Consolidation, “reduced physician competition,” could lead to price increases for patients.
The Northeast, Florida and Arizona are the nation’s hotspots for private equity (PE) firms to acquire physician practices across six specialties.
A new study examined geographic trends of private equity acquisitions of physician offices specializing in dermatology, gastroenterology, ophthalmology, obstetrics/gynecology (OB/GYN), orthopedics, and urology. Among those, less than 10% of physicians worked in PE-acquired practices, as of 2019, based on figures from the IQVIA OneKey database, compiled with the American Medical Association Physician Masterfile and other data.
Health care industry analysts have been examining effects, good and bad, of PE investments in physician practices. The study did not attach financial values to PE transactions and did not examine consequences for patient care, but it did refer to potential price hikes if market competition dries up.
“Because some PE acquisitions consolidate physician practices into larger organizations, geographic concentration of PE penetration may be associated with reduced physician competition, which could lead to increased prices,” the study said. “If PE acquisitions induce practice consolidation among remaining independent practices with financial pressures, this spillover effect may further hinder competition, underscoring the importance of monitoring practice consolidation and the ownership and regulatory environment of acquisitions.”
The research letter, “Geographic Variation in Private Equity Penetration Across Select Office-Based Physician Specialties in the U.S.,” was published earlier this year in JAMA Health Forum.
The study found in 2019, there were 97,094 physicians in the six specialties and 4,738, or 4.9%, worked in PE-acquired practices, the study said. PE penetration was:
Based on state and hospital referral region data, PE penetration was greatest in the Northeast at 6.8%, or 1,270 of 18,708 physicians, and lowest in the Midwest at 3.8%, or 638 of 16,613 physicians. PE penetration was highest in:
This article originally appeared on Medical Economics