Private equity continues to snap up physician groups

Private equity firms are continuing their investments in physician practices, scooping up 355 acquisitions from 2013 to 2016, according to a new study published in JAMA.

The pace of acquisitions also increased over time, from 59 practices in 2013 to 136 in 2016, according to the findings. Other reports suggest that acquisitions in 2017 to 2018 also accelerated, though those dates weren’t included in the data set. The number of acquisitions meant private equity firms took over 1,426 sites of care and more than 5,700 physicians over the study period.

Researchers used data of physician group practices by private equity firms from the Irving Levin Associates Health Care M&A reports, excluding practices that were bought by non-private equity firms. They also Googled the specifics of the practices to verify them.

Private equity firms preferred to acquire practices with several sites of care and many physicians, expecting greater than 20% annual returns on their investments.

The findings come at a time when physician-owned practices are at an all-time low, and the effects of this change in ownership on patients and employees are unclear, particularly with firms looking to capitalize on the transactions. Practices may also face other revenue pressures under private equity ownership.

“These financial incentives may conflict with the need for longer-term investments in practice stability, physician recruitment, quality and safety,” wrote lead author Jane M. Zhu, MD, MPP, MSHP, of the division of general internal medicine and geriatrics at Oregon Health & Science University, et al.