Money to be made: Private equity firms buy dermatology practices

Money

With money to be made in cosmetic procedures, dermatology practices are suddenly a hot commodity.

Private equity firms are buying up dermatology practices across the country, according to a report by Business Insider. In the past two years, there have been more than 200 such purchases of physician practices by investors, with about 30 of them involving dermatology practices, the publication reported, with more deals likely to come in the future.

What’s the draw? Investors are particularly interested in the profitable cosmetic procedures that are a component in many dermatology practices from Botox and Restylane to micro-dermabrasion and laser correction. A few of the deals have come at huge prices, such as the New York-based private equity firm Harvest Partners' recent purchase of the country’s largest dermatology practice, Florida-based Advanced Dermatology & Cosmetic Surgery, for a reported $600 million.

And some doctors are more amenable to selling their practice than they might have been in years past, the publication said. Doctors, who might have balked at losing their independence, now like the idea of spending most of their time providing patient care and are happy to turn over billing, scheduling and insurance contract negotiations to someone else.

Other physicians are getting in on the deals. Some doctors are teaming up with investors to become consolidators, acquiring other dermatology practices and seeking an equity stake in the larger organization, the publication said. Others have joined or formed multi-physician dermatology practices with several locations and additional specialties.

Dermatology is also being changed by new technology, with teledermatology providing access to more patients. It’s not just dermatology practices that investors are focused on, it’s innovative, value-based care providers in general.

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