Harris Meyer reports for Kaiser Health News on the rise in private equity ownership of orthopedics practices. At least some large orthopedics practices have not been able to stay afloat financially. Instead of selling themselves to large hospital systems or health insurance companies, they have allowed private equity firms to buy them. Based on what we know about private equity ownership in dental care, eye care, emergency room services and more, Americans should be prepared to see costs increase and quality of care suffer for orthopedics services.
Tip: If you need orthopedic surgery, do your homework. Make sure that the specialist you choose puts patients first and is not being directed to deliver less than you need.
In 2021, orthopedic surgeons earned an average of $634,000. Private equity ownership gives these specialists a big upfront payment. In theory, private equity ownership could reduce orthopedic surgery costs through reliance on lower cost outpatient surgery out of a hospital system. In practice, it is more likely to lead to higher costs for both insurance companies and patients.
One study published in JAMA Network looked at 578 private equity owned dermatology, gastroenterology, and ophthalmology physician practices. Within two years of private equity ownership, charges were 20 percent more than at places that were not private-equity owned. There is also data showing that physicians working for private equity firms are often pressured to do more with less help, which could mean poorer quality care.
One chief medical officer of an orthopedics group that refused to sell themselves to a private equity company said that the only goal of private equity is to make greater profits and then sell. The only way they succeed is by expecting physicians to work more and do less.
Private equity is still relatively new to medicine. Companies only began buying orthopedics practices in 2017. But, many private-equity owned orthopedics practices are now for sale again. Georgia, Texas, Florida and Colorado, along with eight other states have seen the greatest buyout of orthopedic practices by private equity.
Why is private equity looking at orthopedic practices? You guessed it. It’s following the money. Patients spend almost $50 billion each year for orthopedic surgery to treat back pain alone! Then, there’s all those knee and hip replacements, which many people need. One knee replacement can easily cost more than $40,000.
Some physicians, whose businesses are now owned by private equity, claim that they are still in charge. They don’t see any changes. If you ask me, if they haven’t yet, they will. It’s only a matter of time.
One expert explains that private equity is looking at short-term returns. That likely means that in a capitated payment system, where the physicians are paid a flat fee for their work, physicians will do less than people need. In a fee-for-service system, they will do more than needed.
Right now, the future of independent physicians looks pretty grim.
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