Private equity and its effect on patients: a window into the future

Health in the age of asset manager capitalism

A relatively small number of for-profit asset managers-financial intermediaries that invest capital on behalf of other investors-have emerged in recent decades to become some of the most influential commercial actors in the global political economy. Despite their important role in society, asset managers have received little attention from a public health perspective. In this article, we aimed to propose a conceptual framework of potential pathways and mechanisms through which asset managers may influence health and equity. The framework included asset class-specific pathways related to investments in publicly listed corporate equity, private equity, 'real assets' (e.g. housing, hospitals, farmland) and commodities. The framework also included more generalized pathways, focusing on ways in which the large and highly concentrated asset management sector can drive economic inequities, influence policy and political decision-making and shape the global 'development' agenda. We argue that measures challenging so-called 'asset manager capitalism', such as promoting and protecting the public ownership of companies and assets in essential sectors, are imperative to address the commercial determinants of ill health and inequity.

Trends in Ophthalmology Practice Consolidation: 2015-2022

PURPOSE

To quantify trends in ophthalmology practice consolidation in the United States.

DESIGN

A retrospective cross-sectional study.

PARTICIPANTS

Providers in the Centers for Medicare and Medicaid Services (CMS) National Downloadable File with a primary specialty designation of ophthalmology.

METHODS

We used the CMS database to determine national practice consolidation trends in ophthalmology on individual physician and group practice levels and analyzed by region, sex, and years spent in practice. We used the Cochran-Armitage test to determine the statistical significance of practice size differences between 2015 and 2022.

MAIN OUTCOME MEASURES

Temporal practice size trends for physicians and practices in ophthalmology and regional, sex-specific, and age-related trends.

RESULTS

Between 2015 and 2022, the number of ophthalmologists decreased from 17 656 to 17 615 (-0.2%), whereas the number of practices decreased from 7149 to 5890 (-18%). The percentage of ophthalmologists in practices of 1 to 2 members decreased from 35% to 28%, whereas those in groups of 50 or more increased from 7% to 11%. The percentage of practices with 1 to 2 members decreased from 75% to 71%, and those with 50 or more increased from 0.2% to 0.4%. Consolidation trends were significant on individual ophthalmologist (P < 0.001) and group practice (P < 0.001) levels. All regions, sexes, and subgroups of years spent in practice demonstrated consolidation (P < 0.001). The Northeast showed the greatest increase in groups of 50 or more physicians (+7%) between 2015 and 2022. Proportionally fewer female than male ophthalmologists were associated with practice sizes of 1 to 2 members in 2015 (29% and 36%, respectively) and 2022 (23% and 30%, respectively). Proportionally fewer ophthalmologists with 0 to 10 years of experience in practice were associated with practice sizes of 1 to 2 members than those with more than 30 years in practice in 2015 (18% and 48%, respectively) and 2022 (14% and 40%, respectively).

CONCLUSIONS

Ophthalmology has undergone practice consolidation from 2015 to 2022. A decrease in the proportion of physicians affiliated with smaller practice sizes seems to have occurred.

FINANCIAL DISCLOSURE(S)

Proprietary or commercial disclosure may be found in the Footnotes and Disclosures at the end of this article.

Evaluating trends in private equity ownership and impacts on health outcomes, costs, and quality: systematic review

OBJECTIVE

To review the evidence on trends and impacts of private equity (PE) ownership of healthcare operators.

DESIGN

Systematic review.

DATA SOURCES

PubMed, Web of Science, Embase, Scopus, and SSRN.

ELIGIBILITY CRITERIA FOR STUDY SELECTION

Empirical research studies of any design that evaluated PE owned healthcare operators.

MAIN OUTCOME MEASURES

The main outcome measures were impact of PE ownership on health outcomes, costs to patients or payers, costs to operators, and quality. The secondary outcome measures were trends and prevalence of PE ownership of healthcare operators.

DATA SYNTHESIS

Studies were classified as finding either beneficial, harmful, mixed, or neutral impacts of PE ownership on main outcome measures. Results across studies were narratively synthesized and reported. Risk of bias was evaluated using ROBINS-I (Risk Of Bias In Non-randomised Studies of Interventions).

RESULTS

The electronic search identified 1778 studies, with 55 meeting the inclusion criteria. Studies spanned eight countries, with most (n=47) analyzing PE ownership of healthcare operators in the US. Nursing homes were the most commonly studied healthcare setting (n=17), followed by hospitals and dermatology settings (n=9 each); ophthalmology (n=7); multiple specialties or general physician groups (n=5); urology (n=4); gastroenterology and orthopedics (n=3 each); surgical centers, fertility, and obstetrics and gynecology (n=2 each); and anesthesia, hospice care, oral or maxillofacial surgery, otolaryngology, and plastics (n=1 each). Across the outcome measures, PE ownership was most consistently associated with increases in costs to patients or payers. Additionally, PE ownership was associated with mixed to harmful impacts on quality. These outcomes held in sensitivity analyses in which only studies with moderate risk of bias were included. Health outcomes showed both beneficial and harmful results, as did costs to operators, but the volume of studies for these outcomes was too low for conclusive interpretation. In some instances, PE ownership was associated with reduced nurse staffing levels or a shift towards lower nursing skill mix. No consistently beneficial impacts of PE ownership were identified.

CONCLUSIONS

Trends in PE ownership rapidly increased across almost all healthcare settings studied. Such ownership is often associated with harmful impacts on costs to patients or payers and mixed to harmful impacts on quality. Owing to risk of bias and frequent geographic focus on the US, conclusions might not be generalizable internationally.

SYSTEMATIC REVIEW REGISTRATION

PROSPERO CRD42022329857.

Financial Health of Private Equity-Backed Groups: Perspectives From Eye Care

BACKGROUND

In private equity (PE) buyouts of medical practices, it is common for the PE firm to raise significant levels of debt in order to finance the purchase. This debt is subsequently shouldered by the acquired practice(s). There remains a scarcity of literature quantifying the effect of PE acquisition on the subsequent financial performance of eye care practices. We aim to identify and characterize debt valuations of ophthalmology and optometry private equity-backed group (OPEG) practices, which serve as an indicator of practice financial performance.

METHODS

A cross-sectional study from March 2017 to March 2022 was conducted using business development company (BDC) quarterly/annual filings to the Securities and Exchange Commission (SEC). The 2021 BDC Report was used to identify all BDCs actively filing annual reports (Form 10-Ks) and quarterly reports (Form 10-Qs) in the United States in 2021. The public filings of BDCs lending to OPEGs were searched from the inception of the OPEG's debt instrument in a BDC's portfolio and the amortized cost and fair value of each debt instrument were tabulated. A panel linear regression was used to evaluate temporal changes in OPEG valuations.

RESULTS

 A total of 2,997 practice locations affiliated with 14 unique OPEGs and 17 BDCs were identified over the study period. Debt valuations of OPEGs decreased by 0.46% per quarter over the study period (95% CI: -0.88 to -0.03, P = 0.036). In the COVID-19 pre-vaccine period (March 2020 to December 2020), there was an excess (additional) 4.93% decrease in debt valuations (95% CI: -8.63 to -1.24, P = 0.010) when compared to pre-pandemic debt valuations (March 2017 to December 2019). Effects of COVID-19 on valuations stabilized during the pandemic post-vaccine period (February 2021 to March 2022), with no change in excess debt valuation compared to pre-pandemic baseline (0.60, 95% CI: -4.59 to 5.78, P = 0.822). There was an increase in practices that reported average discounted debt valuations from 20 practices (1.6%) associated with one OPEG to 1,213 practices (40.5%) associated with nine OPEGs (including 100% of newly acquired practices), despite the stabilization of COVID-19-related excess (additional) debt.

CONCLUSIONS

Debt valuations of eye care practices have declined significantly post-PE investment from March 2017 to March 2022, suggesting that the financial health of these groups is volatile and vulnerable to economic contractions such as the COVID-19 pandemic. Eye care practice owners must consider long-term financial risks and impacts of subsequent patient care when selling their practice to a private equity group. Future research should assess the impact of secondary transactions of OPEGs on the financial health of practices, practitioner lifestyle, and patient outcomes.

The Rise of Private Equity in Gastroenterology Practices

Private equity (PE) investment in gastroenterology practices has significantly increased over the past several years. Because PE firms are prevented legally from owning a medical practice in many states, they usually form a management services organization to oversee all nonclinical aspects of the practice, leaving all clinical functions to the physician owners. Gastroenterology practices have become attractive investments to PE firms because of the willingness of gastroenterologists to join a PE-backed practice and the potential to earn profits through consolidating the market. Research has started to examine the effects of PE-backed practices on patients and on the gastroenterology specialty specifically. Questions remain regarding the benefits for physicians. This article examines PE investment in gastroenterology practices and how this may impact the specialty in the future.