I never thought I’d see this story in the New York Times: Who Employs Your Doctor? Increasingly, a Private Equity Firm. Until two years ago, my personal physician was a solo practitioner. She retired early, in part because of the burden of dealing with multiple insurance agencies, private and public. Solo practitioners like her are increasingly rare.

Something new has been added to the world of medical providers: private equity firms that are buying up medical practices.

The New York Times reported on this new trend:

In recent years, private equity firms have been gobbling up physician practices to form powerful medical groups across the country, according to a new report released Monday.

In more than a quarter of local markets — in places like Tucson, Ariz.; Columbus, Ohio; and Providence, R.I. — a single private equity firm owned more than 30 percent of practices in a given specialty in 2021. In 13 percent of the markets, the firms owned groups employing more than half the local specialists.

The medical groups were associated with higher prices in their respective markets, particularly when they controlled a dominant share, according to a paper by researchers at the Petris Center at the University of California, Berkeley, and the Washington Center for Equitable Growth, a progressive think tank in Washington, D.C. When a firm controlled more than 30 percent of the market, the cost of care in three specialties — gastroenterology, dermatology, and obstetrics and gynecology — increased by double digits.

Source: Nicholas C. Petris Center on Health Care Markets and Consumer Welfare, University of California, Berkeley; Washington Center for Equitable Growth

The paper, published by the American Antitrust Institute, documented substantial private equity purchases across multiple medical specialties over the last decade. Urology, ophthalmology, cardiology, oncology, radiology and orthopedics have also been major targets for such deals….

The higher prices paid by private insurers contribute to high insurance premiums, and may increase out-of-pocket costs for patients.

Private equity firms, which pool funds from institutional investors and individuals to form investment funds, tend to purchase companies using debt, with an eye to reselling them in a few years. The industry has turned to health care fairly recently, but it has begun purchasing doctors’ practices at a steady clip, combining smaller practices to form larger companies.

When a private equity arm of a Canadian pension fund, OMERS Private Equity, bought Gastro Health, a large gastroenterology medical group, in 2021, it proceeded to acquire nearly a dozen smaller practices, according to the researchers, who say the group is now dominant in markets including the Miami area. The company now operates in seven states, employing over 390 doctors. The researchers saw similar patterns in other markets, where a firm would buy one large practice, then increase its market share by adding nearby smaller practices in the same medical specialty.

Historically, doctors’ practices have been relatively small, and owned by doctors themselves. But that model has been rapidly declining as the business of medicine has become more complex and the insurance companies that negotiate with doctors over prices have become bigger. Nearly 70 percent of all doctors were employed by either a hospital or a corporation in 2021, according to a recent analysis from the Physicians Advocacy Institute.

“We’re seeing a fundamental change in how medicine is being practiced in the U.S.,” said Richard Scheffler, a professor of health economics and public policy at Berkeley and director of the Petris Center.

Hospitals and insurance companies have also bought out many independent physicians’ practices. Optum, an arm of the publicly traded UnitedHealth Group, which also owns one of the nation’s largest insurers, employs roughly 70,000 physicians. Studies have shown that these types of concentrated ownership of doctors in a given market are also associated with higher prices.

Open the article and read on.