Private equity firms that acquire physician-owned practices may be upcoding or up-charging insurance, according to researchers at Oregon Health and Science University in Portland.
The study, published Sept. 2 in the Journal of the American Medical Association, compared financial data from 578 private equity-acquired practices and 2,874 similar independent practices. The results showed that before acquisition, spending at private equity and non-private equity practices was similar. However, in the eight quarters following acquisition by a private equity firm, practices exhibited a consistent differential increase in spending.
The study reported an average increase of 20.2 percent, or $71, in charges per claim, and 11 percent, or $24, in amount allowed per claim.
Researchers also found a 37.9 percent increase in new patient visits. Although cases did not change in complexity, more visits were billed as longer than 30 minutes.
"These billing patterns could mean more efficient documentation of services provided, or it could mean upcoding or up-charging insurance companies to make more money," the study's senior author, Jane Zhu, MD, said in a Sept. 2 article on the university's website.
Dr. Zhu said this is concerning to patients and policymakers, as private equity firms are usually driven by profit margins of at least 20 percent.
"To [reach those margins], they have to generate higher revenues or reduce costs," she said. "Increasing private equity in these physician practices may be a symptom of the continuing corporatization of healthcare."