The influence of private equity on doctors' practices is growing. A new study offers insight

Harold Brubaker, The Philadelphia Inquirer on

Published in Business News

Private equity-backed urology practices control nearly 40% of the market in the Philadelphia region, according to a recent Health Affairs study that provided rare insight into the opaque world of private, for-profit health-care businesses.

The area's biggest PE-backed urology practice, MidLantic Urology LLC, has 55 urologists and 26 offices, yet does not account for all of the 40% market share in urology.

Researchers at the University of California-Berkeley and elsewhere did not identify individual practices, but found private equity, or PE, firms collectively had at least 30% market share in 120 markets nationwide in 2021 in at least one of 10 major specialties studied.

"The findings raise concerns about competition and call for closer scrutiny by the Federal Trade Commission, state regulators, and policy makers," Ola Abdelhadi and coauthors wrote, while cautioning that their data might not be complete because private equity ownership is difficult to track.

Federal regulators with oversight of the health-care industry and economic competition in early March asked for public comments on private equity and other for-profit corporations' increasing presence in health care. It's part of what the FTC, the U.S. Department of Justice, and the U.S. Department of Health and Human Services called an "inquiry on the impact of corporate greed in health care."

"Given recent trends, we are concerned that transactions may be generating profits for those firms at the expense of patients' health, workers' safety, and affordable health care for patients and taxpayers," the three agencies said.


Private equity firms gather money from pension funds, endowments, and wealthy individuals. That money goes into limited partnerships, or funds, that buy companies or stakes in companies. The goal of the PE firm is to make a profit by selling the companies within the typical 10-year lifespan of the funds.

The number of U.S. physician practices acquired by private equity firms soared to 484 deals in 2021 from 75 in 2012, according to the researchers at the University of California-Berkeley.

The increase in PE deals with physician groups comes as the health-care industry consolidates under hospital systems and insurers, said Gary Kirsh, a urologist in Cincinnati and president of Solaris Health, which includes MidLantic, and is backed by Lee Equity Partners.

"Independent docs have a choice, because if they put their head in the sand and remain their own small operation in each locale, they are not going to survive the consolidating headwinds," he said in an interview . They can join hospitals or work for an insurance company or get investor help, he said.


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