There’s been an uptick in the number of radiologists and other specialists moving under private equity ownership, a trend that warrants further investigation, according to a new JAMA analysis.
Researchers reported a more than doubling of physician practices acquired by such investors between 2013 and 2016, from just 59 up to 136 by the end of the study period. The number of radiology-dedicated practices in this tally was low. However, investigators did find a notable number of imaging physicians in multispecialty groups moving under an investor umbrella, from just four radiologists in 2013, up to 159 in 2015.
This trend comes at a time when Congress is scrutinizing private equity’s role in care delivery as part of an effort to rein in surprise medical bills. Oftentimes, investors’ strategy involves acquiring “platform” practices with large footprints, and subsequently increasing value by gobbling up smaller groups to expand market reach, the team wrote in its Feb. 18 letter.
“Research is needed to understand the effect of these acquisitions and to mitigate unintended consequences,” wrote lead author Jane Zhu, MD, with the Division of General Internal Medicine and Geriatrics at Oregon Health and Science University. “Private equity firms expect greater than 20% annual returns, and these financial incentives may conflict with the need for longer-term investments in practice stability, physician recruitment, quality and safety. There may be additional pressures to increase revenue streams, direct more referrals internally and rely on lower-cost clinicians.”
Zhu and co-authors gathered their numbers by marrying M&A data from Irving Levin Associates and general practice information from SK&A. The match was not perfect, but authors did log a more than 82% overlap in all of the years included.
All told, the investigators reported 355 physician practice acquisitions during the four-year period, involving 1,426 care sites and 5,714 docs. Anesthesiology (19%), multispecialty (19%), emergency medicine (12%), family practice (11%), and dermatology (10%) represented the most commonly acquired medical groups. Radiology, cardiology, ophthalmology and obstetrics/gynecology also saw increases in private equity activity during the study period. Overall, the 252 radiologists included in the study represented about 4.4% of total practice acquisitions.
The study was limited to only private equity deals that were reported publicly, likely leaving out smaller practices. Plus, available data typically lags behind “the rapid pace of private equity acquisitions,” the team noted.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.