Last week, the LevinPro HC editorial team sat down with Nick Donkar from the Healthcare Services Deals team at PwC, which provides a wide range of services and solutions to help payer, provider, pharmaceutical, life sciences and medtech organizations innovate, transform and grow. Our conversation explores the trends shaping the healthcare M&A market and what the rest of 2025 might look like for the industry.
Would you be able to walk us through your background and your role at PwC?
I have 25 years of experience with public accounting, 24 of those at PwC and its deals practice. I am the Health Services Deals Leader for the United States, where we work with clients of all types, including payer, provider, private equity, for-profit, and not-for-profit, with both buy-side and sell-side services. We complete the due diligence for financials, taxes, billing and coding contracts and the full operational gamut.
With the first quarter done, how did the first quarter of 2025 look?
We judge the health of the market by volume more than value, analyzing the tailwinds and headwinds that drive activity. From that perspective, the first quarter of 2025 was another reminder of how resilient the healthcare market is, especially in our post-COVID era. The market is still down compared to the COVID-related highs of pent-up deal-making, but thanks to some strong tailwinds, we’re still seeing transactions happen. Extensive capital has been raised to invest across all verticals. Tariffs have taken a hit at corporate balance sheets, but right now, it seems like they’re still strong enough to do strategic reviews and make investments. And lastly, we have private equity firms, which effectively participate in 40%-50% of healthcare transactions on an annual basis.
We’re going to circle back to a few of the points you brought up in a bit, but let’s expand on your idea of volume vs. value as a barometer for the market, something you’ve explored on PwC’s Next in Health podcast as well. Why do you see volume as a more important indicator of market health than value?
For me, volume is a really important measurement of market health because it shows that people and business owners are willing to trade assets. If you remember during the height of COVID in 2020 and early 2021, everybody just clenched up. They didn’t know if they were going to get financial funding to leverage a transaction or find any willing buyers. The market stalled, and it was a tough period for everyone in the business. For people like me in the industry, we relish volume.
But when the market opened, deal activity surged to historic records. The willingness of people to trade assets shows there is investor interest, which can lead to innovation and market growth. Mega deals are important, and can point to larger trends in the market and economy, there’s no doubt about that. But we mainly see those in healthcare adjacent areas like medtech and health tech, which have different business models than providers
Back to private equity. Although private equity still remains one of the most active investor types in the market, there has been a trailing decline in the past 12 months, at least according to the data we’re seeing. Can you piece together an explanation for this trend?
I can speak to some of the larger market conditions that can explain this. Some of the headwinds we’re seeing relate to legal and regulatory reviews at the national level for antitrust matters, coupled with state-related initiatives to look at and provide incremental layers of review on approvals for transactions in certain states, like New York and California. And then you got what I call market uncertainty, which can relate to anything from reimbursement changes to the level of interest rates. You’re always going to have uncertainty, but there has been a lot of disruption recently, whether it’s high interest rates, tariffs, or shifting reimbursement models.
The LevinPro HC team reviewed the most recent US Healthcare Consumer Insights and Engagement Survey from PwC, and this stat stood out to me: 65% don’t seek care until it’s urgent, especially for Gen Z and Millennials. To me, that sounds like very low utilization due to issues surrounding costs and access, and that sounds like a big issue that’s not getting enough attention. What are some ways providers are addressing these issues? And what are some ways you think providers should be addressing these issues?
That’s a great question. As we all know, the vast majority of the discussions in dealmaking focus on the aging population, such as baby boomers. I don’t think I’ve ever seen one that talks about increasing utilization for younger generations. In some ways, that makes sense. You want to be focused on the finite population that is going to be using your services regularly. But then you miss this younger generation, whether that’s due to coverage or cost, or just the characteristics of those demographics and generations. They only come in when it becomes urgent. I think some of that reflects just the care of delivery in the United States; it’s not focused on preventative care. It’s focused on fixing a problem and not fixing the underlying issues that are there. The stat is alarming, and it is something we should be thinking about when we are designing our care models. Are we implementing telehealth and mobile options? Are we meeting these patients where they are?
There has been a lot of news and market chaos surrounding the new tariff policies. How does this affect the healthcare industry, and do any of these changes affect your outlook for the rest of 2025?
It’s interesting because we often think of healthcare as a very domestic industry. But tariffs will have an impact on the industry, which, by extension, impacts what we do and the healthcare M&A market in general. Think about health systems, for example, which already have thin margins. Think about all the equipment they need to be: gloves, hospital beds, medicine, needles, you name it. Most of that equipment, if not all of it, is manufactured abroad, and those costs are going to go up under these tariffs. I’m not a prognosticator, and I don’t think any of us knows how this is going to play out, but I can see this being another challenge for providers to deal with.
With that being said, I do think the market is resilient, and I do believe there are still strong tailwinds in the industry that will help healthcare keep growing. I’m confident about this year, and I think people are ready to make deals happen.
