Women's Health: Obstetrics & Gynecology

NOVEMBER 2024

Obstetrics and Gynecology at a Glance

Obstetrics and Gynecology (OB-GYN) provides comprehensive care for women's reproductive health, focusing on pregnancy, childbirth and general gynecological needs throughout all stages of life.

Obstetrics

Prenatal Care

Prenatal care involves essential services such as initial assessments, routine health and fetal monitoring, diagnostic testing, and nutritional support, all aimed at promoting a healthy pregnancy and identifying potential complications early.

Labor and Delivery

Labor management encompasses comprehensive services like progress assessment, pain management, and offering both vaginal and cesarean delivery options, ensuring a safe and tailored birth experience for both mother and baby.

Postpartum Care

Postpartum care provides crucial support in physical recovery, mental health screening, infant care guidance, and family planning, helping new mothers transition smoothly into post-birth life while ensuring long-term well-being.

Gynecology

General Gynecology

General gynecology includes routine health checks like pelvic exams, Pap smears, and treatment for menstrual conditions, with a focus on preventive care and the early detection of any gynecological issues.

Reproductive Health

Reproductive health services offer vital support in infertility evaluation, contraception, and preconception counseling, enabling women to make informed decisions about their reproductive futures.

Minimally Invasive Care

Minimally invasive surgery/care offers advanced procedures like laparoscopic surgery, hysterectomy, and endometrial ablation, providing effective treatment options that reduce recovery time and minimize surgical risks.

The OB-GYN market is rapidly growing as demand for specialized women’s health services increases due to factors such as rising maternal age, advancements in reproductive technology and the broader adoption of preventive care. With innovations in minimally invasive procedures, fertility treatments and personalized maternity care, OB-GYN services are becoming more accessible and prevalent, leading to improved patient outcomes and expanded opportunities for healthcare providers.

Source: Publicly available information

Obstetrics and Gynecology Market Overview

U.S. Market Size

Key Metrics

14,992

Gynecologist and obstetrician enterprises in the U.S. in 2024

16,522

Forecasted gynecologist and obstetrician enterprises in the U.S. in 2029

+10%

California, Texas, New York and Florida
are home to about 40% of all OB-GYN facilities in the U.S.

Service Segmentation and Workforce Demographics

% of total revenue
% of total OB-GYN workforce as of 2024

Source: Publicly available information

Several Key Themes Across Obstetrics and Gynecology

1
Cultural Trends Driving Growth
  • Shifts in societal factors, such as increasing maternal age, changing marriage patterns, and rising rates of conditions like obesity, are driving heightened demand for OB-GYN services
  • As these trends contribute to more complex patient needs, there is growing demand for reproductive and maternal healthcare, including fertility treatments and specialized care for high-risk pregnancies
2
Increasing Treatment Gap
  • The shortage of OB-GYN providers is widening the gap between the supply of and demand for services, especially as the need for comprehensive maternal health support continues to rise
  • Larger healthcare platforms have an opportunity to address this provider shortage by offering more efficient access to care and attracting professionals through competitive incentives and support
3
Improving Coverage and Payor Dynamics
  • Expanding insurance coverage, particularly through Medicaid and private insurers, has improved access to OB-GYN services, with payor dynamics steadily evolving to support broader care
  • Designations that recognize high-quality maternal care, such as "Birthing Friendly" hospitals, present opportunities to align financial incentives with better health outcomes
4
Rising Demand for Preventive Care
  • Preventive care has become a key focus in the OB-GYN field, with growing awareness of women’s health needs and increased insurance coverage driving demand for routine services like screenings
  • Early detection and proactive women's health measures are being utilized at increasing rates to promote better long-term outcomes and reduce the need for more intensive treatments
5
Prioritizing Value-Based Care
  • There is a shift toward value-based care models in OB-GYN, aiming to reduce costs while enhancing care quality through shared savings and risk-sharing agreements
  • Programs like Pregnancy Medical Homes and performance-based incentives are helping to reduce unnecessary procedures while promoting better maternal and newborn health outcomes

Source: Publicly available information

Expanding Treatment Gap

The treatment gap in OB-GYN care is widening due to a combination of factors, including workforce shortages and increasing demand for maternal health services, which are outpacing available providers.

Drivers of OB-GYN Workforce Shortage

OB/GYN supply and demand imbalance (# in thousands)

Aging Workforce

With an average age of 51 and 40% of the OB-GYN workforce being above the age of 55, physicians are retiring quicker than younger doctors can replace them.

Declining Medical Student Interest

The average number of applications per OB-GYN residency program decreased from 661 in 2022 to 585 in 2024, with declines especially noticeable in states that adopted complete abortion bans.

The Dobbs Decision (2022)

The Dobbs decision has made the OB-GYN field less appealing to providers, with nearly 50% of respondents in a national survey agreeing it influenced their decision to avoid or reconsider the specialty.

Key Metrics and Implications

> 5.6 million

Women live in areas with "low or no access to maternal care"

> 350,000

Child births affected across the U.S. per year as a result

16%

Of OB-GYN providers in the U.S. are under 40 years old

~50%

Of U.S. counties lack even a single OB-GYN provider

~6,000

Projected national shortage of OB-GYN providers by 2030

Leveraging Platforms to Bridge the Treatment Gap

Consolidation among larger platforms offers a significant opportunity to address the growing treatment gap in OB-GYN care. By pooling resources, these platforms can provide competitive incentives such as loan forgiveness, flexible work schedules, and higher compensation, making OB-GYN roles more appealing to providers. Additionally, they can invest in telehealth services and value-based care models, improving productivity and allowing physicians to treat more patients efficiently. Consolidation also mitigates individual provider liability through a diversified risk pool and enables platforms to negotiate better payor contracts, further driving access to care and reducing the strain on the OB-GYN workforce.

Source: Publicly available information

Enhanced Insurance Coverage and Payor Dynamics

As demand for OB-GYN services continues to rise, payor dynamics within the industry have shown improvement. Overall, insurance coverage has expanded, and while private insurers still offer the most favorable reimbursement rates, commercial payors are also making progress. OB-GYN providers who achieve a "Birthing Friendly" designation for high-quality birthing services can further maximize commercial rates, combining financial incentives with a focus on delivering quality care.

Insurance Coverage Among U.S. Women

Uninsured rates amoung U.S. women ages 19-64
% of births for by Medicaid (2022)

"Birthing Friendly" Designation for OB-GYN Providers

The Birthing-Friendly designation, introduced by CMS in 2023, recognizes hospitals that deliver high-quality maternity care by meeting specific standards set by CMS. While the designation is for hospitals, individual providers can benefit by affiliating with these hospitals or health systems. By consolidating or partnering with designated institutions, providers can gain access to better payor contracts, improved reimbursement rates, and the resources that come with being part of a recognized high-quality care network, further enhancing their ability to serve patients under commercial plans.

Incentives for Quality Care
Improved Payor Rates
Increased Access
Enhanced Outcomes

Sources: Publicly Available Information

Increased Focus on Preventive Care

As insurance coverage and disposable income have risen, alongside growing awareness of women's health needs, preventive care has become increasingly prominent in healthcare. This shift is driving significant growth and demand within the OB-GYN industry, as more women prioritize proactive health management and comprehensive reproductive care.

Preventive Care Visits Among U.S. Women

% of preventive visits, in thousands

Percentage of Healthcare Visits in the U.S. (2020)

OB-GYN Preventive Care: Key Services and Growth Catalysts

Cervical Cancer Screening
Well-Woman
Visits
Contraceptive Counselling
GDM
Screening
Mammography
Screening
Breast Feeding Counselling

~70%

Of OB-GYN visits are related to preventive care

Affordable Care Act

The Affordable Care Act significantly expanded insurance coverage for women by providing access to Medicaid expansion and subsidized private insurance plans, resulting in millions of women gaining coverage.

~20%

Insured women are ~20% more likely to seek preventive care

Declining Wage Gap

The wage gap is steadily closing, with women earning 84% of what men made in 2020, up from 75% in 1990. Higher disposable incomes will continue to enable women to seek preventive care more frequently.

$2.03 Billion

In revenue for OB-GYN providers (2024 YTD)

Sources: Publicly Available Information

Strong Emphasis on Value-Based Care

Both payors and providers are increasingly emphasizing value-based care, particularly in women's health, due to high downstream costs and the availability of meaningful data. Payors are willing to enter shared savings agreements, focusing on reducing costly procedures like C-sections while promoting efficient and quality care. Initiatives such as bundled payments for maternity care, pioneered by organizations like United, Humana and Cigna, are driving this shift by offering fixed rates for comprehensive maternity services, from prenatal to postpartum care.

Growing Adoption of Value-Based Care Models

# of people treated under VBC models, in millions (not exclusive to OB-GYN)
  • Value-based care in OB-GYN focuses on reducing costs and improving outcomes through measures like health screenings, cesarean rates and elective delivery rates to promote efficient care
  • 41 Medicaid programs have implemented value-based initiatives aimed at enhancing maternal health, helping to reduce unnecessary procedures and promote safer care practices
  • 14 states have adopted pay-for-performance programs with financial incentives for meeting health metrics, 10 states implemented perinatal episode-of-care models, and four states introduced Pregnancy Medical Homes (PMH) for comprehensive, coordinated maternity care

Distinct Benefits of Value-Based Care Pertaining to OB-GYN

Incentives for Early Detection and Prevention
Increased Access to Comprehensive Maternity Services
Reduced Provider Burnout Through Streamlined Care
Higher Reimbursement for Quality Outcomes
Improved Patient Satisfaction and Personalized Care

Sources: Publicly Available Information

Medicaid Postpartum Expansion

A provision in the American Rescue Plan Act 2021 gave states a new option to extend Medicaid postpartum coverage to 12 months via a state plan amendment. Originally available for five years, the option was made permanent by the Consolidated Appropriations Act 2023.

Overview

  • As of August 2024, 46 states and D.C. have implemented a 12-month postpartum extension
  • Continuity of Care: 45% of women on Medicaid lose coverage after 60 days postpartum, but this extension reduces gaps and prevents late postpartum health issues
  • Utilization: Extended coverage increases the use of mental health services, contraceptive care, and other essential postpartum care
  • Addressing Treatment Gaps: Women earning 138% - 221% of the federal poverty rate (FPL) can maintain coverage in the 40 states and D.C. that expanded Medicaid, while the extension helps bridge the gap for nearly 900,000 women in non-expansion states, where Medicaid eligibility for parents is much lower than for pregnant individuals

State Adoption

Medicaid Eligibility Thresholds

Medicaid eligibility thresholds for prenatal women compared to mothers who are beyond the postpartum period, 2024

Sources: Publicly Available Information

Other Select Regulatory Developments

Federal and state policies protecting abortion rights, maternity services and advancing women's health are helping boost the long-term outlook for the industry.

Current and Ongoing Regulatory Protections

Recent State Legislation Protecting Abortion Access

Washington: Health insurance plans can no longer impose cost-sharing for abortion services, lowering out-of-pocket costs, deductibles and copays for patients

California: Abortion providers are now protected from lawsuits when treating out-of-state patients, increasing capacity to serve those from abortion-restricted areas

Illinois: Out-of-state abortion seekers surged in Illinois last year due to nearby bans, prompting a law that blocks law enforcement from sharing license plate data with other states to protect privacy

Medicaid Benefits Expansion

Doula Services: Doula services provide continuous, non-medical support throughout pregnancy, labor and postpartum, offering physical comfort, emotional guidance, and practical information to help mothers navigate childbirth and improve overall outcomes

Virginia: Virginia joined several states in enacting legislation requiring Medicaid to cover doula services, aiming to improve maternal health outcomes by providing additional support during pregnancy and childbirth, potentially reshaping OB/GYN care with more holistic support systems integrated

Keep Obstetrics Local Act (KOLA)

June 2024: U.S. Senator Mark R. Warner (D-VA) and his colleagues introduced draft legislation titled the Keep Obstetrics Local Act (KOLA), aiming to address access to local obstetric services and improve maternal health care in rural and underserved areas

This legislation aims to keep obstetric services available in rural and underserved areas by increasing Medicaid rates, offering "standby" payments to cover staffing costs at low-volume hospitals, and introducing low-volume payment adjustments to support facilities with fewer deliveries

Medicaid Benefits Expansion

March 2024: President Biden signed an executive order to advance women’s health research across federal agencies, aiming to fill critical knowledge gaps on conditions such as perimenopause and menopause, ultimately enhancing care and treatment options for women

The order allocates $12 billion to establish a network of research centers, fostering collaboration across the healthcare sector and giving OB/GYN practices access to cutting-edge research and best practices that directly enhance patient care

Sources: Publicly Available Information

Obstetrics and Gynecology M&A Overview

M&A activity in the OB-GYN sector has been dominated by select private equity backed platform add-on transactions while significant tailwinds pave the way for an expected rebound in deal activity after peaking in 2020.

OB-GYN Transaction Summary

# of transactions, in actuals

65

OB-GYN
focused
transactions
2018-2024

Investment Tailwinds and Headwinds

Tailwinds

1

Outsized Demand

Demographic and cultural shifts are outpacing provider supply, opening opportunities to disrupt the market and meet growing care demands.

2

Highly Fragmented Market

The OB-GYN market remains highly fragmented, with numerous small, independent providers, making it a prime candidate for consolidation.

3

Rise of Integrated Care Models

The rise of integrative care models is driving activity, with providers expanding into ancillary women’s health services to offer more comprehensive care.

4

Rising Role of Midwives

Laborists and nurse-midwives are easing OB-GYN workloads, with Medicaid reimbursements for midwives at 100% of physician rates in half of all states.

5

Higher Volume of Visits

Women visit doctors 33% more than men, leading to $15.4 billion in extra spending, and only 2% of non-cancer research focuses on women’s health, exposing a large unmet market.

Headwinds

1

Historically Low Rates

Low reimbursement rates have led to challenges, resulting in over 200 rural maternity unit closures in the past decade, with 26 closures recorded in 2024 alone.

2

Legislative Challenges

The Dobbs decision and subsequent state abortion bans have impacted patient volumes, creating uncertainty and affecting investor interest.

Sources: Publicly Available Information

Highly Acquisitive Operators

Sources: Publicly Available Information

Obstetrics and Gynecology Select Transactions

Date Target Acquirer Transaction Type
July 2024 Was acquired by Add-On
July 2024 Was acquired by Corporate M&A
May 2024 Was acquired by Corporate M&A
April 2024 Was acquired by Add-On
April 2024 Was acquired by Add-On
January 2024 Was acquired by Add-On
December 2023 Was acquired by Add-On
September 2023 Was acquired by Add-On
June 2023 Great Neck
Obsterics & Gynaecology		 Was acquired by Add-On
June 2023 Was acquired by Corporate M&A
April 2023 Was acquired by Corporate M&A
February 2023 Was acquired by Add-On
January 2023 Was acquired by Add-On
December 2022 Was acquired by Add-On
December 2022 Was acquired by Add-On
August 2022 Bellas
Women's Care		 Was acquired by Add-On

Source: Pitchbook

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