Key Takeaways
- • A September 2022 JAMA Network study of 578 private equity-acquired physician practices (2016–2020) found average allowed amounts per claim increased $23 (11%) and charges per claim rose $71 (20.2%) in each of eight quarters post-acquisition, compared to 2,874 control practices.
- • Patient utilization surged across PE-acquired practices, with unique patient counts rising 25.8% on average post-acquisition, driven primarily by a 37.9% increase in new patient visits, while total encounters increased 16.3%.
- • Increases in charges and new/unique patient volume held consistently across dermatology, gastroenterology, and ophthalmology specialties; however, only ophthalmology and gastroenterology showed statistically significant increases in allowed amount per claim following PE acquisition.
- • The research demonstrates that private equity ownership of physician practices correlates with higher health care spending and increased service utilization, raising implications for payers, patients, and healthcare cost trajectories.
Summary
A landmark JAMA Network research study published in September 2022 examined the financial and operational impact of private equity acquisition on physician practices, analyzing 578 PE-acquired practices across three specialties against 2,874 control practices. The study tracked changes in spending, utilization, and practice patterns for practices acquired between 2016 and 2020, following them through eight quarters post-acquisition.
The findings reveal material increases in healthcare spending attributable to PE ownership. Allowed amounts per claim—the maximum reimbursable amount negotiated between insurers and providers—climbed $23 per claim (11%) on average in each quarter following acquisition. More notably, actual charges per claim increased $71 (20.2%) per quarter post-acquisition. These increases persisted consistently across all eight quarters studied, suggesting structural rather than transient pricing changes.
Utilization metrics expanded substantially in PE-acquired practices. The mean number of unique patients increased 25.8% on average across post-acquisition periods, with new patient visits climbing 37.9%—the primary driver of overall patient growth. Total encounter counts rose 16.3% following PE acquisition. This dual expansion in both pricing and volume indicates PE-backed consolidation correlates with both higher unit costs and increased service delivery intensity.
Specialty-level analysis revealed variations in spending impacts. While increases in new and unique patient counts and charges held across all three specialties—dermatology, gastroenterology, and ophthalmology—only ophthalmology and gastroenterology practices demonstrated statistically significant increases in allowed amounts per claim post-acquisition. Dermatology showed the pattern of increased utilization but did not reach statistical significance on pricing metrics, suggesting specialty-specific factors influence PE's pricing leverage and operational strategy.
These findings contribute to growing evidence that private equity consolidation of physician practices correlates with increased healthcare expenditures and service intensity, with direct implications for health plan costs, patient access patterns, and the structural economics of healthcare delivery markets.
The findings reveal material increases in healthcare spending attributable to PE ownership. Allowed amounts per claim—the maximum reimbursable amount negotiated between insurers and providers—climbed $23 per claim (11%) on average in each quarter following acquisition. More notably, actual charges per claim increased $71 (20.2%) per quarter post-acquisition. These increases persisted consistently across all eight quarters studied, suggesting structural rather than transient pricing changes.
Utilization metrics expanded substantially in PE-acquired practices. The mean number of unique patients increased 25.8% on average across post-acquisition periods, with new patient visits climbing 37.9%—the primary driver of overall patient growth. Total encounter counts rose 16.3% following PE acquisition. This dual expansion in both pricing and volume indicates PE-backed consolidation correlates with both higher unit costs and increased service delivery intensity.
Specialty-level analysis revealed variations in spending impacts. While increases in new and unique patient counts and charges held across all three specialties—dermatology, gastroenterology, and ophthalmology—only ophthalmology and gastroenterology practices demonstrated statistically significant increases in allowed amounts per claim post-acquisition. Dermatology showed the pattern of increased utilization but did not reach statistical significance on pricing metrics, suggesting specialty-specific factors influence PE's pricing leverage and operational strategy.
These findings contribute to growing evidence that private equity consolidation of physician practices correlates with increased healthcare expenditures and service intensity, with direct implications for health plan costs, patient access patterns, and the structural economics of healthcare delivery markets.
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