Report Summary

The healthcare industry, historically viewed as recession proof, has not been immune to the macroeconomic factors of 2023. The record-high valuations and frenetic deal activity of the past several years slowed midway through 2022 and healthcare companies, providers and investors are adjusting their expectations and strategies, all against a backdrop of regulatory scrutiny into healthcare mergers and acquisitions (M&A), investing and the end of the COVID-19 public health emergency (PHE).

Our team of industry-leading health lawyers and health policy insiders examined the industry across several sectors, reflecting on 2022’s most influential developments and how they will shape healthcare in 2023. In doing so, several key themes emerged:

DEALMAKING IS COMPLICATED BUT STILL POSSIBLE for the right partners providing the right services to meet the moment. Companies that understand the culture and complexities of healthcare, prioritize operational efficiencies and have reasonable expectations for deal terms in today’s market are still likely to close deals in 2023. Timelines may be longer, but those who are patient and identify alignment will find success.

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SHIFTING APPROACHES TO OVERSIGHT from state and federal governments are expected to continue and even accelerate, with a focus on mergers and noncompete agreements, Medicare Advantage and site inspections as just a few areas in the crosshairs this year.

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EVOLUTION OF CARE DELIVERY continues, particularly as the PHE comes to an end and COVID-19 flexibilities, particularly those surrounding the provision of virtual care and access to telehealth services, are unwound. Agencies are also ramping up rulemaking to keep pace with growing innovation in care delivery, advancements in value-based care, and drug and device development, among other areas.

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CREATIVITY TAKES THE FRONT SEAT as industry stalwarts, new market entrants and emerging leaders combine forces to address healthcare’s toughest challenges amidst a cloudy economic outlook, healthcare disparities and a slow deal market. As parties come together and apply their unique strengths to overcome challenges, we expect to see creative collaborations and deal structures designed to deliver transformative solutions despite the year’s challenges to date.

Read on for an overview of what we’re watching in key healthcare sectors and download our report for 50+ pages of insights from the McDermott Health team.

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Healthcare Private Equity

Private equity investment in healthcare reached an all-time high in 2022, with reports putting the overall deal value at a staggering $151 billion. But 2023 is shaping up to be a very different year, with investors pulling back as they try to figure out how long the landscape will be dominated by rising labor costs and interest rates. We explore trends to watch in private equity healthcare investing from our conversations with leading investors and bankers.

Hospitals and Health Systems

Healthcare providers, including hospitals and health systems, are feeling the influence of inflation, high labor expenses, volatile markets, supply chain snarls and other issues in ways not previously seen in the sector. Additionally, they must grapple with the end of the COVID-19 PHE, which will require unwinding the multilayered changes that were put into effect during that period. We examine the key trends impacting hospitals and health systems in 2023, including:

  • Megamergers and FTC scrutiny
  • Dealing with distressed assets
  • Increased focus on value-based care
  • Pursuing investments and partnerships
  • Returning to pre-PHE operations



  • In today’s challenging economic environment and rapidly evolving regulatory landscape, healthcare corporations and their leadership face a host of legal and reputational challenges that must be addressed strategically and proactively. Our Governing Health thought leadership series, delivered by McDermott governance partner Michael W. Peregrine, provides engaging, issue-based resources on the risk areas corporations face and how the general counsel’s office and the board can address them.

Physician Practice Management

The physician practice management (PPM) sector is expected to continue its rapid growth in 2023, with new PPMs emerging to seize opportunities in cardiology, orthopedics, ophthalmology, urology, gastroenterology, primary care, women’s health and other specialties. However, a tight labor market, wage inflation and fixed reimbursement pose challenges to all areas of healthcare, including the PPM sector. Additionally, new proposed rules governing physician transactions and employment agreements have the potential to fundamentally alter the PPM industry. We offer our insights on significant 2022 developments and take a strategic look ahead at regulatory and transactional issues that will shape business outcomes in 2023, including:

  • Physician alignment
  • Provider employer agreements
  • Regulatory areas to watch to reduce risk
  • Hot specialties drawing investor attention

Digital Health

Digital health is one of the fastest-growing segments of the healthcare market, with patients, clinicians and regulators increasingly aligned behind the opportunities that digitization presents. Moving into 2023, federal and state regulators are setting new standards for telehealth and digital care in a post-PHE world. On a transactional front, slowdown and stagnation are expected as economic headwinds impact dealmaking in all industries, but the outlook remains bright for digital health companies offering transformative solutions.

We take a closer look at the forces shaping the sector in 2023, including:

  • Telehealth regulatory trends
  • Women’s health
  • Increased scrutiny on tracking, privacy and security
  • Unwinding from COVID-19 virtual care flexibilities
  • State of investing and dealmaking in digital health

Managed Care

The managed care space saw several regulatory and legislative developments in 2022 that are shaping the sector as we move further into 2023. Against this backdrop, the healthcare industry itself has continued to transform in response to the demand for improved patient care at lower costs, heightened focus on health equity, and other social and economic issues.
Our managed care team reviews updates across core managed care issues and delivers an overview of market trends, including:

  • M&A trends
  • State of health system plan joint ventures
  • Risk Adjustment Data Validation (RADV) rule developments and other regulatory and legislative activity
  • Medicare Advantage scrutiny
  • CMMI models
  • Employee Retirement Income Security Act (ERISA) preemption developments

Health Policy

The results of the 2022 election brought changes to the makeup of US Congress. In the US Senate, Democrats maintained control and gained one seat, with a 51-49 margin. In the US House of Representatives, Republicans gained control with a 222-213 margin.

Changes from one party to another in Congress, even in just one chamber, can mean big changes in policy progress and direction. However, the Senate and the House both have razor-thin margins and with a divided government, it will be difficult to pass legislation.

This report provides a look into how those in the healthcare sector should view these outcomes and plan for new dynamics from Capitol Hill and health policy priorities.

Food and Drug Administration

As the United States’ primary public health and consumer protection agency, FDA regulates at least one-quarter of the nation’s economy and exerts significant influence over global economies. 2022 was notable for the FDA’s continued efforts to align and scale its regulatory processes to keep pace with growing innovation. Despite forecasts and concerns that 2023 may bring economic challenges across multiple sectors, innovation and strategic investment in long-term growth areas remain a priority for the FDA and the industries it regulates.

We take an in-depth look at the agency’s activities throughout 2022 and offer an informed take on what’s ahead in 2023 across several areas, including:

  • Drug, biologics and combination products
  • Medical devices and digital health
  • Lab-developed tests and precision medicine
  • Unprecedented oversight of the cosmetics industry
  • Food and dietary supplements
  • Tobacco and cannabis
  • Enforcement


Our 2023 events will offer robust networking opportunities and insightful programming for healthcare and life sciences’ leading providers, investors, founders and other senior leaders.


McDermott Will & Emery partners with leaders around the world to fuel missions, knock down barriers and shape markets. Our team works seamlessly across practices and industries to deliver highly effective solutions that propel success. More than 1,200 lawyers strong, we bring our personal passion and legal prowess to bear in every matter for our clients and the people they serve.

McDermott is the nation’s leading health law firm. Our achievements are driven by a deep commitment to our clients and we were honored to see those achievements recognized in industry accolades. In 2022, the McDermott Health team received top rankings from U.S. News – Best Lawyers “Best Law Firms,” The Legal 500, Chambers USA and Law360; this was the 132th consecutive year we received a National Band 1 ranking from Chambers USA, and the fifth consecutive time we were the only nationwide Band 1 Healthcare firm. We were also named the most active firm for healthcare private equity by Pitchbook’s League Tables for the fifth consecutive year. Our lawyers also received top honors in Legal 500 Europe, Middle East & Africa (EMEA), Best Lawyers European editions, LMG Life Sciences, and The National Law Journal, among others.

Above all else, these accolades reflect our dedication to providing exceptional business results for our clients.

We strive to offer unparalleled counsel to the world’s most respected, innovative and important health organizations as they make their mark on the rapidly evolving healthcare industry. We’re deeply passionate about the incredible progress our clients are making and our role in supporting them as they transform the future of healthcare – and we’re equally passionate about what these revolutionary results mean for patients.

As an advisor to many of the healthcare industry’s leading organizations, the depth of our practice, leading market reputation among clients and peers, and strategic vision empowers us to guide clients through the opportunities and challenges of 2022 and toward transformation in 2023.

Past Reports

The healthcare and life sciences industries continued to grapple with the ongoing COVID-19 public health emergency in 2021, but the year also saw a spike in innovation activity, investing and a return to some of the regulatory, enforcement and oversight activity that was put on hold during the height of the pandemic. Our 2022 Health Report provided a comprehensive overview of 2021’s significant legal developments across the following sectors, as well as their potential impact on the business of healthcare moving forward:

  • Healthcare private equity
  • Digital Health
  • Health Policy
  • FDA
  • Healthcare Governance


Throughout 2020, the McDermott Health team partnered with healthcare and life sciences clients to help them proactively respond to the COVID-19 pandemic, protect providers and patients and work toward recovery with an eye towards compliance and financial recovery. Our 2021 Annual Health Report took a look back at key developments of 2020 and offered projections on the health law outlook in 2021 in the following areas:

  • Healthcare Private Equity
  • Global Healthcare Investing
  • Digital Health
  • Managed Care
  • Antitrust
  • Collaborative Transformation
  • Health Policy
  • FDA


In our 2020 Annual Health Report, we assembled a comprehensive examination of the healthcare industry in 2019, with particular emphasis on the legal implications in the market. We’ve also collected insightful analyses, predictions and guidance for the year ahead in key areas, including trends in digital health; regulatory and compliance changes; modifications in the provider and hospital spaces; collaborative transformations; Developments in private equity; what to expect in FDA requirements; and more. Note: this report was assembled and published prior to the outbreak of the COVID-19 pandemic