Private equity buying sprees in radiation oncology along Florida's Paradise Coast have some physicians, researchers and antitrust regulators concerned, according to Bloomberg.
The Paradise Coast includes Naples, Marco Island, Everglades City and the Gulf Coast portion of the Everglades, and private equity firms see the area as ripe for business given the number of wealthy people hoping to retire there.
PE is now extending the same favored strategy it's deployed for many other medical specialties, including anesthesiology and hospice care, to radiation oncology by buying up small practices and placing them under a corporate umbrella — a practice known as the "roll-up" deal. PE firms generally sell the rolled up company or take it public after several years.
Physicians, researchers and antitrust authorities are concerned that PE's roll-up deals — many of which are below the $94 million threshold to flag federal scrutiny per the Hart-Scott-Rodino Act — will over time leave consumers and patients with little choice for their healthcare needs.
GenesisCare operates all four of Naple's radiation treatment centers, for example. Florida's GeneisCare is what used to be 21st Century Oncology — the latter combined with GenesisCare this past spring. GenesisCare is partly owned by KKR & Co., one of the world's largest PE companies.
Democratic and Republican commissioners with the Federal Trade Commission are calling for a study of healthcare roll-ups. Some states are on higher alert as well: Connecticut and Washington have passed laws requiring notification of even small healthcare mergers.
Authorities are also examining radiation oncology roll-up deals in Florida, specifically.
In April, the Justice Department announced that Florida Cancer Specialists and Research Institute in Fort Myers admitted to conspiring with another company until at least 2016 to carve up Southwest Florida's cancer care market to thwart competition. Although prosecutors didn't name the second company, other court documents indicate it was 21st Century, according to Bloomberg. Florida Cancer Specialists agreed to pay $100 million, the statutory maximum, to settle the Justice Department's case in a deferred-prosecution agreement. The government says the investigation is ongoing.