Docs Vent As Feds Investigate Private Equity, Consolidation In Medicine


                                                               By Steph Weber

As three federal agencies investigate how private equity ownership and consolidation of healthcare organizations affects patient care and costs, physicians are giving them an earful.

"Before I retired, I could already see the damage private equity was doing to hospitals and medical practices. Well-regarded physician groups were being bought and the respected doctors and staff forced out to squeeze out profit for the buyers. Hospital-based physicians were being hit especially hard," wrote Rhonda Wright, MD, of Brookhaven, Georgia.

"Now, the rot is setting in for emergency rooms. One in four ERs is now (under-)staffed by private equity firms. This is leading to longer wait times, deterioration in patient care, and higher bills," Wright continued. "Private equity takeover of medicine must be stopped. All such deals should be strictly regulated and should be heavily scrutinized, if not barred altogether. Our health depends upon it!"

The federal government is accepting public comments like Wright's through June 5 and has even set up a website ( to make it easier to file complaints against health organizations possibly violating antitrust laws.

The US Department of Justice's Antitrust Division, the Federal Trade Commission (FTC), and the Department of Health and Human Services want to hear from physicians and the public about how private equity firms' investments in healthcare entities, such as hospitals, nursing homes, or specialty service providers, affect patients and healthcare workers. The investigation will also evaluate how market pricing, competition, and referral patterns change when practices and hospitals are acquired by health systems or insurers.

Maintaining competition in the provider and payer markets benefits healthcare workers through higher pay, while patients can access quality care at lower prices, the joint request for information said. However, consolidation and mergers — potentially driven by private equity's entry into the market — can diminish these benefits.

Investigating private equity and consolidation in medicine is part of the Biden Administration's focus on lowering medical and prescription drug costs and strengthening competition in healthcare. The FTC's vote last week to ban noncompete agreements, which business groups have vowed to challenge in court, falls under the same initiative.

Alexandra Nicole Thran, MD, FACEP, president of the Vermont Chapter of the American College of Emergency Physicians, said that the private equity business model is problematic because it ties physicians' wages to patient satisfaction and the number of patients they see per hour.

A Connecticut primary care physician expressed similar sentiments. "Physicians are being forced into a system where corporations provide financial incentives and punitive policies to direct healthcare decisions towards a profitable aim," said Eric Schwaber, MD.

While a majority of comments criticized the role of private equity and consolidation, some reflected a more positive view.

"Private equity helps make healthcare more efficient and effective. It brings needed operational and managerial expertise to allow for better patient care," said Reenie Abraham, MD, an associate professor in the Department of Internal Medicine at University of Texas Southwestern Medical Center, Dallas. The University of Texas is facing a lawsuit involving the liability status of its physicians who work for a private equity-backed hospital partly owned by the university.

Several public comments point to the increasing market influence UnitedHealth Group (UHG) and other payers have obtained through recent acquisitions. Retired emergency room physician Scott Davis, MD, said that the "astronomical" rate of burnout among providers has been exacerbated by "the economic takeover of the healthcare system by…United Healthcare [and] private equity groups who put profits over anything else."

The healthcare conglomerate employs approximately 10% of active US physicians, including many through its subsidiary, Optum Health, which provides primary, urgent, and surgical care. UHG has also invested heavily in acquiring physician practices to advance its value-based care model.

"If a publicly traded private insurance or private equity company is interested in their short-term quarterly profits or stock price, there is little interest in the…effective management of chronic disease, other than that which fulfills a 'value-based' metric," wrote Kenneth Dolkart, MD, FACP, clinical assistant professor at the Dartmouth Geisel School of Medicine in Hanover, New Hampshire.

Sarah Ealy, a revenue cycle professional, commented that payers like UHG have outsized bargaining power when negotiating rates with providers. "In many states, United Healthcare and its subsidiaries pay a lower reimbursement rate than state Medicaid plans — these rates are nearly 50% of the breakeven per-visit rate that practices need to keep the lights on."

Another comment ties the recent cyberattack on UHG-owned Change Healthcare to private equity ownership and "healthcare behemoths buying up practices and data."

"The ramrodding of consolidation and private oversight with little to no barriers to foreign intrusions…is a testament to how ill prepared [the] US market is to private equity healthcare takeovers," said SW Dermatology Practice LLC.

The agencies request comments from all health market participants, including physicians, nurses, employers, administrators, and patients.


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