Private equity firms — corporations that help finance and often partially manage companies in return for a share of profit — have become a larger player in medical care through their acquisition of medical practices. As a result, the remaining practices must learn how to compete against larger medical groups; this often leaves small organizations with little choice but to accept the generous financing offered by private equity to survive.3Impact of Private Equity on Medical Quality and AccessAlthough private equity allows smaller medical practices to continue existing, the partnership also creates new processes and customs that affect both patients and practitioners. For example, private equity firms typically desire annual returns to exceed 20% within 3 to 7 years following acquisition. Between 2012 and 2017, the cost of health care services provided by medical groups backed by private equity grew more than twice as much as groups without private equity involvement.5The Physician’s PerspectivePhysicians generally have mixed feelings about the increased growth of medical groups financed by private equity firms. Already, some legislators and physician groups are considering ways to regulate the industry to ensure that private equity-based health care remains profitable while also improving medical care for patients.6References

Source: New York Times October 26, 2023 18:55 UTC