Physicians (Mostly) Negative on Private Equity in Healthcare

Many—but not all—doctors in the United States are concerned about the impact private equity will have on the healthcare system, according to a new survey from the American College of Physicians.

Those worries include the effects investment from private equity firms such as Shore Capital Partners and Webster Equity Partners, among others, will have on physician well-being, healthcare spending, and disparities in access to care.

“Private equity has become sort of a bogeyman in some ways for a lot of the ills in the healthcare system,” Jane Zhu, MD, MPP (Oregon Health and Science University, Portland), lead author of the new report, told TCTMD. “There's been a lot of media attention, a lot of policy attention on this issue, and clinicians themselves are concerned about the effects of private equity on their own practice and on their patients. That finding was not entirely surprising. What was surprising to me, though, was the share of providers who felt positively about private equity, which suggests that as long as there's a willing seller private equity will be able to continue to acquire practices in this space.”

Private equity, said Zhu, has been making “impressive inroads” into healthcare in the past decade, with estimates suggesting that roughly 5% to 10% of practices are backed by such investment. In some markets and specialties, penetration is even higher. In some metropolitan areas, private equity can control up to 50% of practices in certain specialties, she said. 

Cardiology, as has been reported previously, has recently gained a lot of interest from private equity. Highly profitable sectors, such as radiology, dermatology, emergency medicine, and gastroenterology, were the initial focus, but a shift from inpatient to outpatient services, such as office-based labs and ambulatory surgery centers (ASC), has put cardiology practices on investors’ radar. In 2020, the Centers for Medicare & Medicaid Services added diagnostic heart catheterizations and PCI to their ASC-covered procedure list. 

“It’s part of a broader trend towards corporatization, financialization, and consolidation in healthcare,” said Zhu.  

Majority Hold Negative View of Private Equity

The survey, which was published in JAMA Internal Medicine, is based on the answers of 525 physicians, the majority (66.9%) of whom were general internal medicine physicians. Most (70.2%) were salaried employees, while 21.9% were owners or partners in physician-group practices. Just 5.5% of those surveyed worked for a private equity-acquired practice, but nearly 10% said that private equity had expressed interest in purchasing their practice.

The majority of physicians (60.8%) considered private equity involvement in healthcare negatively, while 28.8% consider it “neutral.” Framed another way, 52.0% of physicians viewed private equity ownership as worse or much worse than independent ownership, while 49.3% considered it worse or much worse than not-for-profit or healthcare-system ownership. A little more than 10% viewed private equity’s involvement positively. Roughly 20% viewed private equity better/much better than working as an independent physician, while approximately 15% felt it was better/much better than working at a nonprofit hospital, within a healthcare system, or another type of corporate ownership structure.  

More than half of those surveyed see private equity in an unfavorable light when it comes to physician well-being, healthcare prices or spending, and health equity. One potential upside of private equity, according to those surveyed, is that it might lead to healthcare innovation.

To TCTMD, Zhu said that physicians are a heterogenous group with varying opinions, noting that the concerns of those working in an independent practice will differ from a salaried employee within a hospital. For the independent physician, private equity can provide an infusion of capital in a highly competitive environment where there is a lot of financial uncertainty.  

“There is a willing contingent of physicians who see private equity as a reasonable and rational alternative to other forms of ownership,” said Zhu.

Opinions of Those With Experience

The 29 physicians who worked for private equity-acquired practices were less likely to report high levels of professional satisfaction and workplace autonomy compared with those who worked elsewhere. Less than half (44.8%) of those working in a private equity-backed practice said they were extremely/somewhat likely to remain with their employer compared with 77.8% of those working in other practices.

The opinions of those working in a private equity-backed practice are difficult to extrapolate to a wider number of US physicians because the sample size was so small, said Zhu.

“It’s hard to know what to make of those results and whether they're generalizable to different types of settings, because private equity takes different approaches,” she said. “There are different companies, and like any other ownership type, there may be good actors and bad actors. I do think that it suggests a reason for further assessment in terms of how private equity affects workforce satisfaction, workforce longevity, and turnover.”

Last year in Health Affairs, Zhu along with Joseph Dov Bruch, MD (University of Chicago, IL), and colleagues showed that physician-owned medical practices acquired by private equity had higher rates of turnover and relied more on advanced practice providers, such as physician assistants and nurse practitioners, than on doctors.  

In an accompanying editor’s note for the JAMA Internal Medicine paper, Cary Gross, MD (Yale School of Medicine, New Haven, CT), and Giselle Corbie, MD (University of North Carolina at Chapel Hill), said that one of the key questions with private equity investment is whether it has a detrimental effect on physicians, practices, and patients. Physicians, they add, may be caught between two conflicting agendas: the health of their patients and the financial imperatives of the practice’s owners.

“Before putting up ‘for sale’ signs across the healthcare system, it is incumbent on physicians, regulators, and professional societies to call for more evidence and to ensure patient access to high-quality care—before it is too late,” write Gross and Corbie.