OHSU investigator says study raises red flags about corporatization of healthcare
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 are taking in more patients and billing more for visits among a large commercially insured population, according to a study published today in Gamma Health Forum 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.
“The reason patients and policymakers are concerned is that private equity is often driven by profit margins of 20% or more,” said one of the senior authors. Jin M Chu, MDD., assistant professor of medicine (general internal medicine and geriatrics) at OHSU College 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, lawmakers created the Health Care Market Oversight Program to review proposed mergers, acquisitions, and other business deals to ensure they meet the state’s goals for health equity, lower consumer costs, increased access and better care.
A recnt estimate by the same study team found that approximately 5% of physicians currently operate through privately owned practices. 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 Yashswini Singh, MPAAnd the Daniel Polsky, Ph.D., MPPfrom Johns Hopkins University. And the, Zeroi Song, MD, PhD.And the Joseph D.from 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.