- Private equity firms acquired 355 physician practices from 2013 to 2016, accounting for a total of 1,426 sites of care and more than 5,700 physicians, according to the latest research in JAMA.
- Acquisitions accelerated each year over that time period, from just 59 acquisitions in 2013 to 136 in 2016.
- Of the 355 acquisitions, the most targeted area was anesthesiology with 69 practices acquired, followed by emergency physicians at 43, the report published Tuesday showed.
It's no secret that private equity is increasingly interested in healthcare. However, researchers believe this report is foundational as it attempts to measure the size and scope of investment in the space.
There are still many questions that need to be answered regarding private equity's involvement in the industry, including how it affects quality of care and delivery. But those questions can't be answered until the magnitude of this trend is first understood, Jane Zhu, one of the authors of the report, said Tuesday.
"Understanding the scope of this phenomenon is a first step; as more investment dollars are infused into physician medical groups, greater investment in rigorous empirical analyses is also needed," Zhu said in a post on the University of Pennsylvania's Leonard David Institute of Health Economics blog.
However, there is a lag time in the data that examines a period more than four years ago. Still, experts recently told Healthcare Dive that private equity's interest in healthcare was only expected to grow.
The report in JAMA attempts to shed some light on the characteristics of the practices that were acquired over the timeframe.
Acquired practices had an average of about 16 physicians and four sites and the majority of the acquired practices were located in the South.
Also, a large share of these practices (81%) reported they were accepting new patients. About 60% reported they accepted Medicaid patients and about 83% said they accept Medicare patients.
The research data does seem to match commonly held beliefs about private equity's approach to healthcare investments.
"These data, which show acquired practices to have several sites and many physicians, match private equity firms' typical investment strategy of acquiring 'platform' practices with large community footprints and then growing value by recruiting additional physicians, acquiring smaller groups, and expanding market reach," researchers said.
Still, there are many lingering questions, and the researchers are calling for more studies to be conducted. "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," according to the report.
Recently, private equity firms have found themselves in the spotlight of a Congressional inquiry as lawmakers try to understand the firms' role in surprise billing.
The inquiry followed a report that showed two physician staffing firms owned by private equity firms funneled millions into ads opposing legislation to prevent surprise billing.