A study published June 20 in JAMA Health Forum offers fresh evidence on the impact of private equity acquisitions in health care – and some of the findings may give ambulatory surgery center (ASC) leaders reason to take notice.
The study, which focused on gastroenterology practices, found that PE ownership was associated with higher prices and greater utilization for colonoscopy services, but no improvement in quality measures.
As part of the study, researchers from Brown University, the University of California – Berkeley, Stanford University and Henry Ford Health analyzed more than 1.3 million colonoscopy procedures performed between 2012 and 2021. The study sample included 718,851 colonoscopies at 1,240 PE-acquired practice sites, plus 637,990 procedures at 2,657 independent practice sites.
The overall findings – that PE ownership translates to higher costs but necessarily better care – are noteworthy for ASC operators given the increasing role of PE firms in acquiring physician practices, including those providing care in outpatient surgical settings.
“While the influx of capital from PE has the potential to create technological and operational efficiencies, many have feared that PE’s short-term financial incentives may negatively impact health care prices, quality, or access,” the study’s authors wrote.
Gastroenterology has seen particularly active investment, with about 13% of U.S. gastroenterologists working in PE-owned practices as of 2021, according to the study.
How much more expensive were those PE-owned practices? On average, PE-owned practices charged 4.5% more per colonoscopy than their independent counterparts, the study’s researchers found. The price differential widened when looking at practices with larger market shares, defined as those above the 75th percentile in their metropolitan area.
Colonoscopy spending per physician rose 16% post-acquisition, while the number of colonoscopies and unique patients per physician grew 12.1% and 11.3%, respectively.
Importantly, the study authors noted that these utilization trends had already been increasing prior to PE involvement, raising questions about causation versus correlation.
No measurable changes in quality
Despite higher prices and greater procedure volume, the study found no significant difference in colonoscopy quality between PE-acquired and independent practices.
Quality measures included polypectomy rates, incomplete colonoscopy rates and the incidence of adverse events such as cardiovascular complications, serious or nonserious gastroenterology complications, and any post-procedure complication.
Across these metrics, PE acquisition was not associated with statistically significant improvement or decline.
This lack of quality improvement alongside increased pricing may concern ASCs, especially those focused on delivering high-value care. The study’s findings echo broader concerns raised by policymakers and regulators about PE’s influence on cost without corresponding gains in patient outcomes.
“Policymakers may be well advised to monitor PE investment in physician practices given the increase in prices and spending without a commensurate increase in quality,” the study’s authors wrote.
Of note, Oregon’s governor earlier in June signed into law legislation that enacts arguably the strongest regulations on private and corporate control of medical practices.
For ASCs, especially those operating GI service lines or exploring PE partnerships, the study offers valuable context. While PE investment may bring capital for growth or technology, ASCs should weigh these benefits against potential pricing scrutiny, payer pushback and quality expectations from patients and regulators.
In addition, ASCs might see ripple effects in negotiations if PE-owned GI groups in their market push prices higher.
ASCs could be asked by payers to justify rates or demonstrate quality performance to differentiate themselves from higher-cost providers. Conversely, ASCs could leverage these findings to position themselves as cost-effective alternatives.
