1
|
Christensen EW, Chung Y, Rula EY, Parikh JR. Changes in the Radiology Practice Landscape and Indicators of Practice Consolidation From 2014 to 2023. AJR Am J Roentgenol 2024. [PMID: 38838234 DOI: 10.2214/ajr.24.31357] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 06/07/2024]
Abstract
Background: A range of economic and health policy incentives are leading to ongoing consolidation among payers, hospitals, and physician practices. Objective: To evaluate consolidation among radiologists' affiliated practices through 2023, analyze the impact of consolidation on such practices' specialty mix and size, and assess radiologists' new affiliations after prior practices cease. Methods: CMS data from 2014 to 2023 were used to identify all radiologists nationally along with their affiliated practices. Practices were categorized based on the specialty mix of all affiliated physicians as radiology-only or multispecialty; multispecialty practices were further categorized as radiology-majority, other-specialty-majority,or no-majority-specialty. Practices that ceased (i.e., became absent within CMS data) were identified. Temporal shifts were assessed, to infer consolidation patterns. Results: From 2014 to 2023, the number of Medicare-enrolled radiologists increased 17.3% from 30,723 to 36,024, while their number of affiliated practices decreased 14.7% from 5059 to 4313. The number of radiology-only, radiology-majority, other-specialty-majority, and no-majority practices changed by -31.8% (3104 to 2118), 10.8% (402 to 446), -5.7% (615 to 580), and 24.6% (938 to 1169), respectively. The number of practices with 1-2, 3-9, 10-24, 25-49, 50-99, and ≥100 radiologists changed by -18.7% (2233 to 1815), -34.4% (1406 to 923), -25.2% (910 to 681), 33.2% (352 to 469), 121.6% (125 to 277), and 348.5% (33 to 148). A total of 3494 practices ceased, including 2281 radiology-only practices. Among 3854 radiologists for whom their only affiliation was a ceased radiology-only practice, their subsequent-year affiliation was a radiology-only practice in 54.3% and a multispecialty practice type in the remaining instances. Conclusions: An overall decrease in the number of radiology practices and concurrent growth in the number of radiologists was mirrored by shifts from small toward large practices and from radiology-only toward multispecialty practices, consistent with ongoing practice consolidation. While determining causes of consolidation were beyond this study's scope, the shifts may relate to economic incentives and legislative changes favoring large multispecialty practices. Clinical Impact: Radiologists' continued consolidation into large multispecialty practices may facilitate subspecialization and greater negotiating power in payor contracting. Yet radiologists may prefer smaller and/or radiology-only practices for autonomy and influence on practice structure.
Collapse
Affiliation(s)
- Eric W Christensen
- Harvey L. Neiman Health Policy Institute, Reston, VA
- Health Services Management, University of Minnesota, St. Paul, MN
| | | | | | - Jay R Parikh
- Division of Diagnostic Imaging, University of Texas MD Anderson Cancer Center, Houston, TX
| |
Collapse
|
2
|
Lee CI, Davis MA, Lexa FJ, Liao JM. JACR Health Policy Expert Panel: Private Equity Investment in Radiology. J Am Coll Radiol 2023; 20:940-942. [PMID: 37011830 DOI: 10.1016/j.jacr.2023.01.014] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Received: 01/10/2023] [Accepted: 01/24/2023] [Indexed: 04/03/2023]
Affiliation(s)
- Christoph I Lee
- Director of the Northwest Screening and Cancer Outcomes Research Enterprise, Department of Radiology, University of Washington School of Medicine, Seattle, Washington; and Deputy Editor, JACR.
| | - Melissa A Davis
- Vice Chair of Informatics, Department of Radiology, Yale University School of Medicine, New Haven, Connecticut. https://twitter.com/MelissaDavis29
| | - Frank J Lexa
- Department of Radiology, University of Pittsburgh School of Medicine and UPMC International, Pittsburgh, Pennsylvania; and Chief Medical Officer and Vice Chair, ACR Radiology Leadership Institute. https://twitter.com/fjlexa
| | - Joshua M Liao
- Director of the Value and Systems Science Lab and Associate Chair for Health Systems, Department of Medicine, University of Washington School of Medicine, Seattle, Washington. https://twitter.com/JoshuaLiaoMD
| |
Collapse
|
3
|
Desai S, Memon R, Chen E, Patil S, Vail D, Konda S, Parikh R. Financial Health of Private Equity-Backed Groups: Perspectives From Eye Care. Cureus 2023; 15:e39582. [PMID: 37384090 PMCID: PMC10293123 DOI: 10.7759/cureus.39582] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Accepted: 05/27/2023] [Indexed: 06/30/2023] Open
Abstract
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.
Collapse
Affiliation(s)
- Sarishka Desai
- Department of Ophthalmology, University of Connecticut School of Medicine, Farmington, USA
| | - Rohail Memon
- Department of Dermatology, Northwestern University Feinberg School of Medicine, Chicago, USA
| | - Evan Chen
- Ophthalmology, University of California San Francisco, San Francisco, USA
| | - Sachi Patil
- Department of Ophthalmology, New York University Langone Health, New York, USA
| | - Daniel Vail
- Department of Ophthalmology, New York Eye and Ear Infirmary of Mount Sinai, New York, USA
| | - Sailesh Konda
- Department of Dermatology, University of Florida College of Medicine, Gainesville, USA
| | - Ravi Parikh
- Department of Ophthalmology, New York University Langone Health, New York, USA
| |
Collapse
|
4
|
Portney DS, Goldstein J, Berkowitz ST, Novice TS, Patel S, Law J, Tannen B. Trainee Perspectives of Private Equity's Impact on Ophthalmology. JOURNAL OF ACADEMIC OPHTHALMOLOGY (2017) 2023; 15:e56-e61. [PMID: 38737149 PMCID: PMC10804765 DOI: 10.1055/s-0043-1761289] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Subscribe] [Scholar Register] [Received: 06/17/2022] [Accepted: 12/14/2022] [Indexed: 02/11/2023]
Abstract
Objective The accelerated involvement of private equity (PE) in ophthalmology has many potential implications for the future of the field. The aim of this study was to evaluate trainee perspectives on PE's impact on ophthalmology. Methods An electronic survey was sent to trainees via an online ophthalmology research newsletter. The survey assessed for career goals and perspectives on the involvement of PE and its impact across a variety of attributes. Results A total of 41 United States-based respondents responded to the survey, 68% were medical students and 32% were residents or fellows. Seventy-eight percent of respondents reported they would not consider working for a PE-owned practice. There was a negative perceived impact of PE for physician autonomy, long-term physician income, career advancement, and quality of care. There was a positive perceived impact for the number of physician extenders, more referral sources, financial support, bargaining with insurance companies, starting physician salary, and administrative burden. All respondents agreed (76% strongly agree, 24% somewhat agree) that education about practice options and ownership structures is important to include in residency program education, with preferred modalities of small group discussions and on-site learning. Conclusions Trainees broadly perceive PE to negatively impact the practice of ophthalmology. While there were attributes perceived to be positively impacted by PE, these were not felt to be as important as those which may be negatively affected. New modalities for education about practice ownership options are necessary, and small group discussions and on-site learning may be of the highest yield for trainees.
Collapse
Affiliation(s)
| | - Jenna Goldstein
- Department of Ophthalmology, Vanderbilt Eye Institute, Vanderbilt University Medical Center, Nashville, Tennessee
| | - Sean T. Berkowitz
- Department of Dermatology, Henry Ford Health System, Detroit, Michigan
| | - Taylor S. Novice
- Department of Ophthalmology and Visual Sciences, Kellogg Eye Center, University of Michigan, Ann Arbor
| | - Shriji Patel
- Department of Dermatology, Henry Ford Health System, Detroit, Michigan
| | - Janice Law
- Department of Dermatology, Henry Ford Health System, Detroit, Michigan
| | - Bradford Tannen
- Department of Ophthalmology and Visual Sciences, Kellogg Eye Center, University of Michigan, Ann Arbor
| |
Collapse
|
5
|
Bruch JD, Foot C, Singh Y, Song Z, Polsky D, Zhu JM. Workforce Composition In Private Equity-Acquired Versus Non-Private Equity-Acquired Physician Practices. Health Aff (Millwood) 2023; 42:121-129. [PMID: 36623222 DOI: 10.1377/hlthaff.2022.00308] [Citation(s) in RCA: 13] [Impact Index Per Article: 13.0] [Reference Citation Analysis] [Abstract] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 01/11/2023]
Abstract
Despite growth in private equity (PE) acquisitions of physician practices in the US, little is known about how changes in ownership influence workforce composition. Using clinician-level data linked to practice acquisition information, we estimated changes in clinician workforce composition in PE-acquired practice sites relative to non-PE-acquired independent practice sites for dermatology, ophthalmology, and gastroenterology specialties. We calculated a clinician replacement ratio (cumulative number of entering clinicians during 2014-19 divided by the cumulative number of exiting clinicians) across 213 PE-acquired practices and 995 matched non-PE-acquired practices. Using a difference-in-differences approach, we also examined practice-level changes in yearly clinician counts at PE-acquired practices before and after acquisition compared with non-PE-acquired controls. In aggregate and across the study period, the clinician replacement ratio was higher for PE-acquired practices compared with non-PE-acquired controls (1.75 versus 1.37), as well as within each specialty and clinician type (physician versus advanced practice provider). Relative to non-PE-acquired control practices, we also found significant yearly increases in the number of advanced practice providers at PE-acquired practices after acquisition. Taken together, these findings suggest differential changes in workforce composition at PE-acquired practices, especially a shift toward advanced practice providers for care delivery.
Collapse
Affiliation(s)
| | - Canyon Foot
- Canyon Foot, Oregon Health & Science University, Portland, Oregon
| | | | - Zirui Song
- Zirui Song, Harvard University, Boston, Massachusetts
| | | | - Jane M Zhu
- Jane M. Zhu , Oregon Health & Science University
| |
Collapse
|
6
|
Recent Trends in Private Equity Acquisition of Orthopaedic Practices in the United States. J Am Acad Orthop Surg 2022; 30:e664-e672. [PMID: 35077400 DOI: 10.5435/jaaos-d-21-00783] [Citation(s) in RCA: 2] [Impact Index Per Article: 1.0] [Reference Citation Analysis] [Abstract] [Track Full Text] [Journal Information] [Submit a Manuscript] [Subscribe] [Scholar Register] [Received: 08/03/2021] [Accepted: 12/24/2021] [Indexed: 02/01/2023] Open
Abstract
BACKGROUND Private equity acquisition of medical specialty practices has increased in recent years. With the projected increase in the volume of elective, ambulatory orthopaedic procedures, especially in the outpatient setting, private equity firms are increasingly investing in orthopaedic practices. The purpose of this cross-sectional study was to report recent trends and variations in acquisitions of US orthopaedic practices by private equity firms and other institutional investors (venture capital firms, trusts, and large investment companies). METHODS Acquisition data through January 1, 2020, were collected and analyzed using various financial databases, supplemented with publicly available information from financial news outlets, press releases, and financial analyst and industry reports. Disclosed financing data were also included, in addition to pertinent geographic information (state, city, and zip code) of the target practices. RESULTS Between 2004 and 2019, 41 orthopaedic practices and surgeon groups across 22 states were acquired by 34 private equity and other investment firms. A significant increase was observed in the number of acquisitions between 2017 and 2019, consisting of 70.7% of total transactions during the study period, with a statistically significant upward yearly trend (P = 0.002). The compound annual growth rate in acquisition volume was 29.2% during the study period. A disproportionate share of private equity acquisitions took place in the South, where more than half (51.2%) of the total transactions took place. Firms were markedly more likely to acquire or invest in practices located in major metropolitan areas (population more than 1 million) compared with those in mid-sized or rural areas (70.7%, 17.1%, 12.2%, respectively; P < 0.001). CONCLUSIONS Private equity acquisition of orthopaedic surgery practices has increased markedly in recent years. The effect of private equity acquisition on physician independence, practice management, and procedure reimbursement remains unclear and may be important to explore as practice management evolves. LEVEL OF EVIDENCE Prognostic Level III.
Collapse
|
7
|
Memon R, Memon A, Francis J, Konda S. Trends in Debt Valuations of Private Equity-Backed Dermatology Groups Before and During the COVID-19 Pandemic. JAMA Dermatol 2022; 158:395-403. [PMID: 35262637 PMCID: PMC8908222 DOI: 10.1001/jamadermatol.2022.0009] [Citation(s) in RCA: 5] [Impact Index Per Article: 2.5] [Reference Citation Analysis] [Abstract] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 11/14/2022]
Abstract
Importance Private equity (PE) firms have invested in and consolidated dermatology practices. Private equity firms typically operate by conducting leveraged buyouts, which occur when target companies are acquired with capital from PE firms and a combination of debt, which may include debt instruments held in business development corporations (BDCs). Objective To investigate the valuations of dermatology PE-backed group (DPEG) debt instruments in BDCs' portfolios both before and during the COVID-19 pandemic. Design, Setting, and Participants This cross-sectional study, conducted from August 1, 2016, to August 31, 2021, examined public financial statements filed by BDCs lending to DPEGs. The public filings of BDCs were searched from inception of the DPEG's debt instrument in a BDC's portfolio, and the amortized cost and fair value of each debt instrument were tabulated. Main Outcomes and Measures The premium or discount at which each debt instrument was valued at a given time was calculated by dividing the difference between the fair value and the amortized cost by the amortized cost. Different testing methods were conducted for normal or nonnormal data to test differences in debt valuations across all DPEGs between 2 consecutive or nonconsecutive quarters. Results The search of the public filings found 10 BDCs containing data on 9 unique DPEGs. Overall, there were 15 trackable DPEG debt instruments because multiple BDCs can hold debt instruments for a given DPEG. Data were available from August 2016 through August 2021. During the study time frame, the amortized cost of the loans for an individual DPEG ranged from a low of $1.7 million to a high of $100 million. The valuation of debt instruments was stable for many DPEGs until some were discounted starting in May 2018, with a significant decrease from May 2019 to August 2019 (-1.4%; 95% CI, not applicable; P = .04), prior to the COVID-19 pandemic. Another significant decrease occurred during the pandemic from February to June 2020 (-9.0%; 95% CI, -13.6% to -4.4%; P = .002). US Dermatology Partners decreased to the lowest valuation (Golub BDC, -39.7%; TCG BDC Inc, -48.8%; TCG BDC II, -48.8%) of the DPEGs examined in November 2020 even after receiving a $10 million forgivable Small Business Administration Paycheck Protection Program loan in May 2020. After pharmaceutical companies announced effective COVID-19 vaccine candidates in November 2020, there was a modest and significant improvement in debt valuations (2.3%; 95% CI, 0.2%-0.4%; P = .03); however, they remained discounted. Only PhyNet Dermatology's debt instruments improved to a premium valuation by August 2021. Conclusions and Relevance Debt valuations of some DPEGs found in this cross-sectional study suggest a lower probability that their loans will be repaid in full. This could be a signal that some DPEGs are not performing well financially.
Collapse
Affiliation(s)
- Rohail Memon
- Northwestern University Feinberg School of Medicine, Chicago, Illinois
| | | | - Joseph Francis
- Department of Dermatology, University of Florida College of Medicine, Gainesville
| | - Sailesh Konda
- Department of Dermatology, University of Florida College of Medicine, Gainesville
| |
Collapse
|
8
|
Veeramani A, Xun H, Comer CD, Lee BT, Lin SJ. What Is the Potential Impact of Private Equity Acquisitions Regarding Plastic Surgery Practices? Ann Plast Surg 2022; 88:1-3. [PMID: 34611090 DOI: 10.1097/sap.0000000000003010] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [MESH Headings] [Track Full Text] [Journal Information] [Subscribe] [Scholar Register] [Indexed: 10/20/2022]
Affiliation(s)
- Anamika Veeramani
- From the Division of Plastic Surgery, Department of Surgery, Beth Israel Deaconess Medical Center, Boston, MA
| | | | | | | | | |
Collapse
|