Growth is also Revelstoke Capital Partners' plan for achieving a return on urgent care. Since investing in Fast Pace Health in 2016, the private equity firm has grown the provider from 36 clinics in two states to 140 clinics in five states, Simon Bachleda, Revelstoke's co-founder, wrote in an email. Almost 100 of the additions were new clinics. Revelstoke has also expanded its offerings to include orthopedics, dermatology and behavioral health.
Despite numerous private equity investments in urgent care, Bachleda said he still thinks there is room for future growth in the sector.
"The cost of services in a hospital setting remains high and the patient experience is poor, underscoring the need for an alternative site of care for urgent, acute procedures," he said.
That said, private equity owners are still looking to cut costs where possible. That often looks like staffing nurse practitioners and physician assistants instead of doctors, Goldberger said.
"There are opportunities to bring in those lower levels of clinicians and you can bill just as much," he said.
A recent Health Affairs study found private equity-owned dermatology practices tend to staff a higher ratio of advanced practitioners to dermatologists than non-private equity-owned practices. The study also found private equity-owned practices charged more for services and saw higher volumes of patients.
While there isn't direct research on how private equity runs urgent care, the mechanisms are likely to be similar, said Dr. Jane Zhu, assistant professor of general internal medicine at Oregon Health & Science University.
"We don't have definitive proof that these practices are being implemented in urgent care, but it makes sense," she said. "It's like any other healthcare sector space."
Private equity also tends to cut back-office staff and centralizes billing and collections, Goldberger said.
Operators can also cut expenses through negotiating lower prices with vendors on supplies and outsourcing information technology services. The more clinics they have, the easier that becomes.
Part of achieving profit means creating a recognizable brand where locations have the same look and feel, right down to the paint color and waiting room chairs.
"It's almost like when you go to a McDonald's, you know that McDonald's will be the same every time," Goldberger said.
The factor that can make or break an urgent-care provider is how they interface with health systems in their region. The most successful models are those that partner with them, like CRH Healthcare's relationship with Emory Healthcare in the Atlanta metro area, Hagood said.
In that case, CRH's Peachtree Immediate Care teamed up with Emory Health Network in 2016. Peachtree had just 16 clinics at the time, a number that has since grown to almost 40 through a combination of acquisitions and new clinics. CRH CEO Bill Miller wrote in an email that his firm decides whether to partner or compete with local systems on a market-by-market basis. In Atlanta, the Emory deal made sense because of Emory's prominent stature in the region, he said. The co-branding helps especially with patients who are already getting care within the Emory system, Miller said.
An Emory spokesperson said clear objectives at the start helped make the relationship successful.
That's not to say private equity investors can't compete with health systems. A good example is CityMD, which offers a desirable alternative to New York City emergency departments.
Hagood said in general, hospitals tend to be poor urgent-care operators because they staff them like EDs, which gets expensive. They're also not adept at locating them in retail areas that are easily accessible.
Even so, health systems increasingly want to add urgent care to their menu of offerings. That's typically not because they make money on those services, but because they're a reliable source of referrals to primary and specialty care. Michigan's Trinity Health, for example, recently bought a majority stake in a privately held urgent-care operator called Premier Health.
Insurers are increasingly seeing value in urgent care, too. The biggest example is UnitedHealth Group's Optum division buying MedExpress in 2015.