Price Transparency Is Reshaping the M&A Playbook for MSOs and Private Equity Investors

Private equity (PE) firms and management services organizations (MSOs) have ignited a wave of physician practice “rollups,” i.e., consolidating many small provider groups into larger enterprises. In specialties from dermatology to cardiology and orthopedics, these rollups promise efficiencies and market power. A game-changer in this arena is the Transparency in Coverage (TiC) data now available. This price transparency data comes in massive machine-readable files of insurer-provider negotiated rates now enables unprecedented analysis of how provider payment rates stack up across a market. In this post, we’ll explore how PE acquirers and MSOs can harness price transparency data to benchmark provider rates, assess market saturation, and inform strategic valuations. We’ll also look at real-world specialty rollup examples, connecting technical rate analytics to high-level market strategy.

The Transparency in Coverage Data Revolution

For decades, negotiated payment rates between insurers and providers were shrouded in secrecy. Today, TiC rules require health plans to publish detailed price data, disclosing in-network negotiated rates for all covered services (as well as historical out-of-network allowed amounts) in machine-readable files. Starting July 2022, virtually every payer-provider rate combination became publicly accessible, albeit buried in terabytes of JSON data across thousands of files, many of which were malformed, completely inaccessible, or just plain wrong. In summer of 2024 this started to change, and since then the data has become increasingly valuable for market analysis.

Why does this matter? It means that a PE firm evaluating a practice acquisition can now look up exactly what that practice is paid for each service by each insurer, and compare it to competitors. Instead of relying on anecdotes or Medicare benchmarks alone, we have granular, negotiated rate data by CPT code, by payer, by provider. This data flips the information asymmetry: historically only payers knew the full landscape of prices, but now providers and investors can see where they stand. As Milliman analysts note, price transparency data “reveals the actual contracted rates across all services and competitors”, which can anchor negotiations and strategy. In short, price transparency data lets you see forward - it shows what payers have agreed to pay each provider, giving a clear view of rate positioning across regions, specialties, and networks.

However, using price transparency data is non-trivial. The files are massive and messy, requiring significant data wrangling and aggregation before insights emerge. For example, one large insurer’s file can exceed 1 TB, with rates encoded in complex structures (sometimes “$X + 125% of charges” rather than a simple dollar fee). At Gigasheet we use advanced tools like cloud data warehouses, AI-driven parsing to standardize these into usable tables (e.g. one row per provider, per procedure, per payer). We also filter out “zombie rates”, which are contract artifacts or placeholder values that appear in files but do not reflect real-world reimbursement, using statistical models to ensure only active, relevant rates are analyzed. Despite these challenges, the payoff is huge: stakeholders can for the first time benchmark competitive reimbursement rates across a spectrum of services in the market. In practical terms, TiC data can be turned into dashboards showing that, say, Cardiology Group A is at 110% of the market’s average for echocardiograms, while Group B is at 150%. Such intelligence is gold for anyone evaluating mergers or negotiating contracts.

Rate Benchmarking: Identifying Under- or Over-Performing Providers

One of the most direct uses of price transparency data for PE acquirers is rate benchmarking. For example, How do this target practice’s payment rates compare to peers? Before the TiC rule, a buyer might only guess or rely on Medicare fee multiples. Now, with some data crunching, they can quantify it: e.g., “Dr. Smith’s orthopedic clinic is paid 20% below the median commercial rate for knee surgeries in the region.”

This kind of insight can justify a rollup thesis. If a practice’s rates are significantly lower than competitors, a PE sponsor sees an opportunity: acquire the practice and use the larger entity’s leverage to negotiate higher, “market rate” contracts. In fact, researchers hypothesize that price transparency helps PE firms “identify providers offering relatively low prices” as attractive targets. The strategy is to buy low-priced providers and then “use the newly available average or typical market price as a reference to negotiate increases in the low prices of the acquired practices.” In plainer terms, if the market average for a certain procedure is $1,000 and our target clinic only gets $700, the PE owner will push insurers toward that $1,000 benchmark in the next contract cycle. This contract leverage from consolidation is a core rationale for rollups.

Of course, price transparency data also reveals the opposite scenario: a practice might already have above-market rates. If two such high-priced groups try to merge, insurers (and regulators) may balk, fearing even greater pricing power. Antitrust concerns can be informed by analyzing price transparency data showing a combined entity would command outsized rates. Indeed, federal agencies recently warned that “private equity-acquired physician practices increase prices 4% to 20%” on average, and that through roll-ups, PE firms enhance monopoly power and raise prices for consumers. Price transparency analytics arm regulators with hard numbers to assess these claims. For a would-be acquirer, this means deals involving already-dominant groups must be approached carefully and justified with quality or efficiency arguments rather than rate gains alone.

Example: Modeling Revenue Upside via Rate Increases

To illustrate, consider a hypothetical orthopedic practice (“Provider A”) being evaluated for acquisition. Price transparency data shows Provider A’s reimbursement rates are lower than a larger competitor (“Provider B”) in the same market. Suppose Medicare’s fee for a given service is used as a baseline:

Table: Hypothetical rate benchmarking for Provider A vs. Provider B. Provider A’s contracted rates are well below Provider B’s. If an acquisition enabled Provider A to negotiate up to Provider B’s rates, annual revenue could increase substantially (e.g. ~$200K more from office visits alone, a 40% jump). This demonstrates revenue impact and contract leverage gained by achieving “upper-tier” reimbursement rates.

In reality, such straightforward gains aren’t guaranteed. Of course payers will resist large hikes, but transparency data equips PE firms with concrete targets and talking points for negotiations. They can go to insurers armed with market data: “Our rates are in the 20th percentile; even after a 15% increase we’d be just average for this service.” On the flip side, if an MSO sees that a practice is already at the 90th percentile, they might project little headroom for further increases, tempering what they’re willing to pay for that practice.

Market Saturation, Concentration, and Using Atlas Data

Beyond individual rates, price transparency data combined with other sources can signal market saturation and consolidation levels. A key question: How fragmented or concentrated is the specialty market in a region? If one or two platforms have rolled up a large share of providers, they may already enjoy high rates, and further rollups could face diminishing returns or regulator scrutiny. Conversely, a fragmented market with many independents may be ripe for consolidation.

Market concentration can be partly inferred from rate patterns. For example, if transparency data shows all orthopedic surgeons in one city getting very high rates (say 180%+ of Medicare across the board), it might indicate a de-facto oligopoly of one dominant group commanding premium prices. If, instead, there’s wide variation (some at 120%, others at 180%), the market is still competitive or segmented. This provides an opening for a rollup to bring the lower-paid under one umbrella and level-up their contracts.

To enrich this analysis, supplementary data sources come into play:

• CMS Medicare datasets (e.g. 5% sample files) can provide service volume estimates by specialty. While transparency data distilled from machine-readable files tells us the price per service, Medicare data (or other claims samples) tell us how many of those services a typical provider performs. This is crucial to model total revenue impact (as we did in the table above). For instance, Dartmouth Atlas or Medicare data might show an average cardiologist performs X echocardiograms a year; combined with TiC rates, one can compute annual revenue and how it would change at different rate levels.
  
  
• Dartmouth Atlas of Health Care offers insights on regional supply and utilization. It can highlight, say, that Miami has twice as many dermatology visits per capita as the national average, or that a given region’s specialist-to-population ratio is very high. Such metrics act as a saturation gauge; if utilization is already sky-high, payers may be particularly aggressive in rate negotiations, fearing overuse. Market saturation can also be proxied by percentage of providers already consolidated: e.g., if 80% of gastroenterologists in a city are under two PE-backed networks, that market is highly consolidated (and likely commanding top-tier rates), whereas a market with 90 independent GI docs out of 100 is still open season for rollups.
  
  

Real-world example: In dermatology, as of the late 2010s, “the majority of dermatologists still operated in solo or small groups”, but private equity was quickly changing that. By around 2021, an estimated 14% of U.S. dermatologists were employed by PE-backed practices. In states like Texas and Florida, PE-backed dermatology chains acquired dozens of clinics, rapidly increasing regional concentration. Price transparency data from payers in those states might show dermatology rates creeping up as consolidation progressed. A payer or antitrust analyst could map negotiated rate increases alongside the timeline of acquisitions. In fact, a recent federal report noted that by 2020, PE-backed firms owned more than 30% of physicians in ~13% of metro areas and explicitly linked roll-ups to higher prices for patients.

For an investor, knowing the competitive landscape helps strategy. If “only one or two big players control a market,” a new rollup might face steep buy-in costs or pushback. If a market is fragmented, a “tuck-in” acquisition strategy can be pursued more freely. TiC data can act like competitive intelligence, revealing which groups have the richest contracts (often the larger, established consolidators) and which independents are lagging. That in turn hints at who might be feeling pressure to join a bigger entity to survive.

Strategic Valuation: Data-Driven Deal Rationale

All these analytics funnel into the ultimate question: what is this practice worth, and how will a rollup create value? PE firms typically value physician practices on a multiple of EBITDA (earnings before interest, taxes, depreciation, amortization). Improving payer rates post-acquisition goes straight to the bottom line as it’s essentially pure profit increase. Treating the same patients and doing the same work yields more revenue. Thus, a practice with depressed rates presents a juicy valuation arbitrage: buy at the current earnings (low due to low rates), renegotiate contracts upward, and enjoy a higher earnings stream that justifies a much bigger valuation upon exit.

Price transparency data allows quantifying that arbitrage with precision. During due diligence, a PE acquirer can model: “If we raise this group’s average commercial rate from 150% of Medicare to 180% (the regional average), their EBITDA would increase by $X million.” Suppose that $X is a 20% boost, that could mean the difference between a 7x EBITDA purchase multiple and a much lower effective multiple post-improvement. In practice, valuations in hot roll-up sectors have climbed because many investors are chasing the same play. For example, dermatology saw HUGE deals like Advanced Dermatology & Cosmetic Surgery (ADCS) which is a Florida-based “platform” selling to PE firm Harvest Partners for a reported $600 million in 2016. Such prices bake in expectations of growth, including better contracts and expansion. Investors openly cite “revenue enhancement, increased market share, and economies of scale” as value drivers in these deals.

However, sophisticated acquirers also consider when high rates might be a double-edged sword. If a target already enjoys outsized reimbursement, one must ask: Can those rates be sustained or will payers push back? TiC data trending over time (as more quarterly files are released) can reveal if payers are narrowing the gaps. Additionally, the shift to value-based care could penalize pure fee-for-service rate hikes. For example, some cardiology groups are being steered toward value/outcomes contracts; simply raising fee schedules might not be as feasible long-term. So, strategic valuation also weighs diversification and quality metrics: PE-backed MSOs often invest in ancillary services (imaging, ambulatory surgery centers, etc.) and care management improvements to drive revenue in other ways. These can complement rate increases in a rollup’s business case.

In summary, price transparency data provides the “hard numbers” to backstop a rollup’s strategic rationale, on either side. It can demonstrate upside (for the investors) or to probe anti-competitive risks (for regulators or challengers). It brings a level of analytical rigor and transparency to questions of “How much more can this practice earn under our management?” or “Will this merger give too much pricing power?”.

Real-World Rollup Examples and Trends

To ground this discussion, let’s look at a few specialty sectors where PE-backed rollups have been prominent, and how rate competitiveness and market dynamics come into play:

Dermatology: A Case of Early Consolidation

Dermatology was one of the earlier physician arenas to see intense PE activity. The specialty’s appeal lay in its steady demand and mix of revenue streams: routine medical dermatology plus lucrative cash-pay cosmetic procedures (Botox, fillers, etc.). By the mid-2010s, dermatology groups were selling for high valuations, fueled by the notion that consolidators could streamline operations and cross-sell cosmetics. Large platforms formed, e.g. Advanced Dermatology & Cosmetic Surgery (ADCS), U.S. Dermatology Partners, Forefront Dermatology, and others backed by big investment firms. The four largest derm groups now employ a whopping ~7% of all U.S. dermatologists, and overall around 14% of dermatologists are estimated to be in PE-owned practices (a number that has likely grown).

Strategic motives: Aside from economies of scale, a key strategy was to boost reimbursement rates by amassing regional clout. Dermatologists in solo practice often had minimal negotiating leverage with insurers. Rollups created large regional networks of derm clinics that payers “must have” in-network, thus commanding higher fee schedules. TiC data can validate this: a single dermatologist might have contracts at or near Medicare rates, whereas the big dermatology MSO in town might be getting significantly higher amounts for the same biopsies or excisions. Contract standardization across acquired clinics was part of the playbook where new owners renegotiated payer contracts to the enterprise’s terms. This study noted private-equity dermatology practices charge roughly 3–5% higher for procedures than traditional practices on average, which aligns with the leverage hypothesis (though some of that might also reflect higher-cost procedures being done). On the flip side, concerns have been raised about overutilization, i.e. reports of PE-owned chains performing unnecessary skin surgeries or upselling cosmetic treatments. High rates combined with high volume can raise payer alarms.

Market concentration: Dermatology rollups have been especially active in states like Florida, Texas, and New York. By 2018, at least 30 states had seen practices acquired by PE, with Texas and Florida alone hosting 36% of acquired clinics. In some metro areas, one network might operate dozens of clinics. Such dominance can lead to market power over rates, but dermatology is still far from monopolized nationally. The top four firms are only 7% of the market. This means there’s still fragmentation (and continued deal opportunity), but local monopolies can occur. Regulators have begun to watch these consolidations; while no major dermatology merger has been blocked, price transparency data could easily be used to show if a particular chain’s prices are, say, 20% above everyone else’s after buying out competitors. This should be a red flag for regulators.

Valuation trends: Early investors enjoyed a robust bull market and often flipped practices after 3-7 years for significant gains. For example, ADCS changed hands multiple times (Audax Private Equity acquired it, then sold a stake to Harvest Partners). Such “secondary sales” at higher multiples reflect the successful growth (through both acquisitions and rate increases) achieved by the platform. The dermatology roll-up wave has inspired similar plays in other specialties.

Cardiology: The New Hot Roll-Up Sector

For years, cardiology was largely the domain of hospitals as many cardiologists sold their practices to health systems in the 2000s due to reimbursement changes. But recently, PE investors have zeroed in on cardiology as the next big consolidation opportunity. The trend is very new: in 2019, there was essentially one private equity deal in cardiology; by 2023, there were 50 deals encompassing 320 locations. In 2023 alone, multiple platform acquisitions launched, making it a record year for cardiology M&A. Firms like Lee Equity, Webster Equity, and Montagu have backed large independent cardiology groups to serve as platforms for roll-up (e.g., Cardiovascular Associates of America, CardioPremier, etc.).

Strategic motives: Why cardiology now? Several factors: 

(1) Shifting site of service: many cardiac procedures that once required a hospital can be done in outpatient labs and clinics (e.g., angioplasty in an office-based lab). Independent cardiology groups can capture these revenues if they have capital to invest in facilities, which PE provides.
(2) High demand: an aging population with prevalent heart disease means strong volume growth for cardiac services.
(3) Fragmentation: despite some past hospital integrations, many cardiologists remain in private practice or small groups, especially in regions that resisted hospital employment. This creates a fragmented landscape ready for consolidation.
(4) Value-based care: cardiology is central to managing chronic disease, so groups that can prove better outcomes have new revenue opportunities. PE investors are keen on practices that can thrive under value-based contracts (managing populations, preventing readmissions), not just fee-for-service.

A crucial part of the rollup thesis, nonetheless, is rate negotiation leverage. If cardiology groups band together, they can bargain more like hospitals do. Price transparency data in cardiology is unveiling striking price variations. For example, one practice might be paid double what another gets for the same cardiac imaging test. A consolidated entity can aim to bring everyone to the higher end of the spectrum. However, cardiology may also encounter pushback because payers (and Medicare) are vigilant about expensive cardiac procedures. There’s also competition with hospitals, which typically charge much higher rates for the same cardiologist’s work once they’re hospital-employed (due to facility fees). TiC datasets and CMS data can illustrate this delta: an echocardiogram might be $800 through a hospital outpatient department vs $300 in a freestanding clinic, for example. PE-backed groups argue they keep cardiology in the lower-cost ambulatory setting, even if their rates rise somewhat (they’ll need data to back this up).

Market concentration: Given how new the PE cardiology trend is, most markets still have multiple independent groups. But the pace of deals suggests that could change fast. Industry watchers note that over ten major cardiology platforms have formed in just the last three years. Some regions (Southeast, Texas, etc.) are seeing a flurry of practice acquisitions. If those platforms each gobble up dozens of cardiologists, we could soon see markets where 60-70% of cardiologists belong to a few large networks instead of 20 solo groups. TiC data will be crucial to monitor if and when those networks start exercising outsize pricing power. For now, payers might actually be amenable to strong independent cardiology groups as a counterweight to even pricier hospital systems (up to a point).

Valuations: The “land grab” phase is well underway. Early movers are commanding high multiples, betting that being first will let them scale rapidly. Provident Healthcare Partners (an investment bank) noted that cardiology is following the playbook of specialties like derm and ortho, expecting increased PE-led consolidation in coming years. As platforms assemble, we will likely see some mega-deals where established platforms sell to larger PE funds or strategic buyers (as occurred in dermatology and others). Those exits will depend on proving the rollup thesis: improved profitability via both cost efficiencies and better payer contracts. Successfully doing so, as revealed by transparent data, will underpin the lofty resale values.

Orthopedics: High Fragmentation / High Demand

Orthopedic surgery groups are another prime target for PE rollups. Orthopedics has historically been fragmented with nearly half of orthopedic surgeons still working in private practice in 2023, and was earlier consolidated mostly by hospitals or physician-led alliances. Private equity’s first foray was around 2017 (e.g., Frazier Healthcare’s investment in The CORE Institute, a large Arizona practice, which became part of HOPCo). Since then, the number of PE-backed orthopedic platforms has more than doubled, from 8 in 2020 to 17 active platforms in 2023. Examples include groups like U.S. Orthopaedic Partners, Orthopedic Care Partners, and many regional “Ortho Alliance” entities.

Strategic motives: Orthopedics combines several favorable factors: an aging population (more arthritis, joint replacements) and rising chronic conditions like obesity that drive orthopedic issues; a shift of procedures to outpatient and ambulatory surgery centers (e.g., Medicare now allows total knee replacements in surgery centers) which increases reimbursement for independent groups; and significant ancillary revenue potential (imaging, physical therapy, sports medicine, pain management) that larger groups can develop. PE partners help orthopedic groups invest in these ancillaries and infrastructure (e.g. new surgery centers or advanced MRI machines) to broaden services.

Crucially, bigger ortho groups can negotiate better contracts with payers. A small five-surgeon practice might get relatively modest rates, but if that practice merges into a 50-surgeon regional powerhouse with its own surgery centers, payers may agree to higher fees rather than risk losing that network. As one PE advisory firm noted, “consolidated platforms aim to negotiate favorable payor contracts” to benefit their operations. TiC data can spotlight opportunities here: for instance, if one ortho group is getting 200% of Medicare for spine surgeries and another similar-sized group is getting 150%, a merger could aim to bring the latter up toward 200%.

Market concentration: Orthopedics is still early on the PE consolidation curve relative to something like dermatology. Many regions have dozens of independent ortho groups. The difference is that in ortho, hospital employment of orthopods was also significant in the 2010s (health systems acquired many orthopedic practices to capture surgical volume). So in any given market, the competitive landscape might include one or two big hospital-employed ortho groups, several independent groups, and now one or two PE-backed platforms. This makes for a complex dynamic. A PE rollup might position itself as a lower-cost alternative to the hospital system (able to do surgeries in an outpatient center at lower overall cost), which payers appreciate, but the rollup will still seek higher rates for professional fees than the solo docs had. TiC data and Dartmouth Atlas data together could be used to analyze how an orthopedic rollup affects a region: Does the average price of a knee replacement go up or down when done by the new consolidated group versus the hospital? Often, the independent surgery center route lowers total cost even if surgeon fees are higher, due to avoidance of hefty hospital facility charges. The key is for the consolidated group to demonstrate value while negotiating those higher professional fees.

Valuation trends: Investor interest in ortho remains strong. As of 2023, at least 17 PE-backed platforms are actively acquiring, and Physician Growth Partners (PGP) expects consolidation to continue into 2025. Valuations have been healthy, with platform practices attracting multiples in the low double-digits of EBITDA in some cases, reflecting growth prospects. Much like in cardiology, early ortho platform builders aim to scale and eventually sell to larger PE firms or perhaps insurance companies or health systems. Their narrative is often that by consolidating, they can achieve integrated care (surgeons, rehab, imaging under one roof) and manage costs better than fragmented providers or hospitals. Time will tell if outcomes support this; regardless, the ability to demonstrate strong revenue per case (via favorable rates and full-service offerings) will be a determinant of success, and transparent data will be central to that demonstration.

Bridging Technical Data and High-Level Strategy

In wrapping up, it’s clear that Transparency in Coverage data has added a powerful tool to the playbook of healthcare investors and operators. It brings what was once gut feeling or anecdote into the realm of empirical analysis. PE acquirers and MSOs can now routinely ask and answer questions like:

• “Are this target’s rates below, at, or above market, and by how much?” - enabling informed negotiation strategies or deal go/no-go decisions.
  
  
• “What revenue upside can we project from repricing contracts closer to benchmarks?” - feeding directly into valuation models and investment theses.
  
  
• “How concentrated is this market and who holds the leverage?” - informing both competition arguments and post-merger integration focus (e.g. where to push for increases versus where to tread lightly).
  
  
• “Is our rollup actually benefiting payers and patients or just raising prices?” - a question coming from regulators and employers, which data can help honestly assess.
  
  

The takeaway is that healthcare rollups aren’t just about cutting costs or expanding footprint. They’re very much about data-driven rate analytics and savvy contracting strategy. The price transparency datasets, alongside tools like CMS claims data and Dartmouth Atlas, allow even highly technical analyses (down to CPT-code level pricing variance) to inform big strategic moves (like multimillion-dollar practice acquisitions and mergers). The ability to consolidate and analyze these data by specialty and provider lets stakeholders model scenarios with a new level of confidence.

At the same time, transparency cuts both ways. Investors can find undervalued practices more easily, but payers and regulators can also see patterns of price hikes or outlier rates more clearly, potentially intervening. In a sense, the healthcare marketplace has become more like a stock market with real-time pricing data accessible to all parties. Those who learn to interpret and act on this data will have an edge. Those who ignore it may misprice deals or be caught flat-footed in negotiations.

The intersection of deep technical data work (parsing terabytes of price transparency machine-readable files) and high-level market strategy (where to expand, what to pay) is where modern healthcare rollups thrive or falter. A dermatology or cardiology MSO backed by smart money will be able to rattle off exactly how its rates compare to others and have a plan for improvement or justification. As consolidation in specialties continues with dermatology looking “good,” cardiology heating up, and orthopedics accelerating- the competitive battleground will increasingly center on data proficiency. Businesses that harness transparency data to its fullest will negotiate from strength, achieve better valuations, and potentially deliver on the promise of rollups: more efficient, high-quality care organizations that are financially sustainable. Without a data-driven strategy, scaling up often leads to higher costs without meaningful returns. As transparency becomes a defining feature of the healthcare landscape, those shortcomings are more visible than ever.

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