
The UK physiotherapy and MSK market has seen considerable change in recent years.
A number of the largest operators have recently received private equity backing, as investors are attracted by strong market growth drivers.
Unlike many other areas of the healthcare market where private equity activity is prevalent however, the UK physio market has not seen the same number of “buy and build” strategies deployed by PE-backed players.
Of the five key operators who have received private equity investment in recent years, only Sano have undertaken an aggressive acquisition strategy, with the others less active from an M&A perspective.
This is largely due to the fact that market trends have allowed these larger operators to grow organically, without the need to lean on acquisitions to deliver a successful growth strategy.
The core physio/MSK market has seen expansion through continued growth in outsourced NHS services, combined with strong demand from the PMI market, and a greater focus on MSK conditions amongst employers.
As a result, the major operators have been successful in achieving significant contract wins from the NHS, large insurers and corporates, providing strong contracted revenue streams. This has also led to service diversification, with most major operators now providing mental health services and psychological therapies, with some moving further afield into clinical specialisms such as dermatology, ophthalmology and diagnostics.
This is creating an interesting dynamic, where the service offerings of these operators is starting to converge with PE-backed providers of other community-based clinical services (such as ophthalmology and diagnostic imaging), as platforms originating from different niches look to capitalise on the increasing use of outsourcing by the NHS.
This could create opportunities for the merging of complementary community-based healthcare providers in due course, providing interesting exit options for the incumbent private equity houses.
Aside from service diversification, digital offerings will be key in creating efficiencies across MSK care pathways in both the NHS and PMI market in the future. Independent technology platforms such as Phio from EQL, Physio Wizard and GetUBetter are growing rapidly through the provision of software directly to the NHS and insurers, as well as by partnering with the large PE-backed operators. These technology platforms may themselves become targets for mid-market private equity in due course as they continue to scale.
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