Who Employs Your Doctor? Increasingly, A Private Equity Firm: NYT
- 'Who Employs Your Doctor? Increasingly, a Private Equity Firm,' The New York Times, July 10, 2023. Ed. - A new study finds that private equity firms own more than half of all specialists in certain U.S. markets. 🥼
In recent years, private equity firms have been gobbling up physician practices to form powerful medical groups across the country, according to a new report released Monday. In more than a quarter of local markets — in places like Tucson, AZ; Columbus, OH; and Providence, RI - a single private equity firm owned more than 30% of practices in a given specialty in 2021. In 13% of the markets, the firms owned groups employing more than half the local specialists. The medical groups were associated with higher prices in their respective markets, particularly when they controlled a dominant share, according to a paper by researchers at the Petris Center at UC Berkeley, & the Washington Center for Equitable Growth, a progressive think tank in Wash., D.C.
When a firm controlled more than 30% of the market, the cost of care in 3 specialties — gastroenterology, dermatology, and obstetrics & gynecology — increased by double digits. 🚑
- When Private Equity Takes Over: Researchers found that when a firm controlled more than 30% of the market, the prices paid by private insurers for gastroenterology & other specialties increased sharply. Average price of gastroenterology visit. Source: Petris Center on Health Care Markets & Consumer Welfare, UC Berkeley; Wash. Center for Equitable Growth. The paper, published by the American Antitrust Institute, documented substantial private equity purchases across multiple medical specialties over the last decade. Urology, ophthalmology, cardiology, oncology, radiology & orthopedics have also been major targets. "It’s shocking when you look at it,” said Laura Alexander, director of markets & competition policy for the Wash. Center, who said private equity firms dominated only a handful of markets a decade ago.
By looking at individual markets, the researchers were able to document the local impact. “National rates mask this much more acute problem in local markets,” she said.
- Health Care in the US: Private Equity’s Takeover: A new study has found that private equity firms have been gobbling up physician practices to form powerful medical groups across the country. - Drug Shortages: The nation’s monthslong shortage of highly potent cancer drugs is grinding on, forcing patients & their doctors to confront gut-wrenching situations & delays in treatment. - Medicare Advantage: People enrolled in these private plans may not be getting the mental health services they need because they cannot find a psychiatrist within their network, according to a new study. - A Moral Crisis: The corporatization of health care has changed the practice of medicine, causing many physicians to feel alienated from their work.
💸 The higher prices paid by private insurers contribute to high insurance premiums, & may increase out-of-pocket costs for patients.
- Private equity firms, which pool funds from institutional investors & individuals to form investment funds, tend to purchase companies using debt, with an eye to reselling them in a few years. The industry has turned to health care fairly recently, but it has begun purchasing doctors’ practices at a steady clip, combining smaller practices to form larger companies. When a private equity arm of a Canadian pension fund, OMERS Private Equity, bought Gastro Health, a large gastroenterology medical group, in 2021, it proceeded to acquire nearly a dozen smaller practices & is now dominant in markets including the Miami area. The company now operates in 7 states, employing over 390 doctors. The researchers saw similar patterns in other markets, where a firm would buy one large practice, then increase its market share by adding nearby smaller practices in the same medical specialty...https://www.nytimes.com/2023/07/10/upshot/private-equity-doctors-offices.html
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