Physician turnover rises significantly after the sale of private equity-owned physician practices.
What’s more, those departing are significantly more likely to join larger groups.
That’s according to a recent study published in JAMA Health Forum that examined 1,215 physicians, comparing those whose practices were sold by PE owners with similar physicians in practices that did not undergo a sale.
Two years after the sale, physicians in PE-exiting practices were 16.5 percentage points likelier to leave their original practice and 10.1 percentage points likelier to move to a practice of more than 120 physicians.
No increase in retirement was detected, which indicates that these physicians were not leaving the workforce but rather seeking alternative practice settings, researchers wrote.
“The increase in turnover after PE exit occurred despite most exiting practices being purchased by PE investors, who may offer financial incentives to encourage retention,” researchers wrote. “The finding of faster turnover at practices purchased by non-PE investors could be consistent with PE buyers providing such incentives; however, by 2 years after exit, the difference in turnover between practices purchased by PE firms and non-PE firms became insignificant.”
Although much attention has focused on the potential immediate effects of private equity acquisitions, the study found that the exit phase can be just as disruptive.
“Physicians employed in PE-owned practices in which the owners exited between 2016 and 2018 were 16.5 percentage points less likely to be working in the practice 2 years after exit than were a matched set of physicians in similarly sized practices, in the same specialty,” researchers wrote.
Based on these findings, physician groups and ambulatory surgery center (ASC) operators may want to invest in strategies aimed at retaining physicians after ownership changes.
“Importantly, patients who change physicians due to turnover may also be negatively impacted,” researchers wrote. “Additional study of PE exits, including potential impacts on patient care and impact of final exits to non-PE buyers, would help solidify our understanding of the long-term effects of PE on health care stakeholders.”
Private equity has played an increasingly prominent role in U.S. health care over the last 20 years, noted the study.
“Over 800 PE health care transactions were completed in 2022,” researchers wrote. “Total deal value over the preceding decade is estimated at $750 billion. Physician practices have become an attractive target: between 2010 and 2020, PE investors purchased over 1000 U.S. practices.”
