Here’s Where Private Equity Is Most Involved in Medicine

When it comes to private equity investment in physician practices, variations exist across geographic regions and medical specialties, according to research announced by the National Institute for Health Care Management (NIHCM) Foundation this week.

Of the six specialties reviewed, the proportion of physicians working in private equity-acquired practices was highest in dermatology (7.5%) and gastroenterology (7.4%), and in the Northeast region (6.8%), reported Yashaswini Singh, MPA, of Bloomberg School of Public Health at Johns Hopkins University in Baltimore, and colleagues.

Other specialties that saw a higher percentage of physicians working in private equity-acquired practices included urology (6.5%), ophthalmology (5.1%), obstetrics and gynecology (4.7%), and orthopedics (1.9%), the team noted in JAMA Health Forum.

While private equity penetration was highest in the Northeast, it was lowest in the Midwest (3.8%). The states that had the highest private equity penetration were Arizona (17.5%), New Jersey (13.6%), Maryland (13.1%), Connecticut (12.6%), and Florida (10.8%). Washington, D.C., had the highest penetration of all areas, at 18.2%.

“These acquisitions don’t take place at random,” Singh told MedPage Today.

Now that the initial legwork is complete, and the research team can see where there is concentrated private equity activity, there is a new set of questions to understand, she said. These include determining what regulatory and economic environments may facilitate such activity, as well as the implications for healthcare spending and patient outcomes.

“Because some private equity acquisitions consolidate physician practices into larger organizations, geographic concentration of private equity penetration may be associated with reduced physician competition, which could lead to increased prices,” the researchers wrote in their study.

The goal is to identify unintended spillover effects of private equity acquisitions, Singh noted. If those are beneficial, such as large influxes of capital that improve technology, infrastructure, or patient wait times, then it can be desirable to incentivize policies that foster such acquisitions. At the same time, it’s important to pay close attention to any negative effects, such as diminished quality of care or access to care.

For this cross-sectional study, the researchers examined 2019 data from the IQVIA OneKey database, which includes physician and practice information on 9.7 million health professionals. The data were compiled from the American Medical Association Physician Masterfile and proprietary data collection.

The 2019 data included 97,094 physicians across the six specialties, of whom 4.9% worked in private equity-acquired practices.

Private equity penetration was calculated at the hospital referral region and state level as the estimated percentage of physicians practicing in the six specialties who belonged to private equity-acquired practices.

Among 200 hospital referral regions, a mean of 5.6% of physicians were in private equity-acquired practices.

The researchers acknowledged that the data may not have captured all private equity acquisitions, potentially underestimating the prevalence of physician practice penetration. In addition, use of secondary data from OneKey may include sampling and measurement error.