It’s becoming common knowledge that there’s an ongoing surge in private equity-backed mergers and acquisitions in the healthcare space, but hard numbers on the extent of private equity control on individual regional markets has been difficult to pin down.
But a new report from researchers at the University of California Berkeley that looked at more than 300 metro areas found an explosion in private equity-acquired sites since 2012, with 50 metros having a single firm controlling at least half of the specialty sites in that market.
“The findings raise concerns about competition and call for closer scrutiny by the Federal Trade Commission, state regulators and policy makers,” Ola Abdelhadi, MPH, PhD, and colleagues state in the March edition of Health Affairs.
The researchers looked at practices across 10 different specialties acquired by private equity firms from 2012 through 2021, using a mixture of merger and acquisition databases, local news reports and press releases. They linked acquisition data with physician datasets in order to calculate private equity penetration in the surveyed markets based as a percentage of full-time physicians working at acquired facilities.
In 2012, the data showed a total of 816 private equity-owned physician practice sites in 119 different metro areas. By 2021, that number had ballooned to 5,779 sites across 307 metros.
Most of the increase has come within the last few years, accelerated by pandemic-fueled financial instability, and it has impacted specialties unevenly. Between 2019 and 2021, for example, penetration rates for private equity acquisition at the physician level for gastroenterology jumped from 7.6% to 13.1% and for urology went from 4.4% to 9%. Primary care, obstetrics-gynecology, radiology, orthopedics and oncology also showed large increases over the full study period.
Those 50 markets where a single firm had control of 50% of sites or more were largely concentrated in the South and Northeast, but evidence of consolidation was noted nationwide. Single firms had at least 30% market share in 108 metro specialty markets.
“Although acquisition by a [private equity] firm can alleviate financial strain by providing capital and technology to the practice, it may also bring a focus on increasing short-term profits and a high debt burden,” the authors write. “A focus on short-term profits may lead to overuse or misuse of lucrative treatments and services, an increase in prices, and substitution of lower-cost healthcare providers for physicians—all of which can compromise healthcare quality."
Evan joined TriMed in 2011, writing primarily for Health Imaging. Prior to diving into medical journalism, Evan worked for the Nine Network of Public Media in St. Louis. He also has worked in public relations and education. Evan studied journalism at the University of Missouri, with an emphasis on broadcast media.