Study shows increases in patient volume and prices after private practices were acquired by private equity firms
In what should be a surprise to absolutely no one, new research shows that when physician-owned medical practices are acquired by private equity firms, measures are put in place to increase profits by boosting patient volume and billing more for visits.
Researchers from Oregon Health & Science University and others examined data from 578 physician practices in dermatology, gastroenterology, and ophthalmology acquired from 2016 to 2020. The study was published in JAMA Health Forum.
The study authors note that this trend of increases in patient volume and billing is concerning because private equity is often driven by profit margins of 20% or more, so firms must generate higher revenue at acquired practices or reduce costs. It is unknown whether clinical outcomes for patients are affected, but researchers note that private equity acquisitions of nursing homes has been associated with an increase in short-term mortality and staffing changes.
In the private practices studied, researchers found an increased patient volume, plus an increase in visits longer than 30 minutes, even though the complexity of the cases remained similar to that before the acquisitions. Either the practices are more efficient documenting services, or possible upcoding is occurring to make more money, according to the researchers, who conclude that policymakers should monitor the private equity trend to make sure the investors are not taking advantage of the health care system.