Private Equity Health Care Acquisitions – February 2022

In light of the growing investor interest in health care and the risks associated with private equity ownership of health care companies, the Private Equity Stakeholder Project will be tracking private equity-backed health care acquisitions. Below is a list of private equity health care buyouts and add-on acquisitions completed or announced during February 2022. We will continue to track acquisitions on a monthly basis.

See January 2022 acquisitions here.

Private equity firms are continuing to invest in physicians’ practices and medical groups, including gastroenterology, dermatology, orthopedics, and podiatry. The acquisitions are part of a growing trend of private equity firms buying up medical practices.

A 2020 study published in JAMA found that private equity firms acquired 355 physician practices between 2013 and 2016, with the number of deals accelerating each year. The most commonly represented medical groups in the study were anesthesiology (19.4%), multispecialty (19.4%), emergency medicine (12.1%), family practice (11.0%), and dermatology (9.9%). There were also increases in the number of cardiology, ophthalmology, radiology, and obstetrics/gynecology practices.[1]

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.[2]

PE Physicians’ Practice Acquisitions – February 2022

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.[3]

The study found that for patients who received anesthesia in a facility with a PMC contract, amounts paid increased by 16.5%, and unit prices standardized by procedure complexity and duration climbed by 18.7%. For private-equity-owned PMCs, allowed amounts and unit prices increased by 26.0% and 25.6% respectively.[4]

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.”[5]

The study raises concern that private equity ownership of physician practice management companies may lead to increased prices and higher premiums.

February 2022 PE Buyouts

February 2022 PE Add-On Acquisitions

February 2022 PE De Novo Acquisitions

[1]https://jamanetwork.com/journals/jama/article-abstract/2761076

[2]https://ldi.upenn.edu/our-work/research-updates/private-equity-investment-in-physician-practices/

[3]https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2789280

[4]https://jamanetwork.com/journals/jamainternalmedicine/article-abstract/2789280

[5]https://www.healthcaredive.com/news/corporate-backed-anesthesiology-practices-paid-more/619665/