As private equity continues to buy up practices in radiology and other specialties, two physicians are offering possible policy solutions to increase scrutiny, reports Radiology Business.
Such investors acquired nearly 7,000 healthcare entities between 2014-2021. But only 0.1% of those firms faced False Claims Acts settlements, editorialists wrote in JAMA. During a time when PE acquisitions in medicine leapt 167%, the number of full-time positions at the Federal Trade Commission climbed only 1%.
Harvard Medical School experts believe regulators need more firepower to begin better understanding the impact of such trends.
“As evidence emerges on the clinical and economic consequences of these buyouts, federal and state policy makers have begun exploring ways to improve oversight and regulation in this space,” Christopher Cai, MD, and Zirui Song, MD, PhD, wrote. “To date, however, a framework for potential policy responses to this growth in private equity ownership remains lacking.”
The two physicians listed three reasons why PE deals in medicine warrant closer examination: (1) The emphasis on rapid returns during a five- to 10-year timeline may lead to price increases and an unnecessary uptick in volume. Among nearly 580 physician groups acquired by PE over a four-year period, prices leapt 11% while volume increased 16%, one study found. (2) PE can introduce new financial risk into medicine, taking on massive amounts of debt and attaching it to the acquired entity rather than the investment firm. Across all sectors including healthcare, companies acquired through a leveraged buyout are 10 times more likely to go bankrupt, another study found. (3) These firms benefit from special tax and regulatory privileges and are subject to less regulatory oversight than their publicly traded counterparts. Read more.
