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New research finds that private equity-acquired physician practices are associated with increased health spending and utilization

October 3, 2022

On September 2, 2022, JAMANetwork published a research study[1] examining the association of private equity acquisition of physician practices with changes in health care spending and utilization.

The researchers looked at 578 private equity-acquired dermatology, gastroenterology, and ophthalmology physician practices acquired from 2016 to 2020. They compared these practices to 2874 controls to examine potential differences in spending, utilization, and practice patterns.

Their findings indicate that the average allowed amount per claim increased by $23 (11%) and the average amount charged per claim increased by $71 (20.2%) for private equity practices in each of the 8 quarters after acquisition.[2] The allowed amount per claim refers to the highest allowable amount an insurance provider will pay for a particular service, based on a negotiated rate with the provider.[3]

The researchers noted that “The increases in allowed amount and charges per claim after private equity acquisition were accompanied by increases in patient utilization in each of the 8 quarters after acquisition. Averaged across all post-acquisition quarters, the mean number of unique patients increased by 25.8%, primarily driven by increased visits for new patients, which rose by 37.9%. The total number of encounters increased by 16.3% after private equity acquisition.”[4]

The study also looked at the three specialties separately and saw minor variations. The increase in new and unique patients as well as the increase in charges held true across ophthalmology, gastroenterology, and dermatology, but only ophthalmology and gastroenterology saw significant increases in allowed amount per claim following private equity acquisition.[5]

The researchers argue that their “study contributes evidence for potential overutilization and higher spending on care that will be important for policy makers to monitor.”[6]

This study is an important addition to the growing investigations into the private equity investment frenzy in specialty physician practices like gastroenterology, dermatology, and ophthalmology.

The Private Equity Stakeholder Project (PESP) has been tracking private equity acquisitions in healthcare since October 2020, and has recently raised concern about the impacts of private equity acquisitions of physician practices, in particular.

As reported in PESP’s Healthcare Research Director Eileen O’Grady’s February 2022 acquisitions blog post:

“Because private equity firms are barred from directly owning physicians’ practices in most states, firms often buy or create platform companies that partner with physician-owned medical groups. These physician management companies (PMC) typically manage the business administration of medical practices, including insurance contracting and billing.

“Of critical concern is the impact of private equity ownership of physicians’ practices on the prices. A February 2022 study published in JAMA found that payments to anesthesia providers were higher at practices that contracted with a PMC, particularly if the PMC was backed by a private equity firm….

“The study author, Ambar La Forgia, told Healthcare Dive: ‘One way PMCs may command higher prices is by amassing market share and by developing better negotiating expertise. PE-backed PMCs may also have had stronger incentives to create short-term returns for investors relative to those without PE investments.’”[7]

This September, KHN released a report on private equity activity in ophthalmology. They cite a KHN analysis that identified how private equity firms are investing in practices where there are doctors who prescribe certain drugs at high rates, suggesting that “the doctors are likely seeing high volumes of patients and thus are more profitable.”[8] They elaborate:

“KHN analyzed the top 30 prescribers of the macular degeneration eye drugs Avastin and Lucentis in 2019 through a Centers for Medicare & Medicaid Services database. Private equity companies went on to invest in 23% of the top Avastin prescribers, and 43% of the top Lucentis prescribers — far higher than the 8% of ophthalmologists in which private equity currently holds a stake. Retina Consultants of America, for example, has invested in the practices of four of the top Avastin prescribers, and nine of the top Lucentis prescribers.”[9]


[1] Yashaswini Singh et al., “Association of Private Equity Acquisition of Physician Practices With Changes in Health Care Spending and Utilization,” JAMA Health Forum 3, no. 9 (September 2, 2022): e222886,

[2] Singh et al.

[3] “What Does ‘Allowed Amount’ Mean?,” WebMD, accessed September 20, 2022,

[4] Singh et al., “Association of Private Equity Acquisition of Physician Practices With Changes in Health Care Spending and Utilization.”

[5] Singh et al.

[6] Singh et al.

[7]Eileen O’Grady, “Private Equity Health Care Acquisitions – February 2022,” Private Equity Stakeholder Project (blog), March 14, 2022,

[8] Lauren Weber, “Private Equity Sees the Billions in Eye Care as Firms Target High-Profit Procedures,” Kaiser Health News, September 19, 2022,

[9] Weber.

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