Building on our initial overview of McDermott Will & Schulte‘s Healthcare Private Equity Miami conference, we are taking a deeper dive into the key panels and strategic dialogues that defined the event.
It should be noted that the media at the conference were bound by the Chatham House Rule, so we will refer to speakers anonymously.
A common theme that ran through multiple panels was that the 2026 market is drastically different from the market environment of previous years. While most experts offered an optimistic outlook for the remainder of 2026 and into 2027, others countered with a more cautious perspective given the market’s struggles over the past year.
Despite healthcare fundraising being down 14% from $490 billion in 2024 to $508 billion in 2025, the industry is still sitting on a mountain of dry powder. However, as several panelists addressed, this liquidity isn’t flowing as freely or as quickly as it did 2-3 years ago, reaching its lowest recorded level since 2020. There are significant constraints that continue to stifle cash flow, particularly in sectors suppressed by austere regulatory oversight and heightened reimbursement pressures.
However, one speaker from a private equity firm serving the lower-middle market noted that, in a year-over-year comparison, the number of fund closings remained relatively stable at approximately 1,600, a 2% decline.
“Not all was lost in 2025,” the panelist said. “As we emerge into 2026, there are slightly more than 4,000 funds in the North American market actively fundraising.”
Another way that the market has changed is that the bid-ask spread persists. Driven by a misalignment between seller and buyer valuations, the spread has become an obstacle for deal flow. To bridge the gap, the structure of deals has expanded beyond traditional M&A to scale and diversify assets, including joint ventures, partnerships and other arrangements. Additionally, diversification has become a key factor in ensuring valuations match expectations, as it provides stronger revenue streams.
“Deals fall apart easily; creativity is a must,” said a speaker. “Assets are being engaged again with different transaction structures.” The diverse deal structure has benefited strategic buyers, which, unlike private equity groups, have a lower cost of capital and greater flexibility in their offerings.
Several industry leaders also spoke to the idea that as more and more assets mature, exit strategies have shifted to accommodate going to market more than once.
“Coming to market the second time is the new black,” one speaker quipped. “The stigma around renegotiations is less intense than it used to be. It’s less about not hitting numbers and more about going to market with confidence; anyone can buy assets; it’s really hard to sell assets.”
While there is still capital to deploy and assets to bring to market, deal flow has tempered as investors prioritize methodical, slow processes over speed. But, due to the innovative deal structures and renegotiations, panelists were hopeful that deal activity would remain strong for the next few quarters.
Building off of the optimism, “What’s hot right now?” was the question on everybody’s minds. While opinions varied on which sectors would see the most growth, a clear consensus was reached: tech-enabled services and outpatient care are currently driving the most intense deal activity.
The tech-enabled services include medical technology, AI, pharma services (such as contract development and manufacturing organizations and contract research organizations) and healthcare IT. The outpatient services are broader but include physician medical groups, ambulatory surgery centers, imaging services, home health and post-acute care.
The interest in medtech is multilayered: there’s massive innovation and growth potential, new assets are being brought to market at lightning speed, the ROI is strong and there’s a global presence. For the rest of 2026, industry experts anticipate that medtech will be an even greater priority for investors.
“Pharma services will continue to be very hot,” a speaker from an East Coast private equity firm noted. “Clinical trials and R&D funding continue to be robust; you’ll see a lot of tailwinds across the value chain.”
Driven by robust infrastructure and aggressive government interest, momentum in the pharmaceutical and pharma-services sectors is expected to grow. Western companies are increasingly looking to the East for innovation, licensing pharmaceutical assets from dominant Chinese and South Korean firms for distribution in the U.S. and European markets. The change is more than just geopolitical; it is a strategic play to be on the ground floor of innovation. By securing high-demand, innovative assets early on, investors and operators are not only broadening their global clientele but also increasing their value. In a market where ROI is driven by portfolio sophistication, being the first to bridge Eastern innovation and Western distribution is the ultimate value-creation lever for future exits.
“I view medtech as a defensive space, with a high floor and maybe a lower ceiling,” said a panelist from an eHealth-focused company. “Valuations are probably at some of their most compelling they’ve been in one long time because growth rates are coming back.”
While the medtech space is valued for its innovation, outpatient services are valued for their stability and consistent patient demand. Their resilience is driven by an aging population that requires more care and is seeking alternative ways to receive it.
“I think Home Health will get a lot more attention in the next several years, as more and more services are moving to the home,” said one speaker from an advisory firm. “Virtualization of Home Health is in its infancy right now,” she said, hinting at how the growing utilization of telehealth services will benefit and bolster home health care as more and more patients are unwilling and unable to receive care elsewhere.
“Infusion is very interesting; it’s a combination of both being a provider as well as having the pharmacy angle to it,” noted a panelist, highlighting the importance of diversified care structures. “Its unique position will continue to take advantage of the demographic shift.”
Sitting at the crossroads of clinical services and pharmacy logistics, infusion is a model of healthcare that moves outside traditional hospital and inpatient settings to accommodate shifting patient demands.
Much like Home Health and Infusion Services, Physician Medical Groups remain a cornerstone of investment activity. While the rising demand for care isn’t a new revelation, much of the sector’s activity is fueled by physicians seeking more stable working environments.
“We’ve seen a real structural shift for how physicians are employed; 12 years ago, 26% of physicians were employed by hospitals and now, that’s over 50%. And there’s another 20% or so that are in corporate practice entities,” said a panelist from a nationwide private equity firm.
With this shift, dealmaking has become more active and will remain so, even if there are slight changes in where deals are concentrated.
A representative from a nationwide investment firm spoke with the Levin team in a private conversation about market saturation among physician group investors. They anticipated that activity would continue to be defined by localized density rather than broad geographic expansion. Instead of entering new markets, investors are expected to expand their presence in existing markets to leverage brand recognition and ensure operational stability. This selectivity is paired alongside a potential transition away from growth through M&A and towards more organic and de novo growth, focusing on extending ancillary services.
Yet, not all outpatient care service sectors were seen in such a positive light. Behavioral Healthcare, for example, emerged as a notable outlier, struggling to gain the momentum industry leaders had hoped for.
“Behavioral is a very hard sector. There’s obviously the need, but the capacity of professionals in spaces is limited with reimbursement dynamics notwithstanding mental health technology,” noted a speaker from an investment firm. “However, considering its high demand and social good, we’re shocked to see it so low.”
The disconnect between high demand and low investment underscores a broader search for efficiency and stable ROIs, which could be helped by technology.
In October, at the Healthcare Private Equity New York conference, also hosted by McDermott Will & Schulte, much of the conversation about AI focused on the fact that, despite its slow integration, it remained a fundamental aspect of the healthcare market.
While its relevance has not tempered, this time around, the conversation showed more hesitancy and concern as a paramount hurdle remains: how do investors value AI implementation into healthcare businesses?
Right now, AI is valued for its utility and ability to provide back-office administrative and automation services that allow physicians more time with patients and increase revenue. But that doesn’t guarantee smoother implementation or even financial gains.
But, it is no surprise that revenue cycle management dominated the AI conversation, as it represents “low-hanging fruit” for AI integration. However, forward-thinking investors are already looking beyond administrative applications of AI and thinking about its untapped potential in the clinical and diagnostic markets. As more sophisticated AI assets begin to move forward to market, they are expected to impact deal flow.
“I’m actually pretty excited about the space,” said a panelist who works with a middle-market advisory firm. “If you’ve got an asset that’s AI native that has a strong competitive mode proprietary data set and then you layer on the complexities of the healthcare space is going to show some resilience”.
Yet, while there are multiple clinical and diagnostic uses that could benefit the market, integration has been slow due to concerns raised by investors and patients. Regulatory gaps, transparency issues, and data/privacy concerns, compounded by high implementation costs, have fueled investor fears that patients won’t adopt AI. There have also been some regulatory concerns.
“States are coming out with some pretty rigorous regulations limiting the ability of providers to use AI to do even things like just offering consolation and emotional support,” said one speaker. “In California, there’s the California Privacy Rights Act that has rules on how you can use data. In Colorado, there’s a law that’s going to also regulate automated decision-making in AI.”
While these laws are designed as protective safeguards, they introduce a layer of operational instability that investors must account for during the due diligence and acquisition process. By taking into account laws such as these, the deal procedures may be slowed down.
Even though industry leaders presented several concerns surrounding the health of the market throughout the conference, an air of optimism remained. In the second half of 2026, medtech and outpatient services are anticipated to command investors’ interest, as deal structures become increasingly innovative.
