Private Equity: Medicine’s Professional Groups Must Weigh In

This transcript has been edited for clarity. 
Hi. I’m Art Caplan. I’m at the NYU Grossman School of Medicine, where I’m the head of the Division of Medical Ethics. 
I’ve been worrying for some time now about the control that private equity is continuing to exercise over private medical practices. Way back in 2011, in that year, data show that approximately 10 private practices were sold to equity firms or investment companies looking to bring returns to people with a large amount of capital. By 2021, the number had risen to 500 in the same year, and I know that number is increasing, right down to the present day. 
The most common targets for private equity are highly paid subspecialty practices — for example, dermatology and ophthalmology. Dermatologists make up 1% of physicians in the United States, but they account for about 15% of equity-owned acquisitions of private practices. Indeed, today, the majority of fertility practices — those doing in vitro fertilization and other fertility treatments — are owned by private equity. They see those as very lucrative. 
There’s a large amount of tension here. There are some good things about private equity and there are some bad things about private equity. Very few of the professional societies in dermatology, ophthalmology, reproductive medicine, or general groups such as the American Medical Association (AMA) have offered much in the way of opinion or guidance about this phenomenon of private equity acquisition, as was pointed out in a recent, very interesting article that appeared in JAMA Health Forum.
What did that article note? It’s something that I’ve been thinking about myself. There is a large amount of good that might come from private equity ownership. Those people are very good at figuring out how to administer practices more efficiently and give doctors help in running the office. They know how to do that. They can help keep track of changing regulatory and insurance environments, and give assistance with that so that payment becomes prompt and practices don’t get behind because of billing and other issues. 
There may be advantages on the money side, but there are some disadvantages, if you will, on the ethics side. Many of these private equity firms, I know, pressure clinicians — I’ve been told over and over again — to see more patients per hour and to do more procedures per hour. 
The relative value unit comes in here about how effective are people in the practice, with the equity people looking to get rid of those who may spend too much time talking to a patient and not enough time doing things that are reimbursable to their patients. You get a large amount of upselling of products in some of these practices, including supplements, creams, and potions that really either don’t have much evidence that they work but are high-priced and are pushed pretty hard in, say, a dermatology or wellness practice.
High tension might make medical practices more efficient, but it might on the other hand lead to things that are not really in the patient’s best interest. What’s important is that professional societies have not spoken up to help give advice to doctors who are considering selling their practices. 
You can talk to plenty of lawyers about the ins and the outs, but where you might expect some advice from the AMA or one of the subspecialty associations is particularly in the fields that equity is really targeting and that are seen as lucrative — to say, well, what should I think about? Should I try to build into contracts that we’re not going to raise prices for a period of time or that we have some charitable care that we do in the practice and that will be maintained? What about upselling products that don’t really have strong evidence for efficacy? 
There are clearly things that people selling practices — which is not going to stop — ought to be thinking about, and one might expect that professional societies, who all say that they’re looking out for patient interest and that must come first, would be advising groups regarding thinking about how to manage a sale.
I’m not saying that sales ought not happen. I’m not even saying that sales are wrong. What I am saying, though, is there’s tension. The tension needs to be managed. We need more advice and experience from professional societies and associations about how best to manage that. 
We need a much wider discussion than we’re getting on these sales that go on behind the scenes about how to balance efficiency, profitability, streamlining, and administrative burden against doing too many procedures, spending less time with individual patients, having doctors who talk more, and if you will, do fewer things penalized for good bedside manner, and making sure that prices are not jacked up and the poor are not forgotten. 
I’m Art Caplan, at the Division of Medical Ethics at the NYU Grossman School of Medicine. Thanks for watching.