Reed Abelson and Margot Sanger-Katz report for The New York Times on private equity’s growing role in health care. The New York Times story is based on a new report from the Antitrust Institute finding that private equity is buying up specialist practices and driving up health care prices and expenses in the process.
Private equity sees big dollars in health care and is paying big money to own physician practices all over the country, at a rapid rate. In 13 percent of the country, private equity owns more than 50 percent of physician practices, which means higher costs for everyone. In markets with the highest private equity penetration, health care costs are rising most dramatically. In cases where private equity controlled more than 30 percent of the market, gastroenterology, dermatology, and obstetrics and gynecology costs rose by double digits.
Private equity firms appear to see value in owning many, if not all, physician specialists as well as primary care practices. Private equity firms have focused on urology, ophthalmology, cardiology, oncology, radiology and orthopedics. Once they have a solid share of the specialty market they demand higher prices from insurance companies.
Insurance companies, in turn, must pay these private-equity owned practices higher prices in order to have enough specialists in their networks. And, if insurance companies are paying more, you better believe that your health insurance premiums are rising, along with deductibles and copays.
Thankfully, Traditional Medicare has fixed provider rates. But, if Medicare Advantage takes over Medicare, (as it will likely do if Congress does not act soon,) Medicare Advantage plans will not have the leverage to negotiate Medicare rates and costs will rise dramatically in Medicare Advantage.
Alternatively, the federal government could require Medicare Advantage plans to pay Medicare rates. The private equity-owned practices would likely have to honor those rates to ensure they have enough patients. The Medicare population tends to make up a significant portion of specialists’ patients.
Here’s more from Just Care:
- Private equity buying up orthopedics practices
- Medical debt is a profit center for banks and private equity
- Private equity-owned hospice and home health agencies drive up Medicare spending, jeopardize quality of care
- Patient safety at risk in private-equity controlled emergency rooms
- Unless you have Medicare, surprise ambulance bills are common
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