A recent commentary (JM Zhu et al. NEJM 2021; 384: 11: 981-983. Private Equity and Physician Medical Practices — Navigating a Changing Ecosystem) describes the restructuring of medical practices with a major decline in independent practices due to the growth of hospital-affiliated employees and private-equity investment in medical specialties.

Key points:

• Between July 2016-January 2018, “hospitals and health systems acquired more than 8000 practices…Roughly 14,000 physicians left private practice”
• Private-equity investment in medical practices has emerged as an alternative source of investment “that allows physicians to continue to hold equity and benefit financially from future transactions.”

Potential consequences of private-equity investment in medical practice:

• Reduction in competition
• Leverage market power with insurers & possible higher costs
• Possible additional pressures on physicians to improve profits and reduction of physician autonomy
• Possible improvements in value with operational improvements including sharing industry knowledge with smaller practices, adopting technology infrastructure, and helping practices assume risk with value-based payments
• Possible prioritization of patients with better payer mix and lower complexity

My take: Mergers and acquisitions whether through hospitals or private equity make me worried that physicians will be squeezed between delivering profits and providing the best service for our patients.

Related audio interview with Dr. Jane Zhu on the growth of private equity investment in medical practices