'There might be a loss of physician autonomy': What 3 leaders think about private equity

As private equity's influence in healthcare increases, many leaders are concerned about how it will affect physicians and ASCs. 

Here are three leaders who recently told Becker's how private equity is affecting the industry:

Kim Mikes, BSN, RN. CEO of Hoag Orthopedic Institute (Irvine, Calif.): When considering a threat from a disruptor, the controversial trend of increasing private equity and investor-owned models and their move into the ASC space comes to mind. At Hoag Orthopedic Institute, physician ownership is central to the model, and while we focus on providing value and operate in a fiscally responsible manner, quality and excellent patient outcomes always come first. Our physician owners know that when you put patient safety and quality care first, success follows. Private equity firms have a different focus, namely to invest, increase the value over time and sell for a profit. With this goal in mind, in the private equity-owned ASC there may be a loss of physician autonomy, a prioritization of financial return with a resultant shift away from a focus on high quality patient care. I worry what may happen to patients when your principal priority is a return on investment.

Andrew Lovewell. CEO at Columbia (Mo.) Orthopaedic Group: [Another] trend I'm following is decline in mergers and acquisitions in the private equity space. KPMG recently released a report that Q2 of 2023 experienced the lowest activity in the last three years. Many private practice groups are catching on to the "second bite" and are learning from peer experience. Private groups are wrestling with several issues right now, but the ones with successful ASCs should not look to a PE deal. There are still ways to win and become the ASC/provider of choice. Value-based arrangements, workers compensation, direct-to-employer, etc. are all great opportunities to feed the practices that are still solo. There's no doubt that strength in numbers still exists, but I predict that many private practice groups will lean on collaboration with each other to develop size and economies of scale. 

Nicholas Grosso, MD. President of The Center for Advanced Orthopaedics (Bethesda, Md.): The market is poised to swing back toward private practice. For years the market has gone away from private practice. We've seen that trend in the numbers of physicians actually in private practice shrinking from 70 percent 10 years ago to 24 percent now, which is obviously concerning. But I think the pendulum is getting ready to swing back. The reason I think that is with the onset of [value-based care], I think private practice is the setting that is going to provide the best care to patients in the most efficient way possible. Hospitals tend to be more expensive. The rash of [private equity] purchases of practices aren't going to do anything to lower the costs in those practices since they're revenue-driven models.

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