Something Nefarious Is Quietly Taking Over Your Neighborhood Doctor's Office

"Private equity firms-which use money from rich individuals and funds like pensions and college endowments to buy businesses, extract cash, and flip them-have quietly moved into Main Street medical practices. In 2012, there were about 816 PE-owned physician practices in the U.S. By 2021, there were 5,779."

"For doctors, striking a deal with a firm to buy up most or all of their business can help struggling medical practices obtain much-needed funding to invest in new resources. It also leaves them at the behest of wealthy firms in far-flung states with no ties to or understanding of the communities the medical practices serve."

"These firms focus mostly on specialty fields built on high-volume procedures and steady insurance payments, like dermatology, dentistry, and gastroenterology. In many of these deals, private equity firms that manage billions of dollars purchase medical practices whose name recognition doesn't extend far past a county line."

Private equity firms have significantly increased their acquisition of medical practices, particularly in specialty fields like dentistry, dermatology, and gastroenterology that generate high-volume procedures and steady insurance payments. Between 2012 and 2021, PE-owned physician practices grew from 816 to 5,779, with at least 149 dental offices and 148 outpatient medical practices purchased in a single year. While these acquisitions can provide struggling practices with needed funding and resources, they also subject local medical providers to distant firms with no community ties or understanding. Major PE firms managing billions in assets purchase practices with limited regional recognition, using acquisition strategies that have historically resulted in debt-loading and bankruptcies in other industries.

Read at Slate Magazine