PE’s own physician groups are associated with higher study expenses

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diving letter:

  • Private equity acquisitions of medical practices have been linked to increased healthcare spending and patient utilization in a new study of commercial policyholders published in the JAMA Health Forum.
  • PE-owned practices showed a consistent increase in spend eight quarters after an acquisition, with the average fee per claim increasing 20% ​​and the average allowable per claim increasing 11%.
  • The study’s authors, from Johns Hopkins University, Harvard Medical School and Oregon Health and Science University, said their research adds evidence of potential overuse and higher spending on care, which will matter to policymakers to monitor them. “These billing patterns could mean more efficient documentation of services rendered, or it could mean insurance companies being upcoded or billed to make more money,” said senior author Jane Zhu, an assistant professor of medicine at OHSU, in a press release .

Dive insight:

A surge in physician group buyouts in recent years has been attributed to increasingly difficult economic challenges, including labor and supply shortages, that physician practices have faced since the onset of the COVID-19 pandemic.

A study this year by Avalere found that nearly three-quarters of U.S. doctors now work for companies like private equity firms, health insurers and hospitals, up from 69% a year earlier.

The JAMA Health Forum study researchers said their data did not identify specific reasons for higher spending related to private equity ownership or the impact on clinical outcomes for patients. But the financial incentives offered by private equity firms, which seek annual returns in excess of 20%, mean these new owners need to generate higher revenues or cut costs, Zhu said.

The study compared 578 US dermatology, gastroenterology, and eye care practices acquired by private equity firms between 2016 and 2020 to 2,874 similar independent physician groups. In addition to higher spending, the study found an increase in the number of patients in PE’s own practices and a larger proportion of outpatient visits longer than 30 minutes.

Practices acquired by PE saw a 38% increase in new patient visits and a 16% increase in total visit volume compared to the control group, with a 9% increase in office visits for established patients billed longer than 30 minutes .4% increased .

The study found no statistically significant changes in patient risk scores between the practices with acquired PE and the control group.

“These results may reflect changes in management and practice operations, such as B. the extension of practice times, branding and advertising or the expansion of recommendation networks. Alternatively, increased patient volume may also reflect overuse of profitable services and/or unnecessary or low-quality care, which could increase health care expenditures with no corresponding benefit to patients,” the study authors wrote.

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