Private equity firms had one of their strongest years yet for healthcare services deal activity in 2022, according to an analysis PitchBook published Monday.

An estimated 863 healthcare services private equity deals were announced or closed last year. That’s a nearly 15% decrease from 2021, but a more than 18% increase from 2020, the market research firm reported. PitchBook extrapolated the annual estimate using recorded deals through the third quarter and historical data to approximate fourth quarter transactions.

“2022, by historical standards, is a really good year for healthcare services dealmaking and what we’re seeing in Q4 is sort of a standard, pre-pandemic level of deal activity,” said Rebecca Springer, senior healthcare analyst at PitchBook.

Private equity investment is becoming more prevalent in healthcare as investors look to disrupt the industry and to expand, particularly in specialty care. These deals—and their subsequent cost-cutting measures—have attracted criticism for potentially negative impacts on patient care. But investors continue to seize opportunities within the typically recession-proof sector.

However, the deal count slowed as 2022 progressed due to challenging macroeconomic conditions and higher staffing costs that weighed on the sector. There is also more competition for private capital as market lenders are less willing to take on risk. Smaller deals tend to be more successful, Springer said.

There were an estimated 158 deals in the fourth quarter, down from 214 transactions during the third quarter. They cover a wide range of services, including dental, home health and multispecialty care.

The number of deals is expected to decline further in the first half of 2023, and macroeconomic conditions will largely determine what happens in the second half of this year, according to PitchBook.

Private equity investors continue to see great potential in primary care, particularly for older patients and for Medicare Advantage-focused platforms. But the number of primary care transactions fell to an estimated 14 last year, compared with 25 in 2021 and 17 in 2020. Springer attributed the decrease to the market readjusting as the COVID-19 pandemic progressed and said there are still plenty of available deals.

“There’s a lot of chess being played in primary care,” Springer said. “Right now, there are a lot of groups that are trying to establish as big a footprint as they can quickly to get ahead of the value-based care trend that we’re all moving towards.”

A growing number of “payviders” such as UnitedHealth Group and Humana and big retailers such as CVS Health and Walmart, are investing in clinical operations. Adding to the competition are value-based care enablement companies that provide software and management support to providers adopting value-based contracts and taking on upside risk. More private equity firms are exploring these partnerships as a less capital-intensive option that could culminate in buyouts.