Private equity acquisition of physician practices — Looking for ethical guidance from professional societies

Private equity acquisition of physician practices — Looking for ethical guidance from professional societies
JAMA Network; by Peter A. Ubel; 9/13/24
In 2012, private equity firms purchased approximately 75 physician-owned practices; by 2021, that number had risen to almost 500. Most commonly, firms have sought high-paid subspecialty practices. For example, dermatologists make up approximately 1% of physicians in the US, whereas dermatology practices account for 15% of private equity acquisitions. Private equity firms can offer valuable administrative support to clinical practices. Some firms offer expertise to help practices respond to rapidly changing regulatory and reimbursement environments. Firms also provide financial rewards to clinicians who have often spent decades building successful practices. However, private equity acquisitions can also lead to ethically troubling consequences. For example, to maximize the return on their investments, private equity firms sometimes pressure clinicians to see more patients, perform more procedures on those patients, and upsell patients on products not reimbursed by insurance, such as acne creams stocked in dermatology offices. In addition, after being acquired by firms, medical practices often raise medical prices, including an increase in out-of-network billing and surprise bills. These price increases harm patients by increasing their out-of-pocket expenses and, potentially, reducing their ability to pay for care, thus contributing to financial nonadherence and medical debt... In short, some professional societies offer guidance on how to promote members’ interests when selling to private equity, even reminding them to factor the value of their real estate into the sale price, but they offer scant information on the ethical tradeoffs created by such sales.

• First, professional societies should convene panels of experts from within and outside their specialties to review the ethical and economic effects of private equity (and other profit-maximizing entities) on patients.
• Second, professional societies should develop written materials that can be easily accessed by members to explain in clear and direct terms that the decision whether to sell one’s practice is not just a matter of economics or of professional quality of life but is also an ethical choice and one that must be consistent with professional duties to current and future patients.
• Third, professional societies should develop ethics guidelines to provide members with practical moral advice.