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Private Equity Continues to Buy More Physician Practices

By Jack O'Brien  
   February 19, 2020

A new study in JAMA found that physician practice acquisitions by private equity firms increased from 2013 to 2016.

There were more than 350 physician practice acquisitions by private equity firms between 2013 to 2016, according to a JAMA study released this week.

The study found that physician practices increased from 59 in 2013 to 136 in 2016, as more than 80% of acquired practices reported accepting additional patients.

The mean for acquired practices was four care sites, just over 16 physicians per practice, and six physicians associated with each site.

Related: The Role of Private Equity in Driving Up Healthcare Prices

Despite findings that point to increased activity among private equity around the physician practice space, including in years beyond the study's scope, researchers said there remain "unknown implications for care delivery and patient outcomes."

"A dearth of evidence and the use of nondisclosure agreements at early stages of negotiation have constrained the ability to evaluate this phenomenon empirically," the study stated.

Most represented specialty groups acquired by private equity:

  1. Anesthesiology (19.4%) 
  2. Multispecialty (19.4%)
  3. Emergency medicine (12.1%) 
  4. Family practice (11.0%)
  5. Dermatology (9.9%)

Researchers found that the most represented specialists in acquired practices were anesthesiologists, accounting for just over one-third of physicians.

Meanwhile, the study acknowledged an increase in the amount of additional specialty groups acquired from 2015 to 2016, including: cardiology, ophthalmology, radiology, and obstetrics/gynecology.

Related: Humana, Private Equity Firm Form Value-Based Joint Venture

JAMA researchers stated that private equity firms see ample business opportunities in the physician practice space, expecting annual returns greater than 20%.

The study comes more than a year after a Weill Cornell Medicine study published in the Annals of Internal Medicine found that private equity has flexed its muscle in recent years through acquisitions centered around specialty areas with potential for additional income. 

The Weill Cornell Medicine study looked at the acquisition trends for physician practices in 2017 and highlighted the rise of "the "corporatization of medicine."

However, like the JAMA study, the researchers were unable to indicate what impact this trend has had on quality of care and patient outcomes due to a lack of available evidence.

Related: Private Equity Purchasing More Physician Practices

Related: Private Equity Fleeing Hospitals

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

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