Most healthcare deal teams are reactive.
They build a buy-box. They tell the bankers what they are looking for. They wait for the CIM to hit their inbox. And by the time they see the deal, so has everyone else in the market.
The result is predictable: you end up in a banker-run auction alongside four other bidders, working off the same CIM, racing through the same compressed diligence timeline, and overpaying for assets that half the market was already underwriting.
Bain and Sutton Place Strategies found that the average PE firm only sees 18% of the intermediated deals relevant to their strategy. For every 10 deals that should be crossing your desk, you are seeing fewer than 2.
And this is in a market that just hit $191 billion in healthcare PE deal value last year across 445 buyouts. That is not a rounding error. That is a structural gap in how most teams approach sourcing.
The firms that consistently get to sellers first are not waiting for processes. They are building pipelines before a banker ever gets hired. Here is how that works in practice.
On Thursday, I am breaking down the other side of this equation: the real cost of building this capability in-house. FTE cost, ramp time, SG&A drag, EBITDA impact at exit, and what it does to deal velocity when your team is building infrastructure instead of closing. If you are weighing hire vs. outsource, that one is for you.
Start With a Buy-Box That Actually Filters
"We like [specialty] in the Southeast" is not a buy-box. It is a preference.
A buy-box that drives real sourcing has hard parameters:
Specialty and sub-specialty: Every healthcare vertical has sub-segments with different reimbursement dynamics, referral patterns, and competitive landscapes. "We like urgent care" is not the same as "we want multi-site urgent care groups with 5+ locations, commercial-heavy payer mix, in MSAs where we already have health system partnerships."
Geography: State-level is too wide. Define it by MSA, by county, or by proximity to your existing footprint. A group 30 minutes from your flagship location is a different strategic conversation than one 4 hours away.
Size thresholds: Provider count, location count, estimated revenue range. A 2-provider single-site practice is a tuck-in. A 15-provider, multi-location group is a platform anchor. Your approach strategy is completely different for each.
Ownership type: Founder-owned with no succession plan? Group-owned with a management company? Already PE-backed and looking for a secondary? Each of these requires a different sourcing lens and a different pitch.
Payer mix signals: Heavy Medicare? Commercial-dominant? Medicaid exposure? This shapes your underwriting thesis before you ever see a financial statement.
The sharper the buy-box, the smaller and more actionable the target universe becomes. You are not trying to boil the ocean. You are trying to get from 200 names to the 10-15 that actually warrant a conversation.
Build the Target Universe Before Anyone Else Is Looking
Most teams start sourcing when they decide they want to enter a market. The best teams have already built the map.
The raw inputs are more accessible than most people think:
State licensing databases will tell you who is licensed to practice, where, and under what entity structure. This is public information in most states.
NPI registries give you provider-level data tied to practice locations, specialties, and taxonomy codes. You can build a surprisingly detailed picture of a group's footprint from NPI data alone.
Payer directories show you which providers are in-network with which plans, which is a proxy for payer mix and patient volume.
Professional association member lists often include practice details, years in practice, and leadership roles that signal seniority and potential succession timing.
Commercial data providers layer in revenue estimates, employee counts, and ownership history.
Here is where AI changes the game. What used to take an analyst two to three weeks of manual research, pulling records one by one, cross-referencing across databases, cleaning and deduplicating, can now be compressed into hours. The data is publicly available. The tools to extract and structure it exist. The bottleneck is not access. It is knowing which sources to pull from, how to cross-reference them, and what the output needs to look like for a deal team to actually act on it.
The goal at this stage is volume. You want to start wide, 200+ names for a state-level market screen, and then filter down against your buy-box criteria. Most of these names will not survive the first pass. That is the point. You are building a funnel, not a shortlist.
Score and Rank: Separate Signal From Noise
A list of 200 names is not a pipeline. It is a spreadsheet. The step that turns data into strategy is scoring.
Every target should be evaluated on a consistent set of criteria. From what I have seen work well:
Scale and footprint: How many providers? How many locations? Is the footprint concentrated or scattered? Concentrated footprints are operationally easier to integrate. Scattered footprints might give you geographic coverage but create management complexity.
Succession signals: Is the founder approaching retirement age? Are there junior partners in the group, or is it a single-owner practice? A 62-year-old solo practitioner with no succession plan is a very different conversation than a 45-year-old with two junior partners building for the next decade.
Competitive positioning: Is this the dominant group in their market, or one of five? Dominant groups command premium valuations but give you immediate market share. Smaller groups might be more affordable but require more build-out.
Strategic fit: Does this target plug a geographic gap? Does it add a sub-specialty you do not have? Does it give you enough density in a market to negotiate better payer contracts? The best targets check more than one box.
Approachability: Has this group been marketed before? Are they known to be receptive to conversations, or have they turned down every banker who has called? This is harder to quantify but it matters for sequencing.
AI can accelerate the data gathering here, but it cannot replace the judgment. Knowing that a 62-year-old founder with no junior partners is a higher-priority conversation than a 45-year-old building a group practice, that comes from having sat across the table from these owners and understanding what drives their decisions. The scoring model is where deal experience and AI infrastructure meet.
Weight these based on what matters most for your specific thesis, and you go from a flat list to a ranked pipeline where the top 10-15 names are genuinely worth pursuing.
Map the Competitive Landscape
Your target list does not exist in a vacuum. Before you approach anyone, you need to know who else is in the market.
For every geography you are evaluating, map:
Which groups are already PE-backed? Who is the sponsor? When did they acquire? Are they in buy-and-build mode or approaching an exit? A market where three PE-backed platforms are actively acquiring is a very different dynamic than one with a single incumbent.
Where are the white spaces? Are there MSAs or counties with no PE presence at all? Those are your first-mover opportunities. The absence of competition is a data point.
What is the consolidation trajectory? Is this a market where 2 of 30 groups are PE-backed, or 15 of 30? Early-stage markets give you more targets and more pricing flexibility. Late-stage markets mean you are fighting for what is left.
This competitive map is what turns a target list into a market entry strategy. It tells you not just who to approach, but in what order and with what narrative. And most of this data is sitting in public filings, press releases, and industry databases waiting to be structured. The teams that have built the systems to pull it together quickly are operating with a fundamentally different information advantage than the ones doing it manually.
Sequence the Approach
Not every target on your list should get the same outreach at the same time. The best teams sequence strategically.
Beachhead first. Identify the 1-2 targets that give you immediate credibility in the market. These are typically the larger, more established groups that, once acquired, signal to every other practice in the region that you are a real buyer. When a 10-provider group in a target market hears that you just acquired the market leader, the next conversation gets a lot easier. And if you get to the founder before a banker does, you are negotiating one-on-one instead of bidding in a process.
Add-ons second. Once the beachhead is established, smaller tuck-in acquisitions become both easier to source and easier to close. Founders who were not interested in selling to an unknown platform become interested when you already have local infrastructure, management support, and a track record of keeping clinicians autonomous.
Watch-list third. Some targets are not ready today but will be in 12-18 months. The founder is not quite at retirement. The group just signed a new lease. Keep them in the pipeline, nurture the relationship, and be the first call when the timing shifts. The goal is that when they are ready to have the conversation, they call you directly instead of hiring a banker to run a process.
This sequencing is what separates a reactive deal team from a proactive one. You are not just finding targets. You are building a sequenced playbook for market entry that accounts for timing, competitive dynamics, and strategic fit.
What the Finished Product Looks Like
When this process is executed well, the output is not a list. It is a market entry package:
A scored and ranked target pipeline with priority tiers
Anonymous profiles with provider counts, location types, payer mix indicators, and succession signals
A competitive landscape map showing every relevant PE-backed platform by location count and sponsor
A market entry recommendation with beachhead targets, add-on sequencing, and approach strategy
The full target detail behind the anonymous profiles: practice names, ownership, contact paths, and a ready-to-pitch shortlist
The teams that invest in building this infrastructure before they need it are the ones having direct conversations with founders on their own terms, without a banker in the middle. The ones waiting for the next process to land in their inbox are showing up to auctions wondering why the price is already where it is.
The tools to build this exist. The question is whether your team has the system to turn them into a pipeline.
If you are building a healthcare platform and want to see what this looks like for your specific market and buy-box, I would be happy to talk through it.