Private Equity In Healthcare

Private equity interest in healthcare is on the rise. According to Bain & Company, healthcare private equity activity in 2019 posted a very strong performance relative to the prior year. The total disclosed deal value reached $78.9 billion, the highest on record. And, interest is only continuing to mount, especially in a post-COVID-19 market.

Oftentimes, the private equity strategy in healthcare is to either combine multiple practices of the same type in order to dominate an entire market, or to create a large multi-specialty practice. Investors in the healthcare space are typically looking to get their money back within 3-5 years (Medical Economics).

The stakes are high, and any one poor financial decision could make or break a private equity firm’s strategy and results.

A Partner to Private Equity-Backed Medical Practices: Gain Servicing

Gain servicing, a Cherokee Legal Holdings company, is an AI-driven servicing and financing company specializing in letter of protection (LOP) solutions for healthcare providers and investors.

Unbeknownst to investors, LOPs can account for a significant amount of a medical practice’s outstanding accounts receivables.

Here is how LOPs work and how they end up as an aged accounts receivable:

For personal injury victims in need of medical care as a result of the accident they were involved in, and who do not have adequate healthcare coverage for the care they need, their bills can be covered by a letter of protection.

For medical providers providing care to personal injury victims, LOPs are essentially an assurance of payment. They are to encourage providers to give care without having to assume the risk of not being paid. LOPs also serve to protect the victim of personal injury cases from being sent to collections while their case is ongoing.

Backed in-house by the medical provider, by the law firm representing the victim, or a third party like gain servicing, an LOP simply states that upon resolution of the personal injury case, the remaining balance of the medical bill(s) will be paid when the case finalizes.

Because LOPs are backed by a personal injury case, traditional billing, accounts receivable and collections departments do not always know how best to handle these files. Simply put, medical practices are not equipped inhouse to successfully collect on letters of protection. No electronic health record system exists that appropriately captures personal injury case statuses or liens, and none have the third-party liability concept built into them. There is also no workflow or status option fit for personal injury cases, so a medical practice’s results are only as good as their manual follow-ups and what they are able to track in Excel.

Gain servicing manages LOPs on behalf of healthcare practices. It is a service built on a mix of technology, people and processes, and it is proven to deliver higher reimbursements, at a lower cost, without impacting referrals to the practice.

Here are some of gain servicing’s biggest deliverables to healthcare practices and their investors:

  • More LOP payouts: Gain servicing’s LOP Servicing results in fewer write-offs and greater paid-in-full accounts.
  • Eliminates avoidable losses: Gain servicing follows the lifecycle of unpaid LOPs by tracking the status of the lawsuit underlying each LOP and taking corrective action, if needed.
    Access to the most advanced LOP platform in the world: Built on Salesforce, every gain servicing customer gets the advantages of the most advanced LOP servicing platform in the world.
    Better attorney relationships and referrals: Attorneys prefer when providers use gain servicing because of the automated process, time savings and efficiency, yielding more referrals for the practice and thus revenue and earning opportunity.
  • Actionable business intelligence: Full reporting and analytics provide direct insight into how LOPs are performing and enable a better understanding of the overall revenue generated from LOPs.
    Referral source analysis: gain servicing’s platform tracks every LOP from every referral source. This provides powerful insights into how each referral source reimburses LOPs over time and allows comparison across all referral sources.
  • System agnostic plug-in optionality: Providers who use gain servicing can continue using their existing practice management software while still gaining critical access to gain servicing’s LOP processing capabilities. Gain servicing has experience working with a variety of systems, including AdvancedMD, Allscripts, Athena Health, Azalea Health, Carecloud, Cerner, eClinicalWorks, eMDs, EMA Dermatology (Modernizing Medicine), OmniMD, Practice Expert and many others.
    Private label options: Gain servicing offers private label options where all communications are performed under the provider’s name. The default option is: Gain servicing on behalf of [Provider Name].”

Gain servicing provides servicing to both independent and private equity-backed healthcare practices. Private equity investors rarely want to tell providers how to manage their practice. Instead, they want to support business growth and profitability while enabling providers to do what they do best, provide quality care. Gain servicing enables the predictable cash flow, business intelligence and reporting capabilities both providers and private equity investors both enjoy.


Medical Funding

Medical Liens

Pre-Settlement Funding

Legal Funding


Letter of Protection