Private equity acquisitions of physician practices fuel rapid growth in head counts as well as clinician turnover, according to data published in the March issue of Health Affairs.
The findings land shortly after another recent analysis on the seller’s side of PE transactions, which was published in JAMA and also found increased turnover. Both come as researchers and others have warned of increased consolidation, higher prices and other downstream effects from PE’s increasing participation in the physician practice ecosystem.
“As PE expands its footprint, policy makers should monitor the long-term implications of PE ownership on physician employment and turnover to mitigate potential undesirable effects on patient health,” researchers wrote in Health Affairs.
The team’s analysis used Pitchbook data and other sources to identify PE investments into practices within a single specialty, ophthalmology, between 2014 and 2021. They matched these to federal provider and business identification numbers, which they followed over time to spot and compare any workforce changes to unacquired practices.
That approach landed on 200 ophthalmology practices with 1,980 clinicians. Compared to matched controls, these practices’ clinician head counts grew by 46.8% during the three years after their PE acquisition through the addition of ophthalmologists (30.7%) and optometrists (36.2%).
Elevated clinician replacement ratios among the acquired practices suggested higher rates of hiring compared to the controls, the researchers found. Turnover was also higher, with the share of physicians who left acquired practices from year to year rising by 265% as compared to control practices, they wrote.
The researchers also took a look at differences in the characteristics of departing practitioners between the two study groups. Those who left PE-acquired practices were more likely older (40 to 60 years), with the researchers also noting that the younger cohort were less likely to be partner-owners of their practice at the time of acquisition, “which may have limited their financial benefit from the acquisition itself. In contrast, partner-owners typically receive large financial payouts at the time of acquisition that might encourage retirement decisions,” they wrote.
Other potential factors affecting physician movement from these acquired practices could include altered performance incentives, practice conditions, physician autonomy, job satisfaction and burnout, the researchers wrote. These factors, and the resulting shift in clinical workforce composition, are worth continued investigation, they said.
“Although we were unable to differentiate between physicians who moved from one practice to another versus those who stopped practicing entirely, future research can examine factors that lead to higher physician turnover after PE acquisition, including physician retirement,” they wrote.
The Health Affairs study comes a few weeks after a JAMA Health Forum-published investigation of physician movement following PE’s divestiture from a practice.
Among 1,215 physicians—two controls for each physician who worked at a PE-owned practice—those who worked under a PE exit were 16.5 percentage points likelier to work elsewhere within two years and 10.1 percentage points likelier to join a large practice. Despite the higher turnover, the study saw no significant difference in the probability of retirement.
“Given their objective of realizing a return by selling acquired practices within roughly three to seven years, understanding how these exits impact physicians and physician market structure is highly relevant to physicians, regulators, investors and patients,” researchers wrote in JAMA Health Forum.
“Our finding … suggests that the aggregate long-term effect of PE investment is to reduce physician retention.”