Key Takeaways
- • AIMPA commissioned Avalere to study Medicare fee-for-service data on private equity-affiliated management services organizations (MSOs) across five specialties—cardiology, gastroenterology, medical oncology, orthopedics, and urology—demonstrating PE-affiliated practices effectively control costs and maintain quality outcomes while preserving physician independence.
- • PE-affiliated medical practices represent a minority of the healthcare ecosystem yet generate disproportionate legislative and regulatory scrutiny, with some policymakers proposing barriers to PE investment despite objective data supporting the model's effectiveness.
- • Private equity firms typically hold medical practices for three to seven years, often consolidating multiple practices to achieve operational scale and provide aging physicians with viable exit strategies while reducing administrative burden.
- • PE acquisition of healthcare entities targets 20% to 30% return yields, leveraging the acquired practice or hospital as security for financing, driving cost reduction and operational efficiency improvements.
- • Independent medical practices affiliated with PE-backed MSOs operate within a fragmented market dominated by larger hospital systems and corporate entities, positioning them as competitive alternatives that preserve local, community-based care delivery.
Summary
The American Independent Medical Practice Association has challenged prevailing skepticism surrounding private equity investment in healthcare, presenting empirical evidence that PE-affiliated management services organizations deliver measurable benefits to independent physician practices. In 2024, AIMPA commissioned a study through consultant Avalere examining Medicare fee-for-service data across five high-value specialties: cardiology, gastroenterology, medical oncology, orthopedics, and urology. The research yielded what AIMPA characterizes as "striking results," demonstrating that physicians working within PE-affiliated MSOs have successfully controlled costs, promoted quality metrics, and remained operationally independent—outcomes that contradict the dominant narrative in national policy discussions opposing PE healthcare investment.
Paul Berggreen, MD and AIMPA board chair, articulated the organization's position that legislative momentum to restrict PE involvement in healthcare is disconnected from objective performance data. AIMPA represents more than 600 independent medical practices operating across 4,200 medical office locations and 575 ambulatory surgery centers in 46 states, collectively serving over 25 million patients annually across primary care, internal medicine, and multiple specialties. Berggreen emphasized that PE-affiliated practices, despite their scale disadvantage relative to hospital systems and corporate practice environments, constitute an essential competitive segment of the healthcare ecosystem and warrant protection from regulatory barriers rather than restriction.
The structural mechanics of PE healthcare investment center on providing exit liquidity for aging physicians while introducing operational support and consolidated scale. PE firms typically maintain medical practice portfolios for three to seven years, implementing cost reduction initiatives and workforce optimization strategies that drive profitability and operational efficiency. These firms structure acquisitions by leveraging acquired practices as collateral for acquisition financing, targeting investment returns of 20% to 30%. This model offers independent practitioners a strategic alternative to full acquisition by hospital systems while preserving clinical independence and reducing administrative responsibilities that divert attention from patient care delivery.
AIMPA's advocacy position reflects the broader debate regarding PE's role in healthcare consolidation. While PE ownership of for-profit hospitals represents approximately 22.6% of proprietary facilities nationally, and independent PE-affiliated medical practices remain a smaller market segment, the regulatory and legislative attention directed toward PE healthcare involvement remains disproportionate. The organization argues that competition among practice affiliation models—including PE-backed MSOs, hospital systems, and wholly independent practices—strengthens the healthcare market and that policymakers should focus on performance outcomes rather than ownership structure when evaluating PE healthcare investments.
Paul Berggreen, MD and AIMPA board chair, articulated the organization's position that legislative momentum to restrict PE involvement in healthcare is disconnected from objective performance data. AIMPA represents more than 600 independent medical practices operating across 4,200 medical office locations and 575 ambulatory surgery centers in 46 states, collectively serving over 25 million patients annually across primary care, internal medicine, and multiple specialties. Berggreen emphasized that PE-affiliated practices, despite their scale disadvantage relative to hospital systems and corporate practice environments, constitute an essential competitive segment of the healthcare ecosystem and warrant protection from regulatory barriers rather than restriction.
The structural mechanics of PE healthcare investment center on providing exit liquidity for aging physicians while introducing operational support and consolidated scale. PE firms typically maintain medical practice portfolios for three to seven years, implementing cost reduction initiatives and workforce optimization strategies that drive profitability and operational efficiency. These firms structure acquisitions by leveraging acquired practices as collateral for acquisition financing, targeting investment returns of 20% to 30%. This model offers independent practitioners a strategic alternative to full acquisition by hospital systems while preserving clinical independence and reducing administrative responsibilities that divert attention from patient care delivery.
AIMPA's advocacy position reflects the broader debate regarding PE's role in healthcare consolidation. While PE ownership of for-profit hospitals represents approximately 22.6% of proprietary facilities nationally, and independent PE-affiliated medical practices remain a smaller market segment, the regulatory and legislative attention directed toward PE healthcare involvement remains disproportionate. The organization argues that competition among practice affiliation models—including PE-backed MSOs, hospital systems, and wholly independent practices—strengthens the healthcare market and that policymakers should focus on performance outcomes rather than ownership structure when evaluating PE healthcare investments.
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