New data and analysis suggest private equity takeovers of U.S. medical practices cause anticompetitive harms to patients, insurers, and employers in local markets

The linked resources and the PDF for this piece were updated on February 20, 2024.

Private equity firms are deeply engaged in buying up and consolidating medical practices across the United States, but the scale, scope, and consequences of these financial takeovers are now leading to high local market shares and increased prices for patients, insurers, and employers alike. In a new report, “Monetizing Medicine: Private Equity and Competition in Physician Practice Markets,” produced in collaboration with the American Antitrust Institute and the Petris Center at the University of California, Berkeley, the Washington Center for Equitable Growth documents this growth in private equity acquisitions across 10 medical specialties.

The report presents new data showing how the rate of national private equity acquisitions, while substantial, mask genuinely explosive growth in private equity ownership in specific local and regional markets. This includes 28 percent of local markets where a private equity firm now controls more than 30 percent of physicians, as well as several specialties where more than 50 percent of the physicians work for a single private-equity-owned firm.   

These market shares alone are concerning for patients, workers, and payers. But the report also documents that these local markets with a high share of private-equity ownership are more concentrated—even more so than markets with similarly high market shares controlled by non-private equity owners. This is concerning from a competition standpoint because such markets are more vulnerable to anticompetitive conduct. This finding also suggests that private equity firms either target more concentrated markets or more aggressively consolidate physician markets than their non-private equity counterparts.

The consequences are telling. The report documents statistically significant price effects associated with private equity acquisition using a difference-in-differences analysis. In 8 of the 10 specialties studied, the analysis finds increased prices, ranging from 4 percent to 16 percent across those specialties. Looking only at the markets where a private equity firm controls more than 30 percent of the physicians, the report finds price increases of 18 percent in gastroenterology, 16 percent in obstetrics and gynecology, and 13 percent in dermatology.

Simply put, patients, insurers, and employers pay more for physician services when private equity firms take over.

These findings underline the urgent need for policymakers to pay attention to the surge of private equity acquisitions of physician practices. The report recommends a combination of immediate policy steps to close loopholes in antitrust reporting alongside reforms to Medicare payment policies, tax policies, and other areas that private equity firms and others exploit as they consolidate medical-provider markets and monetize medicine. The report also specifies several areas that would benefit from further study.

Support for the project was generously provided by Arnold Ventures. Read the full report here.