. REV Group merged with Terex in February 2026. While total market share is not clear, REV’s market share may have been close to 70%, but the last confirmed datapoint was 44% in 2017.

REV Group had $4.B in vehicle backlog, due in part to some of the semi and chassis shortages we brought up earlier. This is leading some municipalities to just try to buy a new chassis instead of a new truck, but if replacing the chassis is expensive then you’re only buying time. However, I totally get it given the two-year backlogs.

The other big consolidator is DBCM, a merger of Demers Ambulance Manufacturer and Braun Ambulance, Crestline Coach, and Medix Specialty Vehicles from 2018 and 2021 acquisitions. Following the announcement, they said more than 1/3 of ambulances in North America were built in a Demers manufacturing facility, implying that overall, REV group and DBCM pretty much dominate the entire market.

I don’t want to steal their thunder, their article is here, but while I was digging around I also wanted to spend some time talking about how disconcerting this whole thing is

Until next time.

-Harry

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