Association of Private Equity Acquisition of Physician Practices with Changes in Health Care Spending and Utilization

Abstract

Importance: Private equity acquisitions of physician practices in the US have been increasing rapidly; however, the implications for health care delivery and spending are unclear. Objective: To examine changes in prices and utilization associated with private equity acquisitions of physician practices across multiple specialties. Design, Settings, and Participants: This was a difference-in-differences event study of US physician practices specialized in dermatology, gastroenterology, and ophthalmology that were acquired by private equity firms from 2016 to 2020. Within each specialty, each private equity-acquired (PE-acquired) practice was matched with as many as 5 control practices based on the preacquisition number of unique patients, encounters, risk score, share of services billed out-of-network, and spending. The PE-acquired practices were compared with matched controls through year 2 after acquisition, using a difference-in-differences event study. Data analyses were performed from March 2021 to February 2022. Exposures: Private equity acquisition of physician practices. Main Outcomes and Measures: Measures of spending and utilization, including the charge and price (amount paid) per claim, new and unique patients, and total encounters. Results: Compared with the 2874 control practices, the 578 PE-acquired physician practices exhibited an average increase of $71 (+20.2%) charged per claim (95% CI, 13.1%-27.3%; P