'Like the system on steroids': Private equity's hold on the healthcare market

The American Antitrust Institute found that in 2021, a single private equity firm owned more than half of practices in 13 percent of urban markets, while in 28 percent of the market, a single firm held 30 percent of practices.

The paper also found some medical specialities like urology, ophthalmology, cardiology, oncology, radiology and orthopedics were targets for private equity purchases. When a firm controlled more than 30 percent of a market, the cost of care for three specialties increased —  18 percent in gastroenterology, 16 percent in obstetrics and gynecology, and 13 percent in dermatology.

"Private equity is like the system on steroids," Sherry Glied, PhD, the dean of the Wagner School of Public Service at New York University in New York City, to The New York Times. "Every time there's an opportunity for making money, private equity is going to move faster than everyone else. And consolidation is the way to do that."

In 2021, nearly 70 percent of physicians were employed by a hospital or corporation, according to an analysis from the Physicians Advocacy Institute.

Here are four other facts:

1. Private equity's acquisition of physicians practices has increased more than sixfold in 10 years, going from 75 deals in 2012 to 484 deals in 2021.
   
   
2. In 8 of 10 physician practice specialties, there were statistically significant price increases associated with PE acquisition. Price increases ranged from 16 percent in oncology to 4 percent in primary care and dermatology.
   
   
3. PE acquisition was also associated with per-patient expenditure increases from 4 percent to 16 percent in 6 of 10 specialties.
   
   
4. The majority of PE acquisitions in the report took place without federal antitrust scrutiny and with limited state antitrust scrutiny.

"At a minimum, federal antitrust reporting requirements must be adapted to modern business models, including PE, to ensure regulators have the information they need to evaluate the competition impacts of these deals," the paper authors wrote. "The FTC has recently begun that process, which we applaud. [Hart-Scott-Rodino Antitrust Improvements Act] changes alone, however, are not enough, and we also recommend changes to Medicare reimbursement policy and tax policies that are driving consolidation and PE opportunism."