The Dynamics of the Roll-up Practice in the German Healthcare Sector

In the vibrant DACH region’s healthcare sector, private equity investors are increasingly deploying roll-up strategies to consolidate fragmented industries and enhance value. This method involves acquiring multiple smaller companies in the same industry and merging them into a single entity to capitalize on synergies and economies of scale. This approach is particularly relevant in healthcare, where the fragmentation of service providers like dental clinics, radiology centers and general practitioners offers ample opportunities for consolidation.

Insights from Winterberg Group

Winterberg Group, a multi-family office investment firm and a trailblazer for SMEs in healthcare, has identified this strategy as one of the best practices for investors. Fabian Kroeher, Partner and Co-Founder of Winterberg Group, emphasizes the potential benefits, stating, “The opportunity to streamline operations and centralize administrative functions offers tremendous value creation potential in the fragmented healthcare sector.”

PE Investors and Their Activities in the DACH Region

The landscape of healthcare roll-ups in the DACH region is populated by a variety of PE investors, each focusing on different sub-sectors within healthcare.

Key Players in Dental Sector Consolidation. Notable among them is Castik Capital Partners based in Munich, which has made significant strides with its investment in All Dent, a German operator of dental centers. Similarly, Investcorp, a global player from Bahrain, has taken significant steps with Acura, a network of approximately 100 dental practices led by former practice owners and business professionals.

Expanding European Influence and Specialized Investments. Further north, Nordic Capital out of Stockholm focuses on a broader European strategy but includes significant activity in DACH through the European Dental Group, a conglomerate of dental practices spread across six countries, including Germany. On a more specialized front, HTGF Founders Fund in Bonn supports PraxisEins, a German network aimed at addressing the looming general practitioner care shortages.

Investments in Specialized Healthcare Networks. Another significant player is Nord Holding, which invested in ZG Zentrum Gesundheit, a network of ophthalmologists and eye surgery centers primarily within Germany. Meanwhile, Telemos Capital from London has expanded its healthcare footprint with Sanoptis, a network of 400 ophthalmologic clinics across Europe, and with Stingray, an alliance focusing on cancer therapy practices in France and Germany.

Strategic Insights and Execution

Successfully rolling up healthcare entities in the DACH region requires a diligent strategy that hinges on several key practices. Kroeher underscores, “Standardizing operations and implementing best practices across all acquisitions is crucial. This not only reduces costs but also enhances patient outcomes significantly.”

Centralization and Bargaining Power. Centralization of administrative functions also plays a critical role. “By consolidating tasks such as HR, payroll, and compliance under one roof, we not only reduce redundancy but also enhance our negotiating power with vendors and suppliers,” Kroeher adds. Consequently, this enables negotiating better terms with vendors and suppliers. This strategic centralization optimizes back-office operations of healthcare practices.

Leveraging Healthcare IT Systems. In the digital age, embracing robust healthcare IT systems is non-negotiable. Kroeher notes, “A best-in-class practice management system lays the groundwork for seamlessly integrating smaller practices.”

Diligent work by heart. Lastly, conducting proper due diligence is indispensable. . Investors must perform thorough financial and tax due diligence to verify historical financial results and identify any potential liabilities before sealing the deal. This level of scrutiny ensures that the roll-up strategy is built on a solid foundation, mitigating risks and setting the stage for sustainable growth.

Avoiding Common Pitfalls

While the potential benefits of roll-up strategies in healthcare are significant, certain pitfalls must be avoided to ensure the success of such ventures.

Underestimating data policies. One of the most common mistakes is underestimating the importance of data policies. Failure to adequately back up data or secure sensitive patient information can lead to substantial fines and severe legal problems, highlighting the necessity of robust data management practices.

Regulatory Compliance. Moreover, compliance with regulatory standards cannot be overlooked. The healthcare sector is heavily regulated, and each acquisition must be thoroughly evaluated for its compliance posture. Neglecting this aspect can expose the roll-up to potential fines and legal challenges.

Overlooking billing practices. Additionally, investors must be cautious not to overlook the billing practices of target acquisitions. If a target practice employs more aggressive billing tactics than the acquiring system, this can lead to discrepancies in revenue projections post-acquisition. It’s crucial to align these practices to avoid unexpected shortfalls in revenue and adjust the purchase price accordingly.

Integration challenges. Managing the integration of multiple practices at the same time, appears as a further noteworthy challenge. “Ensuring a smooth transition requires well-structured planning and consideration of the cultural fit among the practices,” Kroeher advises. “Misjudging the compatibility of those practice cultures and systems can impede integration efforts.”


By and large, successful healthcare roll-ups depend on thorough standardization and centralization of operations, leveraging bargaining power and ensuring robust compliance with regulatory standards. Investors must avoid pitfalls such as underestimating integration challenges, overlooking billing practices and neglecting the cultural fit of acquired entities. Each acquisition should not only enhance operational efficiency, but also align with a broader strategic vision aimed at increasing the entity’s overall value and market presence.

Kroeher concludes, “With strategic foresight and careful execution, healthcare roll-ups can significantly increase value and operational efficiency, positioning these entities for greater success in a competitive market.”