Private equity, hospital affiliations tied to higher primary care costs: 5 study notes

Growing shares of primary care physicians are affiliated with hospitals and private equity firms, which may be pushing up costs for primary care services, according to a new study.

Researchers from Brown University School of Public Health in Providence, R.I., analyzed data on nearly 200,000 U.S. physicians to assess shifts in hospital and private equity affiliations and their implications for prices. Using negotiated price data from Aetna, Blue Cross Blue Shield, Cigna and United Healthcare, the researchers examined rates for office visits and assessed how ownership type affected costs.

Here are five findings from the study, published Jan. 17 in JAMA Health Forum

  1. In 2022, nearly half of primary care physicians were affiliated with hospitals, up from about 25% in 2009. The percentage of PCPs affiliated with private equity firms grew to 1.5% over the same period. 

  2. On average, negotiated prices for office visits to hospital-affiliated physicians were 10.7% higher than those paid to independent physicians. For private equity-affiliated physicians, prices were 7.8% higher. 

  3. It remains unclear whether higher prices paid to affiliated physician practices lead to improved outcomes for patients or clinicians, researchers said.

    "The corporate transformation of primary care is underway," Yashaswini Singh, PhD, lead study author and healthcare economist at Brown, told Medscape

"Hospital and PE affiliation of primary care physicians has been increasing over time with the potential to increase the cost of care. At the same time, there is no evidence that these trends benefit patients or physicians." 

  1. Researchers noted that primary care has been ripe for corporate consolidation due to growing demand for coordinated care, fragmentation of independent clinicians and the potential for affiliated physicians to negotiate higher payment rates with insurers. 

  2. Hospital affiliations were most concentrated in North Dakota (86.2%) and Wisconsin (83.2%), while private equity affiliations were highest in Florida (6.3%) and Texas (3.4%). The findings also showed states with more hospital-affiliated physicians generally had fewer private equity-affiliated physicians. 

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