Over the past several years, private equity acquisitions of medical groups — including those specializing in gastroenterology — have become increasingly common. In 2013 there were 59 total practices acquired; by 2016 there were 136. Recent research examined these figures in an effort to identify patterns by specialty, as outlined in a letter in published in JAMA.
Recently acquired practices were identified using the publically-available Irving Levin Associates Health Care M&A data set, from which practice information was verified by the researchers. Analysis showed that 355 of 18,000 group medical practices were acquired by private equity firms between 2013 and 2016. On average, acquired practices had 4 sites with 6 affiliated physicians each and 16 total physicians per practice. Most were in the southern United States, and many reported accepting new patients. Commonly represented specialties included anesthesiology (33.1% of all physicians), emergency medicine (15.8%), family practice (9%), and dermatology (5.8%). Industry reports also indicated that future growth of private acquisitions is likely in gastroenterology as well as ophthalmology, dermatology, urology, and orthopedics.
Despite the relative increase in private acquisitions, those that were privately acquired represented a small percentage of overall group practices in the United States. However, reports predict further acceleration of acquisitions in the future. Researchers suggest that additional research is needed to determine the effects of these acquisitions on care delivery and to address any unintended consequences that may have arisen as a result.
The researchers also suggest that the financial goals of private firms may be in conflict with longer-term investments like physician recruitment, quality of care, safety measures, and overall practice stability. Additionally, there could be pressures to increase revenue for certain practices which may change the way some practices operate.
The researchers acknowledge limitations of the study, such as the fact that their data likely underestimates the total number of acquisitions, especially among smaller practices, and that their findings may in private acquisitions include data that is behind the pace of current acquisitions.
Zhu JM, Hua LM, Polsky D. Private equity acquisitions of physician medical groups across specialties, 2013-2016. JAMA. 2020;323(7):663–665. doi:10.1001/jama.2019.21844.