Case Study 


The UK physiotherapy market is ripe for consolidation  

By Karen Dawaf Harron

Driven by transformational M&A and private equity investments  

The physiotherapy market is poised for a surge in growth in 2019. Traditionally a highly fragmented market, the sector is ripe for consolidation via transformational M&A and private equity investment. From urgent in-person care to innovative technology solutions for both public and private business, the market includes a wide-range of services and demand is leading to an upsurge in investment in UK businesses. 

In the US, between 2012 and 2017, the number of deals involving retail health companies soared by 34% and the UK and Nordic markets have seen the greatest proliferation of retail health deals.

Recent deal activity in the UK has proven there is appetite for scale and consolidation; interest in the sector has also expanded beyond a niche set of investors. A recent example is Sano Physiotherapy’s acquisition of Physio Direct Sherwood Limited, a Nottinghamshire-based provider of physiotherapy and sports massage services. Post-merger Sano now operates with 100 full-time staff which enables it to meet patient demands running an excess of 150,000 appointments a year. 

Meanwhile, the US market saw Agility Health sell its US-based operations to Alliance Physical Therapy Management in a transaction  valued at $45m. Momentum in the sector shows no signs of abating.

Physiotherapy-led services are increasingly in demand with an aging population set to expand by 4m over the next 10 years. This population will drive higher incident rates (30% of the UK’s over 65s experience a fall at least once a year costing the National Health Service (NHS) around £2.3bn a year) and outsourced physiotherapy services could save the NHS an estimated £275m a year. 

Clinical commissioning groups currently outsource almost a third of their physiotherapy services and the opportunities for private providers are growing. A recent report by the Centre for Health and the Public Interest has uncovered the amount spent in the private sector by local commissioning bodies and NHS trusts has increased by 50%, rising from £6.6bn in 2009 to £10bn in 2014. Increased focus on wellness and preventative treatments from the public will also support long-term revenue growth. Additionally, the sector should be able to weather Brexit and other economic fluctuations as ‘needs-based’ services tend to be resilient.

In the corporate world, two thirds of organizations now operate well-being programs as part of their benefits packages.  As employers seek to give competitive benefits to their staff, physiotherapy, osteopathic, and chiropractic treatments are gaining popularity. In fact, a staggering £1.3 billion has been reported to come out of business to consumer directed physiotherapy services, as employers begin to offer these under corporate programs or as part of employee benefit packages. In example, in 2013, John Lewis Partnership (JLP) recruited Physio Med to provide employees with a ‘Physiotherapy Advice Line’ service which provides employees with on-site face-to-face treatment and advice. In the spring of 2016, JLP estimated that, based on the 2,324 partners who engaged with the service during the year before, it saved around 41,000 working days and delivered an estimated saving of more than £2.6m.

In order to meet increasing demand and achieve a successful expansion, well-built digital and operating platforms are key. From efficient booking systems to safely stored patient and clinician data, the technology to meet market needs is in development. In fact, Deloitte predicted the UK digital health industry’s value would reach £2.9bn in 2018, with digital health systems accounting for the largest market in the UK. As these providers begin to diversify and broaden their digital service offerings, investors, both domestic and international, have ample opportunity to drive value and transform performance.

Technology can also play an important role in retaining and recruiting clinicians and staff within the physiotherapy sector. These trained professionals should remain central to the strategic business plan as clinician buy-in plays a critical role in the management and added-value to business success. Technology which enables improved patient experience, quality of care and better patient outcomes are important initiatives – all of which will help boost profitability. Recently, Morneau Shepell, a Toronto-based technology company, acquired LifeWorks Corporation, a UK-based employee assistance program and wellness provider. LifeWorks by Morneau Shepell will now deliver its Employee Support Solutions products and services to customers across the globe.

As pressure on UK public health increases, investment in outsourced business will likely grow. The UK has strong credentials in the physiotherapy sector and even more traditional providers are ready for consolidation and value creation. Consolidation will enable forward-thinking providers to be at the vanguard of the UK market, and as they achieve sufficient scale they will likely attract a broader international audience of investors and buyers.

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© Copyright 2019

Karen Dawaf Harron

Director, LONDON

+44 (0)20 7484 4730

Karen is a qualified Chartered Accountant and joined Livingstone from Deloitte in 2014. Karen has worked on a range of buy-side and sell-side transactions within the Business Services and Healthcare goups.