Study raises red flags on health care privatization

New research reveals that private equity firms that take over physician-owned medical practices appear to be imposing measures to squeeze more profits.

After being acquired by private equity firms, clinics took in more patients and paid more fees for visits among a large commercially insured population, according to a study published in the JAMA Health Forum.1 by researchers at Oregon Health & Science University and other institutions.

The researchers examined a total of 578 physicians specializing in dermatology, gastroenterology, and ophthalmology, which were acquired by private equity firms across the United States from 2016 to 2020.

Said lead researcher Jin M. Chu, MD, assistant professor of medicine (general internal medicine and geriatrics) at OHSU School of Medicine. To do this, they have to generate higher revenue or reduce costs. Increased private ownership in these physician practices may be a symptom of the continued institutionalization of health care.”

It is not clear whether these practices harm clinical outcomes for patients. However, the results raise concerns in connection with the rapid growth of private equity acquisitions in nursing homes and hospital systems.

“Private equity investment in nursing homes was associated with increases in short-term mortality and changes in employment,” the authors wrote, citing previous research.

In the new study, researchers found an increase in the total number of patients seen at these clinics. The study also reviewed commercial insurance claims data which showed an increased proportion of visits greater than 30 minutes, although case complexity remained similar to cases prior to acquisition.

“These billing patterns could mean more efficient documentation of services provided, or it could mean more markup or charging insurance companies to make more money,” Chu said.

She believes that more evidence is needed about how private equity affects practice patterns.

Policy makers are taking note of these trends.

In Oregon, for example, legislators created a Overseeing the healthcare market A program to review mergers, acquisitions, and other proposed business deals to ensure they meet state goals around health equity, lower consumer costs, increased access and better care.

A recent estimate by the same study team found that Approximately 5% of physicians currently work in privately owned clinics. Researchers have cited quality of care and patient satisfaction as key areas of future research as this trend continues.

They concluded that “private equity ownership of physicians’ practices has clearly added a market-driven special effect to broader trends in corporate consolidation of physicians through health systems and insurance companies.” “This study contributes to evidence of potential overuse and overspending on care that will be important for policymakers to monitor.”

In addition to Zhu, co-authors include Yashaswini Singh, MPA, and Daniel Polsky, PhD, MPP, of Johns Hopkins University; Zirui Song, MD, PhD, Joseph D. Brosh, of Harvard Medical School.

The study was supported by the National Institutes of Health Care Administration Foundation’s National Institutes of Health Director’s Early Independence Award, DPS-ODO24564. The content is the sole responsibility of the authors and does not necessarily represent the official views of the National Institutes of Health.


Jin M. Chu, MD, et al; the association of private ownership of physicians’ practices with changes in health care spending and utilization; Health forum gamma. Published September 2, 2022. doi: 10.1001 / jamahealthforum.2022.2886

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