Physicians Take the PE Money and Run

One of the myriad hassles facing consumers in dealing with the healthcare system is physician turnover. Your primary care physician, cardiologist, sleep doctor, OB/GYN, etc., changes practices. That sets off a chain of paperwork events that leaves even the most hardened healthcare consumer in agony.

Does my insurance cover them? Are they in-network or out-of-network? Are they in the same building or at a new location? Will they have a new office support staff? What happens to my medical records? Do I have to learn a new portal login and password? What specialists will they refer me to? Do I have to go to a different hospital?

Unfortunately for consumers, that experience will become more frequent as private equity (PE) firms acquire more physician practices across the country and change local markets for doctors. A new study in Health Affairs says physician turnover in PE-acquired physician practices is higher than in other practices.

Five researchers from Brown University and the University of North Carolina compared the physician turnover rate in 200 ophthalmology practices acquired by PE firms from 2014 through 2021 with a matched set of ophthalmology practices not acquired by PE firms during the same seven-year period.

Here’s what they found:

• Before PE firms bought the 200 practices, the practices had a physician turnover rate of about 4.9%.
• After PE firms bought the 200 practices, the practices had a physician turnover rate of about 22.2%, or about 17.3 percentage points higher.
• Over that same period, the physician turnover rate in the matched set of non-PE-acquired practices rose from about 7.7% to about 8.8%.

So, the acquired practices had a lower turnover rate than other practices to start, but that rate lapped the other practices nearly three times after a PE firm took them over.

“PE firms may increase physician turnover by altering performance incentives, practice conditions, physician autonomy and job satisfaction,” the researchers said.

This is all another part of the curious dance between physician practices and PE firms. It’s physicians who sell their practices to PE firms and cash their big checks. Then it’s doctors who complain about PE ownership. So much so that they leave their old practices in droves. The losers, of course, are consumers.

I previously wrote about that curious dance between physician practices and PE in this blog post: “Doctors Bite the Private Equity Hand That Feeds Them.”

Nothing in healthcare makes sense.

Thanks for reading.