Private equity and hospital-affiliated physicians are more expensive than independent docs

A study from researchers at Brown University found that nearly half of primary care physicians (PCPs) in the U.S. are now affiliated with hospitals, and private equity (PE) firms are rapidly gaining a foothold in certain regions. These affiliations have significant implications for the prices patients pay for care, according to the findings published in the analysis of physician ownership trends and health care costs. The results were reported in JAMA Network.

Key Findings

Researchers found an increase in corporate ownership that resulted in higher prices for patients, but the trend varied by region. The study found:

Growing Corporate Ownership:

• Hospital-affiliated PCPs have nearly doubled, increasing from 25.2% in 2009 to 47.9% in 2022.
• While PE-affiliated PCPs represent a smaller share, their presence has grown, particularly in states like Florida and Texas.

Higher Costs for Patients:

• Office visit prices were 11% higher for hospital-affiliated PCPs and 8% higher for PE-affiliated PCPs compared to independent practices.
• For example, the average negotiated price for a new patient visit was $180 at hospital-affiliated practices, $155 at PE-affiliated practices, and $147 at independent practices.

Regional Variations:

• States like North Dakota and Wisconsin showed the highest rates of hospital affiliation among PCPs, while Florida led in PE ownership.

Impact on Spending:

• The study estimates that commercial spending on office visits at hospital-affiliated primary care practices exceeded $10.8 billion in 2022. Lowering prices to match independent practices could save $1.5 to $1.8 billion annually.

According to the report, the consolidation of primary care by hospitals and PE firms reflects broader trends in health care. These entities can leverage their market power to negotiate higher prices with insurers. While this may improve financial stability for practices and offer administrative support to reduce clinician burnout, it raises questions about the impact on patients and overall health care costs.

The researchers emphasized the need for transparency and regulatory oversight, particularly as private equity investment continues to expand. Although corporate ownership can bring resources to struggling practices, policymakers and consumers should be aware of the potential trade-offs in cost and accessibility.