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Home Health Who Employs Your Doctor? Increasingly, a Private Equity Firm

Who Employs Your Doctor? Increasingly, a Private Equity Firm

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Private equity firms have been eating away at doctors’ jobs in recent years, according to one source, forming powerful medical groups across the country. new report Released on Monday.

in more than a quarter of local markets such as Tucson, Arizona. Columbus, Ohio. and Providence, Rhode Island — In 2021, a single private equity firm owns more than 30 percent of his operations in certain specialized areas. With 13 percent of the market, these companies owned groups that employ more than half of the local professionals.

A paper by medical researchers found that medical groups were associated with higher prices in their respective markets, especially when they controlled dominant shares. Petris Center at the University of California, Berkeley, Washington Center for Equitable GrowthWhen a company controls more than 30% of the market, the three specialties of gastroenterology, dermatology, and obstetrics and gynecology see double-digit increases in healthcare spending.

The paper, published by the American Antitrust Association, documents large private equity purchases across multiple medical specialties over the past decade. Urology, ophthalmology, cardiology, oncology, radiology and orthopedics are also prime targets for such deals.

“It’s shocking to see this,” said Laura Alexander, director of market and competition policy at the Washington Center, who said a decade ago private equity firms dominated a handful of markets. . Researchers were able to document regional impacts by examining individual markets. “Domestic interest rates mask this more serious problem in local markets,” she said.

High premiums paid by private insurance companies can lead to higher insurance premiums and increased out-of-pocket costs for patients.

Private equity firms, which collect funds from institutional investors and individuals to form investment funds, tend to use debt to buy companies with the intention of reselling them in a few years. While the industry has only recently turned to healthcare, it has begun steadily buying up doctor’s offices, combining smaller clinics into larger companies.

When Omars Private Equity, the private equity arm of a Canadian pension fund, was acquired stomach healthThe large gastroenterology medical group is on track to acquire nearly a dozen smaller clinics in 2021, the researchers said, making it a dominant player in markets including the Miami area. It is said that The company currently operates in seven states and employs more than 390 doctors. Researchers have observed a similar pattern in other markets, with companies buying one large clinic and then adding smaller nearby clinics of the same medical specialty to expand the market. The idea was to increase market share.

Historically, physicians’ offices were relatively small and owned by the physicians themselves. But as the medical business becomes more complex and more insurance companies negotiate prices with doctors, this model is rapidly declining. Nearly 70% of all doctors will be employed by hospitals or businesses by 2021, according to one study. Recent analysis From the Physician Advocacy Institute.

“We’re seeing a fundamental shift in the way health care 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 bought out many independent doctors’ practices. Optum, a division of the publicly traded UnitedHealth Group, is also one of the nation’s largest insurers and employs about 70,000 doctors. Studies have shown that such concentrated ownership of physicians in certain markets is also associated with issues such as: higher price.

Private equity is often viewed by doctors as an attractive alternative to having their practice bought out by a hospital. Lisa Walsh, national managing principal of professional services firm Grant Thornton, said doctors are growing in size and becoming more efficient, including administrative and technical support. said. “It may be a very good thing, but private equity firms have to keep their promises and be held accountable,” she said.

Private equity firms “provide the scale at which independent start-up groups can survive and maintain their autonomy,” said Michael Kroyne, founder and chief executive of Physician Growth Partners, a Chicago-based firm that advises independent start-ups. there is,” he said. Given rising costs and pressure from insurers, if possible, “any independent organization would want to raise their fees,” he said.

The private equity industry is beginning to come under particular scrutiny from academics and policy makers.Under consideration by congressmen law Require more reporting when a company acquires a healthcare company. Acquisition tracking can be difficult today. The authors of the new paper used data on transactions from a company called PitchBook to match doctors in a medical claims database to measure payments from private health insurance companies.

The researchers weren’t sure whether the increased payments they measured were due to doctors performing more complex procedures or simply negotiating higher prices, but most of the effect was I thought that was explained by the price.

Previous Research on Private Equity Acquisitions hospital and doctor’s treatment Zirui Song, associate professor of health policy and medicine at Harvard Medical School, also recorded an increase in revenue with the purchase. Dr. Song said in an interview that he expects the industry to continue buying out doctors’ practices in the next few years. “We still have a lot of small specialty clinics owned by doctors,” he said. “It’s an opportunity for integration. It’s an easy opportunity.”

Industry critics, including Professor Schaeffler, also expressed concern about the care provided by private equity-owned healthcare companies, arguing that the industry’s focus on profit could harm patients.Investigation into Private Equity Ownership nursing home Evidence of low staffing levels and high antipsychotic prescribing rates.

However, few rigorous studies have been published on patient care in the office-based medical specialties on which new papers focus.

Barack Richman, a professor of law and management at Duke University who reviewed the paper, commented on how changes in ownership and independence affect doctors and how they treat their patients “sufficiently.” It hasn’t been studied,” he said. But he said there is evidence that these companies are adept at exploiting existing regulatory loopholes to maximize profits.

“Private equity is like a system on steroids,” says Sherry Glyde, dean of New York University’s Wagner School of Public Service. “Every time there is an opportunity to make money, PE moves faster than others. And integration is the way to do that.”

While federal regulators are considering changing how they oversee these deals, the researchers say the report will keep an eye on what happens when companies make one seemingly modest acquisition after another. He stresses the need. Erin Hughes Brown, director of the Georgia State University Center for Law, Health, and Society, said, “This is a powerful antitrust tool to meet the increasingly smaller, but collectively larger, trend of consolidation. It is the basis for the

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