[ad_1]
In recent years, private equity firms have gobbled up medical practices to form powerful medical groups across the country, according to a new report released on Monday.
In more than a quarter of local markets – in places like Tucson, Arizona; Columbus, Ohio; and Providence, RI – a single private equity firm owned more than 30% of practices in a given specialty in 2021. In 13% of markets, firms owned groups employing more than half of local specialists.
Medical groups were associated with higher prices in their respective markets, especially when they controlled a dominant share, according to a paper by researchers from the Petris Center at the University of California, Berkeley, and the Washington Center for Equitable Growtha progressive think tank in Washington, DC When one company controlled more than 30% of the market, the cost of care in three specialties — gastroenterology, dermatology, and obstetrics and gynecology — rose by double digits.
The document, released by the American Antitrust Institute, documented large private equity buyouts in several medical specialties over the past decade. Urology, ophthalmology, cardiology, oncology, radiology and orthopedics were also the main targets of these operations.
“It’s shocking when you look at it,” said Laura Alexander, director of markets and competition policy at the Washington Center, who said private equity firms dominated only a handful of markets there. ten years old. By examining individual markets, researchers were able to document local impact. “National rates mask this much more acute problem in local markets,” she said.
The higher prices paid by private insurers contribute to high insurance premiums and can increase out-of-pocket costs for patients.
Private equity firms, which pool funds from institutional investors and individuals to build investment funds, tend to buy companies on debt, with a view to reselling them in a few years. The industry shifted to health care fairly recently, but it has started buying up medical practices at a rapid pace, combining smaller practices to form larger companies.
When a private equity arm of a Canadian pension fund, OMERS Private Equity, purchased Gastro Health, a major gastroenterology medical group, in 2021 it acquired nearly a dozen smaller practices, according to the researchers, who say the group is now dominant in markets, including the Miami area. The company now operates in seven states, employing more than 390 physicians. The researchers observed similar patterns in other markets, where a company would buy a large practice and then increase its market share by adding nearby smaller practices in the same medical specialty.
Historically, doctors’ offices were relatively small and owned by doctors themselves. But this model has quickly declined as the business of medicine has become more complex and the insurance companies that negotiate with doctors on prices have grown larger. Nearly 70% of all doctors were employed by a hospital or company in 2021, according to a recent analysis from the Physicians Advocacy Institute.
“We are seeing a fundamental shift in the way medicine is practiced in the United States,” said Richard Scheffler, professor of health economics and public policy at Berkeley and director of the Petris Center.
Hospitals and insurance companies also acquired many independent physician practices. Optum, a branch of the publicly traded UnitedHealth Group, which also owns one of the nation’s largest insurers, employs about 70,000 doctors. Studies have shown that these types of concentrated physician ownership in a given market are also associated with higher prices.
Private equity is often seen by physicians as an attractive alternative to hospital buyouts. In part, doctors are “getting bigger and more efficient,” including helping with office administration and technology, said Lisa Walkush, national chief executive of professional services firm Grant Thornton. “That can be a very good thing, but private equity firms need to deliver on their promises and be held accountable,” she said.
Michael Kroin, founder and managing director of Physician Growth Partners, a Chicago firm that advises independent firms, said private equity firms “provide scale for groups of independent firms to survive and maintain their autonomy.” If they could, given their rising costs and how squeezed they feel from insurers, “every independent group would want to raise their fees,” he said.
The private equity sector has begun to come under particular scrutiny from researchers and policy makers. House lawmakers are considering legislation to require more reporting when companies buy healthcare companies. Currently, acquisitions can be difficult to track. The authors of the new paper relied on data on offers from a company called PitchBook, which they then compared with doctors in a database of health care claims to measure payments from private health insurers. .
The researchers couldn’t be sure if the increases in payment they measured were happening because doctors performed more complex procedures or simply negotiated higher prices, but they suspected prices explained most of the effect. .
Previous Studies of Private Equity Acquired Businesses hospitals And medical offices by Zirui Song, associate professor of health policy and medicine at Harvard Medical School, also documented the increased revenue associated with procurement. In an interview, Dr. Song said he expected the industry to continue buying up medical practices in the years to come. “We still have a lot of small specialist doctor-owned practices,” he said. “It’s an opportunity for consolidation. It’s an easy opportunity.
Industry critics, including Professor Scheffler, have also raised concerns about the medical care provided by privately-owned healthcare companies, saying the industry’s focus on profits could harm companies. patients. Research on the private shareholding of retirement homes showed evidence of lower staffing levels and higher rates of antipsychotic medication prescriptions.
But little rigorous research has been published on patient care in the office medical specialties that the new article focuses on.
How changing ownership and independence affects doctors and how they treat patients “has been very little studied,” said Barak Richman, a professor of law and business administration at Duke University, who reviewed the article. But he said there is evidence these companies are adept at exploiting loopholes in existing regulations to maximize their profits.
“Private equity is like the system on steroids,” said Sherry Glied, dean of New York University’s Wagner School of Public Service. “Whenever there is an opportunity to make money, PE is going to move faster than everyone else. And consolidation is the way to do that.
As federal regulators consider changing how they oversee such transactions, the researchers say the report underscores the need to pay attention to what happens when a company makes a series of seemingly small acquisitions. “This argues for strong antitrust tools for these progressively small but collectively larger consolidation trends,” said Erin Fuse Brown, director of the Center for Law, Health and Society at Georgia State University.
[ad_2]
Source link
