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Rising patient costs tied to private equity ownership


Private equity ownership of medical practices was linked to consumer price increases for 8 of 10 specialties examined in a new report, with the most notable gains reported for oncology and gastroenterology.

The report was a collaboration of University of California, Berkeley, staff and researchers from two nonprofits, the American Antitrust Institute and the Washington Center for Equitable Growth. It provides “convincing evidence that incentives to put profits before patients have grown stronger with an increase in private equity ownership of physician practices,” lead author Richard Scheffler, PhD, of UC Berkeley said in a statement.

The report also noted that private equity acquisitions of physician groups have risen sixfold in just a decade, increasing from 75 deals in 2012 to 484 deals in 2021.

Separately, the American Medical Association earlier released a separate report on trends in physician practice arrangements, finding that the percentage of physicians working in private equity–owned groups was 4.5% in 2022, the same as in its previous 2020 report. The share of physicians working in private practices fell by 13 percentage points from 60.1% to 46.7% between 2012 and 2022, the AMA reported.

The Berkeley report and the AMA update come amid rising concerns about the effects of the decline of independent physician practices. The U.S. Senate Finance Committee, which oversees most federal health spending, held a June hearing examining the causes and consequences of increased corporate ownership in health care, including a look at physician practices.

“It’s increasingly clear that consolidation in health care is not lowering costs or increasing the quality of Americans’ health care,” Senate Finance Chairman Ron Wyden (D-Ore.) said in an email. “For private equity in health care in particular, there needs to be more transparency around ownership so the effect on these business relationships can be better understood.”

Federal and state agencies do not generally track acquisitions of physician practices.

The UC Berkeley report impressively documents the rising influence of private equity in health care, for which it’s tough to find good data, said Karen Joynt Maddox, MD, MPH, of Washington University in St. Louis. Dr. Maddox, a cardiologist and policy researcher who also has studied the effects of consolidation in health care, examined the new report at the request of this news organization.

“They did a great job with the data,” Dr. Maddox said. “One of the big issues around private equity, and in general, ‘corporatization’ and consolidation of health care, is that there’s not a great way to track ownership changes. It’s really difficult to study.”

Dr. Scheffler and colleagues used data from the commercial firm PitchBook to identify acquisitions of physician practices by private equity firms. They consulted IQVIA’s physician databases – OneKey and SK&A Office-Based Physicians Database – to learn about the location, size, and specialties of acquired practices. They also used data from the nonprofit Health Care Cost Institute, which tracks commercial health plan claims, to assess how private equity acquisitions affected prices.

The researchers then matched the findings for practices acquired by private equity firms from 2015 to 2021 against those for comparable physician practices that remained independent from 2012 to 2021.

The authors then tied private-equity ownership to the following price increases:

  • Gastroenterology (14%; 95% confidence interval, 7.9%-20.4%
  • Oncology (16.4%; 95% CI, 5.5%-28.4%)
  • Dermatology (4.0%; 95% CI, 1%-7.1%)
  • Ob.gyn. (8.8%; 95% CI, 3.8%-14%)
  • Ophthalmology (8.7%; 95% CI, 5.1%-12.3%)
  • Radiology (8.2%; 95% CI, 0.8%-16.1%)
  • Orthopedics (7.1%; 95% CI, 2.2%-12.3%)
  • Primary care (4.1%; 95% CI, 1.3%-7%)

The analysis also found higher prices for cardiology (8.7%; 95% CI, –6.4% to 26.1%) and urology (4.2%; 95% CI, –2.3% to 11.1%), but neither of these findings was statistically significant, one of the authors, Daniel R. Arnold, PhD, of UC Berkeley, said in an email. This was most likely caused by smaller sample sizes for these fields.

Factors driving consolidation

The two reports and the Senate Finance consolidation hearing raised similar issues, including calls to look at the factors driving more physicians out of independent practice, including Medicare reimbursement that may not keep up with rising inflation.

The Berkeley report authors called for Congress to add a broad inflation component to the Medicare physician fee schedule. It also called on Congress to add cases where Medicare, the biggest U.S. purchaser of health care, pays less for services when performed in independent practices than in hospital-affiliated ones.

Shawn Martin, executive vice president and CEO of the American Academy of Family Physicians, said his group appreciates how the report from UC Berkeley and nonprofit groups echoed recommendations many clinicians have made, including the call for a broad inflation adjustment for the fee schedule.

“To move the needle forward, Congress must advance site-neutral payment policies while also addressing the administrative requirements that take physicians away from the important work of caring for patients,” Mr. Martin said in an email.

Arnold Ventures provided funding for the report, which was a joint project of the American Antitrust Institute, the Nicholas C. Petris Center on Health Care Markets and Consumer Welfare, UC Berkeley, and the Washington Center for Equitable Growth.

A version of this article appeared on

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