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Study finds little impact of private equity on dermatology practices



A new study suggests that private investor ownership of dermatology practices has little impact on spending, but does result in a small increase in the number of patients seen per dermatologist, and slightly higher reimbursement per clinician.

Robert Tyler Braun, PhD, Instructor in Population Health Sciences, Weill Cornell Medicine, NYC

Dr. Robert Tyler Braun

The authors reported that – with an average of five quarters postacquisition – there was no statistically significant differential between investor-owned and non–investor-owned practices “in total spending, overall use of dermatology procedures per patient, or specific high-volume and profitable procedures.”

Essentially, the study findings were equivocal, reported Robert Tyler Braun, PhD and his colleagues at Weill Cornell Medicine, New York. “The results provide mixed support for both proponents and opponents of private equity acquisitions,” they wrote in the study, which was published in Health Affairs.

But two dermatologists not involved with the study said the analysis has significant limitations, including a lack of pathology data, a lack of Medicare data, and a lack of insight into how advanced practice clinicians, such as nurse practitioners and physician assistants, were used by the private equity (PE)–owned practices. The study was not able to track “incident to billing.”

Leaving out Medicare data is a “huge oversight,” Joseph K. Francis, MD, a Mohs surgeon at the University of Florida, Gainesville, said in an interview. “The study is fundamentally flawed.”

“With all of these limitations, it’s difficult to draw meaningful conclusions,” agreed Clifford Perlis, MD, Mbe, of Keystone Dermatology in King of Prussia, Pa.

Both Dr. Francis and Dr. Perlis also questioned the influence of one of the study’s primary sponsors, the Physicians Foundation, formed out of the settlement of a class action lawsuit against third-party payers.

In addition, Dr. Francis and Dr. Perlis said they thought the study did not follow the PE-owned practices for a long enough period of time after acquisition to detect any differences, and that the dataset – looking at practice acquisitions from 2012 to 2017 – was too old to paint a reliable picture of the current state of PE-owned practices. Acquisitions have accelerated since 2017.

In March 2021, Harvard researchers reported in JAMA Health Forum that PE purchases in health care peaked in the first quarter of 2018 and surged to almost as high a level in the fourth quarter of 2020, with 153 deals announced in the second half of the year. Of the 153 acquisitions, 98, or 64%, were for physician practices or other health care services.

Dr. Braun said his study focused on 2012-2017 because it was an available data set. And, he defended the snapshot, saying that he and his colleagues had as much as 4 years of postacquisition data for the practices that were purchased in 2013. He acknowledged there were less data on practices purchased from 2014 to 2016.

“It is possible that our results would change with a longer postacquisition period,” Dr. Braun said in an interview. But, he said there was no way to predict whether that change “would look better or worse for private equity.”


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