With more than 180 deals announced so far in 2019, the Physician Medical Group sector is roaring toward another strong close. The usual specialties—dental, dermatology and ophthalmology—are still very active, but after 10 to 20 years of consolidation, their trajectories are flattening.

Other specialties are gaining traction with private equity investors, particularly orthopedics, gastrointestinal (GI), urology, pain management and women’s health. Even ear, nose & throat (ENT) deals are picking up. We spoke with a few deal makers to find out where this sector stands at the end of 2019 and what’s ahead for M&A in 2020.

The hot areas this year have been surgical subspecialties, according to Gary Herschman, a member of Epstein Becker Green’s Health Care and Life Sciences practice and its Board of Directors. “GI, ortho, urology are the areas where we have the most work going on,” he said recently. “We’ve seen a pick-up in OB/GYN-women’s health deals. That area is getting hot, in general.”

Private equity investors are looking for growth and one way to get it is to add on ancillary services that add value, he said. “Ortho is my favorite. They can have physical therapy, durable medical equipment, urgent care, lab services. The same is true with GI practices that have pathology labs, ambulatory surgery centers, infusion therapy and more. All of those services add value.”

Another valuation booster is brand recognition, particularly for retail practices like vision care. Goldman Sachs‘ (NYSE: GS) private equity arm, West Street Capital Partners, paid $2.7 billion in June for Capital Vision Services LP, a 560-physician optometry chain doing business as MyEyeDr. Atlas Partners and Canadian pension fund CDPQ paid $715 million for the business in 2015.

“Groups that have very strong brand recognition and a differentiated patient experience will receive premiums from investors since the branding and marketing opportunities offer investors more value-creation tools,” said Luke Mitchell, a partner and managing director at Edgemont Partners.

Where’s the slowdown? “We’ve seen some reduction in deal volume in specialties that are further along the consolidation curve, for example in dermatology, but it’s also very geography dependent,” Mitchell noted. “There remains strong interest for high-quality groups with differentiated market positions and healthy growth.  However, as the larger platforms potentially prepare themselves for their second or third ‘flip,’ the number of bidders that a group could expect to entertain offers from has come down.”

One deal that could truly be called transformational this year was the merger of Summit Medical Group, a 900-plus physician multi-specialty group with more than 80 locations in New Jersey, with CityMD, a portfolio company of Warburg Pincus and the leading urgent care provider in the New York metro area with more than 120 locations. The combined organization aims to deliver high-quality medical care, of course, but the key component is convenience, delivered via its network of physicians and care locations from New Jersey to Long Island, New York.

“That was a huge transaction,” Herschman agreed, not only because of the scale. “That’s the future, where multi-specialty practices are married to urgent care. They’ll have all the ancillaries. Maybe that’s where private equity will be exiting.”

Edgemont’s Mitchell sees more deals like this coming along. “Many of the largest single-specialty platforms are outgrowing their core markets and starting to encroach on each other. I expect 2020 will bring an increase in activity among the large consolidators within each specialty.” As the 20-plus platforms in both dermatology and ophthalmology compete for patients, physicians and markets, many investors will decide they are better off combining resources instead of battling it out, he added.

Looking ahead, EBG’s Herschman sees deal volume continuing to rise for the next year or two. “Eventually multiples will come down from where they are now. Small practices are going for 5x to 8x or 9x now and the larger ones (40 to 50 physicians) are getting 9x to 15x. I don’t know how long that’s sustainable,” he said.

Don’t expect any IPOs, either, Mitchell added, given that 2020 is an election year. Private equity interest will remain very strong, though, and he expects to see plenty of attractive private-market opportunities.