Study Shows Private Equity Acquisitions Of Physician Practices Result In Price Hikes

Private Equity Firms Quickly Gaining Control of the Physician Practice Market, Leading to Price Hikes

Recent research shows that private equity firms are rapidly acquiring physician practices all across the nation, providing them with a significant market share and leading to a significant rise in medical prices in many specialties. According to the study, price hikes were associated with PE acquisitions in 8 out of 10 specialties, especially in metropolitan areas where the firm controls more than 30% of the market. Price surges were especially obvious in fields like gastroenterology, with a 14% increase; and oncology and ophthalmology, with 16% and 9% increases, respectively.

The number of metropolitan areas in which a private equity firm served half or more of a market has seen a noticeable rise from 2012 to 2021. The study revealed that in 2021, there were a total of 484 acquisitions by private equity firms, with the highest number in dermatology, ophthalmology, gastroenterology and primary care.

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The findings of this research has caught the eye of antitrust enforcers, leading Andrew Forman, Deputy Assistant Attorney General, to comment, “To the extent that private equity transactions and conduct are focused on short-term gains and aggressive cost-cutting in the health care space, they can lead to disastrous patient outcomes.”

However, Drew Maloney, President of the American Investment Council, seeks to provide a more balanced viewpoint: “Private equity investment is helping improve patient care and ensuring that residents have high quality facilities in their local communities. By partnering with private equity firms, physicians have more time to focus on caring for patients and benefit from experienced management teams, better technology, and stronger networks.”

As it currently stands, the vast majority of acquisition in this report took place without federal antitrust scrutiny and with limited state antitrust scrutiny. Several people are keeping a close eye as it’s uncertain what the systemic changes in the health care sector will cause in the long run.