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Private Equity in Medicine: Cardiology in the Crosshairs
This transcript has been edited for clarity.
Robert A. Harrington, MD: I’m continuing my series of conversations with leaders in the field of cardiovascular medicine who are working on interesting projects and making contributions in the science and policy space. We have three guests joining us today who have recently written two papers in the Journal of the American College of Cardiology. One is an original research paper dealing with the issue of private equity’s acquisition of outpatient cardiology practices. And the second is an editorial that really tries to get at why this is happening. Is it a problem? Is it a solution to a problem?
Fortunately, I have all three as guests to think about this important issue that has implications for clinical care, reimbursement, physician wellness, and clinician wellness, and it has implications regarding public policy and how we should be thinking about the practice of medicine in this country.
Dr. Victoria L. Bartlett is an internal medicine resident at Brigham and Women’s Hospital in Boston, and a research fellow in the Smith Center at the Beth Israel Lahey medical center in Boston. Dr Rishi K. Wadhera is the senior author of the paper written by Dr. Bartlett. Dr. Rishi is associate professor of medicine at Harvard Medical School, and he is the associate director of the Smith Center at Beth Israel Lahey.
Rishi K. Wadhera, MD, MPP, MPhil: Thanks for having us, Bob.
Dr. Harrington: The editorialist, Dr. Ed Fry, is the national service line leader for cardiovascular medicine, for Ascension Health. Dr. Frey is a recent past president of the American College of Cardiology (ACC).
Edward T. A. Fry, MD: Great to be here. Thanks.
What is private equity? Why the interest in medicine?
Dr. Harrington: I was intrigued by the papers and it caused me to do a deeper dive into some of the earlier works that you have referenced about this growing topic of private equity making its way into medical practice. Rishi, I’ll start with you. For the casual reader like myself, what is the business of private equity?
Dr. Wadhera: Private equity firms basically used pooled investments from multiple sources. These can be individual and institutional investors, pension funds, endowments, and they use those funds to invest in private companies that have the potential to return a profit. The goal really is to turn a profit for institutional investors over a shorter time horizon.
Dr. Harrington: How do they do that? I can understand, you buy a factory and you want to make the factory a little more efficient, and you think that perhaps, by combining some technologies, etc., that you might have in other factories, you can drive more value out of the one you just invested in in a short period of time. What’s the general business sense of how they’re going to do that in a cardiology practice? Is it all about making us more efficient?
Dr. Wadhera: Operational efficiency is the overarching theme here. One could argue that perhaps, private equity firms have the expertise to bring that kind of organizational know-how and operational efficiency to medicine. But there’s evidence that the way that private equity firms maximize their margin is maybe through mechanisms that aren’t necessarily good for patient care, such as reduced nursing staffing. When private equity acquires hospitals or practices in the same location, they have greater negotiating power at the payer table, to have higher prices for the services they deliver. There’s a lot of discussion about whether the sort of changes that private equity firms tend to implement are good or bad for patient care and also for clinicians.
Dr. Harrington: Great summary. Ed. Why is this happening in medicine? What did we do in medicine that made us ripe for investment by private equity? When you and I started out years ago, I don’t think we ever would have thought that this was in the future.
Dr. Fry: I think number one, as we know, is that medicine represents about 20% of our economy. There are huge amounts of money involved in these considerations. If players in this space can access even a small fraction of that money, it’s a lot of money and a lot of incentive for them.
In medicine in general, and then maybe more specifically, in cardiology, we’ve seen a shift away from private practice into employed practice. When people made those decisions over the past 10-15 years, there were certainly positives and risks that they took. I think for some, along the way, they realized that perhaps they gave up more than they thought in terms of control and running their own business and the opportunity to shape that themselves and be rewarded for that as they were in private practice. In cardiology, more specifically, we’ve seen this shift to the outpatient space: moving diagnostics and even therapeutics into ambulatory surgical centers and outpatient-based labs, and that is another potential source of revenue for these private equity companies.
As I wrote in the editorial, there are certainly a lot of pressures and frustrations that the day-to-day clinician feels, and maybe, this move to private equity is more of a symptom of those concerns and that this could be an opportunity to take the bull by the horns again in cardiology. We’ve evolved from a predominantly hospital-based acute care specialty into one of diagnosis, chronic disease management, and longitudinal care punctuated by diagnostics and therapeutics, which are, again, I think, attractive to private equity firms as potential sources for revenue.
Dr. Harrington: Ed, why cardiology? What’s happened over the years that has led to that appearance, if you will, of private equity and cardiovascular medicine?
Dr. Fry: Some of the earlier specialties were dermatology, ophthalmology, and gastroenterology, in particular. And interestingly, those tend to be specialties that have less chronic disease management and are more based on procedures and things like that. Within cardiology, obviously, the big driver is that our population is aging: 11,000 people turn 65 every day and become eligible for Medicare. With that, we see a rise in disease prevalence and then the rise in risk factors, obviously, with obesity and diabetes driving that, so there are more people who are going to have an illness that requires evaluation, diagnostics, and procedures. Because of that, it is a very target rich environment for private equity.
Dr. Harrington: That’s great background. Now, let’s dive into what you did, Victoria. What got you interested in the question? And give us some background on the literature that you were trying to build upon when you asked your series of questions.
Victoria L. Bartlett, MD: There’s been a lot of interest in private equity acquisitions and healthcare. A lot of the existing literature has been around hospital acquisitions and what happens there. There’s some literature, as you’ve mentioned, in outpatient practices, in certain specialties, where private equity has existed a little bit longer than in cardiology. They’ve been asking really similar questions to what we have been asking about cardiology, which is what happens when practices are acquired.
A kind of overview is that many of those studies have found increased costs to payers, to patients, and many have also found evidence of decreased quality. The evidence for the latter is honestly more difficult to figure out, but there has been evidence of decreased nursing ratios in nursing homes. There’s been evidence of changing the mix in clinics to more advanced practice providers than physicians. There’s been some evidence in hospitals that maybe quality doesn’t change too much. But the deeper layer under that is that these private equity–acquired hospitals may be selecting certain patients that are less sick, that are not going to negatively affect their metrics as much. That’s the environment that we had been reading about and starting to ask: Are we seeing that in cardiology too?
Dr. Harrington: Share with the audience what you did. You took what I would call a descriptive approach to try to understand the current landscape in cardiovascular medicine. As Ed already pointed out, a lot of the earlier data does not concern cardiology practices. My read of your paper is that you were trying to at least lay the groundwork for us to understand as a community what’s going on out there. Is that a fair interpretation?
Dr. Bartlett: Absolutely. Even that initial question of what’s happening is more challenging than it seems it might be to answer, partly because with private equity, these are private transactions. They don’t have to publicly report anything. So there’s a lot of manual work to gather these data. Our first questions were: What are these transactions? When are they happening? Where are they happening? What are the clinics that private equity is interested in? What are the community characteristics of those clinics? And what could that tell us about what’s going on?
Who Is Getting Acquired?
Dr. Harrington: Tell the audience broadly what you found. What are those clinics? And how often does this happen?
Dr. Bartlett: We looked at acquisitions between 2013 and 2023, and in that 10-year span, we found 41 acquisitions of outpatient cardiology practices, which corresponded to 342 acquisitions of clinics. The vast majority of these, pretty much 95%, occurred between 2021 and 2023. We calculated that about 3% of cardiology clinics in the US are owned by private equity. The states with the highest number of acquisitions were Florida, Texas, and Arizona, and particularly the urban areas in those states, ie, Jacksonville, Houston, Dallas. And interestingly, that mirrors what we’ve seen before in anesthesia and dermatology.
Our last question was around community characteristics, we looked at several that had a statistically significant association with private equity acquisition, and we found that private equity firms were less likely to acquire clinics in the highest poverty communities. Within the communities, we looked at the proportion of adults over 65, the proportion of racial and ethnic minorities, educational level, rurality, and didn’t find any significant associations between private equity acquisition and those characteristics.
Dr. Harrington: Thank you. Rishi, do you want to interpret why private equity was targeting certain areas?
Dr. Wadhera: Private equity goes where they can actually acquire practices. Those states, in particular, have more independent practices than, say, Massachusetts does. Then there’s the target population available in those states. Building on what Ed said earlier, why all of a sudden? Because Victoria just pointed out that the vast majority of these acquisitions happened between 2020 and 2023 and you see the surge, and I expect that surge to continue over the next several years. And the question is why?
We know with the rise in cardiometabolic risk factors at a population level, that the cardiovascular disease is only going to become more common. Cardiac procedures are very well reimbursed. There’s likely a lot of appeal in entering a specialty with a highly profitable service line. Over the past decade, federal policymakers very intentionally have created incentives to shift the delivery of cardiac procedures to nonhospital settings. We see that with the rise of ambulatory surgical centers and more cardiac procedures are being reimbursed in these types of settings. And I think that private equity firms may see this as an opportunity to maximize profits.
Victoria created this beautiful map in our study that showed how concentrated these acquisitions are. They really concentrated in specific markets. And I think that parallels what we’re seeing with health systems more broadly, this consolidation, and concentration is the ultimate goal. These different stakeholders, it’s not just private equity, have more market power, so that when they go to insurers, they can demand higher prices for procedures and services.
Dr. Harrington: It’s hard to look at the dates of 2021 or 2020 to 2023, and not wonder if there is a COVID effect. Victoria, do you think there’s a COVID effect, or is it just true, true, unrelated?
Dr. Bartlett: COVID definitely put a lot of financial pressure on providers, and particularly small independent practices. They would have felt that the most, and I certainly think is a piece of the picture but may not be all the picture.
Dr. Harrington: That’s what I would have guessed. We were all under financial pressures, but the small, independent practices didn’t have the big health system behind them to backstop things. Ed, as a former leader of the ACC, and the ACC very much works at the local level, are you hearing from the governors of these states that this is an issue, and not hearing from other states?
Dr. Fry: Certainly this activity is concentrated in the states that Victoria and Rishi described for the reasons that they outlined. This is still a very small number and probably will remain relatively small if we consider that 85% of cardiologists are employed, and the bar to exit an employment arrangement and enter into a private equity situation is pretty darn high. There’s a lot of costs associated with that. So it may have a finite cap to it, and that may be part of what buffers some of the response.
I would like to go back and address other reasons why this is happening. Particularly because of the aging population of cardiovascular patients, we’ve also seen the rise of Medicare Advantage, which is a type of value, if you consider it a type of value-based care. There are incentives built into Medicare Advantage to manage costs and to do various things so there is certainly a reward incentive. I am not wearing my hat as a representative of the ACC nor Ascension, and I will probably be a consumer of these services before I’m ever a participant, but I would say that private equity in some respects, is acting as a disruptor in this entire process. One of the positive outcomes from this is for a reevaluation of the role of clinicians in the overall delivery of care for health systems and academic medical centers. I think that can be a positive; I always try to look at the bright side of things too.
Patient and Clinician Satisfaction
Dr. Harrington: To your last comment. Ed, maybe I’ll ask you Rishi or Victoria, any insights into clinician wellness, how people feel when their practice has been bought by private equity? Are there any data out there?
Dr. Wadhera: Not that I know of. I will say that we have a study under review right now that doesn’t answer your question directly, Bob, but that looks at how private equity acquisitions of US hospitals affect the patient care experience. And what we found, using a rigorous, quasi experimental study design comparing private equity–acquired hospitals to neighboring control hospitals, is that private equity acquisition leads to a pretty marked decrease in patient care experience and satisfaction.
That’s capturing another dimension of quality that mortality and readmissions don’t necessarily reflect. It doesn’t answer your question directly, but I think an important area for future research is understanding the effects on the clinician experience as well as, most importantly, the patient experience.
Dr. Harrington: Nicely said, it seems like a good time to think about mixed qualitative methods such as focus groups, etc., coupled with the more quantitative research methods. Victoria, I suspect you talked to people in acquired practices. Any insight into whether it’s observational or rigorous data on the clinician experience?
Dr. Bartlett: Not that I have seen. I imagine it’s probably mixed because as we’ve been saying, there’s a lot of financial pressure on practices, small, independent practices, and it can become overwhelming to run them. Private equity firms offer a very attractive value proposition or can. But I think it’s a great point that should be highlighted.
Dr. Harrington: Ed, taking off your cardiovascular leadership hat, not representing any specific organization, what are the policy things that we should be thinking about?
Dr. Fry: There’s an opportunity to combine these conversations around research, collecting more data, and the advocacy issues related to that. One of the things that perhaps differentiates cardiology in this space from other specialties, or subspecialties, surgical subspecialties, is the plethora of data that we already have with well-established registry tools. We have good benchmarks. From a professional society standpoint, we have an obligation to make sure that the care that is provided in whatever environment meets the standards and is measurable, reportable, and provides a level of consumerism to patients and payers to be able to look at that. I think we have an obligation to advocate for the use of well-validated registry tools to track the data, to have objective data, to be able to demonstrate outcomes.
Interestingly, there’s an ACC/American Heart Association policy document from 2020 on professionalism and ethics in cardiology. And it calls for the obligation of the profession to make sure that in alternative sites of care, that we are achieving at least as good a result, if not better. We have to be true to that.
Dr. Harrington: I was actually a coauthor on that paper on professionalism and talking about some of the research and education issues within the academic medical centers. You’re spot on. And I love the comment about the importance of long-standing registries, whether maintained by the ACC, the Heart Association, or the Society of Thoracic Surgeons, where we can get insights into the quality issues.
We need more work done on the patient experience, the clinician experience, but I also take the positive, Ed, that this may be a disruptor that could lend itself to some positive change in other areas that need to change.
This has been a fantastic conversation on the appearance, if you will, of private equity in cardiovascular medicine and some of the observations made by colleagues at the Smith Center at the Beth Israel Lahey, with great commentary by Ed Fry on whether this is a symptom or a solution and what we should be thinking about from a broader societal perspective. I want to thank my three guests today, Victoria, Ed, and Rishi, for joining us here.
Dr. Harrington is the Stephen and Suzanne Weiss Dean of Weill Cornell Medicine and provost for medical affairs of Cornell University, as well as a former president of the American Heart Association. He disclosed ties with several companies. Dr. Bartlett is resident physician, Department of Internal Medicine, Brigham & women’s Hospital, Boston, and has disclosed no relevant financial relationships. Dr. Fry is chair, Ascension National Cardiovascular Service Line, Ascension St. Vincent Heart Center in Indianapolis, Indiana. Dr. Wadhera is associate professor, Harvard Medical School, and associate director, Richard A. and Susan F. Smith Center for Outcomes Research, Beth Israel Deaconess Medical Center, both in Boston. Dr. Wadhera disclosed ties with Abbott, ChamberCardio, CVS Health, the National Institutes of Health, American Heart Association, and the Donaghue Foundation.
A version of this article first appeared on Medscape.com.
This transcript has been edited for clarity.
Robert A. Harrington, MD: I’m continuing my series of conversations with leaders in the field of cardiovascular medicine who are working on interesting projects and making contributions in the science and policy space. We have three guests joining us today who have recently written two papers in the Journal of the American College of Cardiology. One is an original research paper dealing with the issue of private equity’s acquisition of outpatient cardiology practices. And the second is an editorial that really tries to get at why this is happening. Is it a problem? Is it a solution to a problem?
Fortunately, I have all three as guests to think about this important issue that has implications for clinical care, reimbursement, physician wellness, and clinician wellness, and it has implications regarding public policy and how we should be thinking about the practice of medicine in this country.
Dr. Victoria L. Bartlett is an internal medicine resident at Brigham and Women’s Hospital in Boston, and a research fellow in the Smith Center at the Beth Israel Lahey medical center in Boston. Dr Rishi K. Wadhera is the senior author of the paper written by Dr. Bartlett. Dr. Rishi is associate professor of medicine at Harvard Medical School, and he is the associate director of the Smith Center at Beth Israel Lahey.
Rishi K. Wadhera, MD, MPP, MPhil: Thanks for having us, Bob.
Dr. Harrington: The editorialist, Dr. Ed Fry, is the national service line leader for cardiovascular medicine, for Ascension Health. Dr. Frey is a recent past president of the American College of Cardiology (ACC).
Edward T. A. Fry, MD: Great to be here. Thanks.
What is private equity? Why the interest in medicine?
Dr. Harrington: I was intrigued by the papers and it caused me to do a deeper dive into some of the earlier works that you have referenced about this growing topic of private equity making its way into medical practice. Rishi, I’ll start with you. For the casual reader like myself, what is the business of private equity?
Dr. Wadhera: Private equity firms basically used pooled investments from multiple sources. These can be individual and institutional investors, pension funds, endowments, and they use those funds to invest in private companies that have the potential to return a profit. The goal really is to turn a profit for institutional investors over a shorter time horizon.
Dr. Harrington: How do they do that? I can understand, you buy a factory and you want to make the factory a little more efficient, and you think that perhaps, by combining some technologies, etc., that you might have in other factories, you can drive more value out of the one you just invested in in a short period of time. What’s the general business sense of how they’re going to do that in a cardiology practice? Is it all about making us more efficient?
Dr. Wadhera: Operational efficiency is the overarching theme here. One could argue that perhaps, private equity firms have the expertise to bring that kind of organizational know-how and operational efficiency to medicine. But there’s evidence that the way that private equity firms maximize their margin is maybe through mechanisms that aren’t necessarily good for patient care, such as reduced nursing staffing. When private equity acquires hospitals or practices in the same location, they have greater negotiating power at the payer table, to have higher prices for the services they deliver. There’s a lot of discussion about whether the sort of changes that private equity firms tend to implement are good or bad for patient care and also for clinicians.
Dr. Harrington: Great summary. Ed. Why is this happening in medicine? What did we do in medicine that made us ripe for investment by private equity? When you and I started out years ago, I don’t think we ever would have thought that this was in the future.
Dr. Fry: I think number one, as we know, is that medicine represents about 20% of our economy. There are huge amounts of money involved in these considerations. If players in this space can access even a small fraction of that money, it’s a lot of money and a lot of incentive for them.
In medicine in general, and then maybe more specifically, in cardiology, we’ve seen a shift away from private practice into employed practice. When people made those decisions over the past 10-15 years, there were certainly positives and risks that they took. I think for some, along the way, they realized that perhaps they gave up more than they thought in terms of control and running their own business and the opportunity to shape that themselves and be rewarded for that as they were in private practice. In cardiology, more specifically, we’ve seen this shift to the outpatient space: moving diagnostics and even therapeutics into ambulatory surgical centers and outpatient-based labs, and that is another potential source of revenue for these private equity companies.
As I wrote in the editorial, there are certainly a lot of pressures and frustrations that the day-to-day clinician feels, and maybe, this move to private equity is more of a symptom of those concerns and that this could be an opportunity to take the bull by the horns again in cardiology. We’ve evolved from a predominantly hospital-based acute care specialty into one of diagnosis, chronic disease management, and longitudinal care punctuated by diagnostics and therapeutics, which are, again, I think, attractive to private equity firms as potential sources for revenue.
Dr. Harrington: Ed, why cardiology? What’s happened over the years that has led to that appearance, if you will, of private equity and cardiovascular medicine?
Dr. Fry: Some of the earlier specialties were dermatology, ophthalmology, and gastroenterology, in particular. And interestingly, those tend to be specialties that have less chronic disease management and are more based on procedures and things like that. Within cardiology, obviously, the big driver is that our population is aging: 11,000 people turn 65 every day and become eligible for Medicare. With that, we see a rise in disease prevalence and then the rise in risk factors, obviously, with obesity and diabetes driving that, so there are more people who are going to have an illness that requires evaluation, diagnostics, and procedures. Because of that, it is a very target rich environment for private equity.
Dr. Harrington: That’s great background. Now, let’s dive into what you did, Victoria. What got you interested in the question? And give us some background on the literature that you were trying to build upon when you asked your series of questions.
Victoria L. Bartlett, MD: There’s been a lot of interest in private equity acquisitions and healthcare. A lot of the existing literature has been around hospital acquisitions and what happens there. There’s some literature, as you’ve mentioned, in outpatient practices, in certain specialties, where private equity has existed a little bit longer than in cardiology. They’ve been asking really similar questions to what we have been asking about cardiology, which is what happens when practices are acquired.
A kind of overview is that many of those studies have found increased costs to payers, to patients, and many have also found evidence of decreased quality. The evidence for the latter is honestly more difficult to figure out, but there has been evidence of decreased nursing ratios in nursing homes. There’s been evidence of changing the mix in clinics to more advanced practice providers than physicians. There’s been some evidence in hospitals that maybe quality doesn’t change too much. But the deeper layer under that is that these private equity–acquired hospitals may be selecting certain patients that are less sick, that are not going to negatively affect their metrics as much. That’s the environment that we had been reading about and starting to ask: Are we seeing that in cardiology too?
Dr. Harrington: Share with the audience what you did. You took what I would call a descriptive approach to try to understand the current landscape in cardiovascular medicine. As Ed already pointed out, a lot of the earlier data does not concern cardiology practices. My read of your paper is that you were trying to at least lay the groundwork for us to understand as a community what’s going on out there. Is that a fair interpretation?
Dr. Bartlett: Absolutely. Even that initial question of what’s happening is more challenging than it seems it might be to answer, partly because with private equity, these are private transactions. They don’t have to publicly report anything. So there’s a lot of manual work to gather these data. Our first questions were: What are these transactions? When are they happening? Where are they happening? What are the clinics that private equity is interested in? What are the community characteristics of those clinics? And what could that tell us about what’s going on?
Who Is Getting Acquired?
Dr. Harrington: Tell the audience broadly what you found. What are those clinics? And how often does this happen?
Dr. Bartlett: We looked at acquisitions between 2013 and 2023, and in that 10-year span, we found 41 acquisitions of outpatient cardiology practices, which corresponded to 342 acquisitions of clinics. The vast majority of these, pretty much 95%, occurred between 2021 and 2023. We calculated that about 3% of cardiology clinics in the US are owned by private equity. The states with the highest number of acquisitions were Florida, Texas, and Arizona, and particularly the urban areas in those states, ie, Jacksonville, Houston, Dallas. And interestingly, that mirrors what we’ve seen before in anesthesia and dermatology.
Our last question was around community characteristics, we looked at several that had a statistically significant association with private equity acquisition, and we found that private equity firms were less likely to acquire clinics in the highest poverty communities. Within the communities, we looked at the proportion of adults over 65, the proportion of racial and ethnic minorities, educational level, rurality, and didn’t find any significant associations between private equity acquisition and those characteristics.
Dr. Harrington: Thank you. Rishi, do you want to interpret why private equity was targeting certain areas?
Dr. Wadhera: Private equity goes where they can actually acquire practices. Those states, in particular, have more independent practices than, say, Massachusetts does. Then there’s the target population available in those states. Building on what Ed said earlier, why all of a sudden? Because Victoria just pointed out that the vast majority of these acquisitions happened between 2020 and 2023 and you see the surge, and I expect that surge to continue over the next several years. And the question is why?
We know with the rise in cardiometabolic risk factors at a population level, that the cardiovascular disease is only going to become more common. Cardiac procedures are very well reimbursed. There’s likely a lot of appeal in entering a specialty with a highly profitable service line. Over the past decade, federal policymakers very intentionally have created incentives to shift the delivery of cardiac procedures to nonhospital settings. We see that with the rise of ambulatory surgical centers and more cardiac procedures are being reimbursed in these types of settings. And I think that private equity firms may see this as an opportunity to maximize profits.
Victoria created this beautiful map in our study that showed how concentrated these acquisitions are. They really concentrated in specific markets. And I think that parallels what we’re seeing with health systems more broadly, this consolidation, and concentration is the ultimate goal. These different stakeholders, it’s not just private equity, have more market power, so that when they go to insurers, they can demand higher prices for procedures and services.
Dr. Harrington: It’s hard to look at the dates of 2021 or 2020 to 2023, and not wonder if there is a COVID effect. Victoria, do you think there’s a COVID effect, or is it just true, true, unrelated?
Dr. Bartlett: COVID definitely put a lot of financial pressure on providers, and particularly small independent practices. They would have felt that the most, and I certainly think is a piece of the picture but may not be all the picture.
Dr. Harrington: That’s what I would have guessed. We were all under financial pressures, but the small, independent practices didn’t have the big health system behind them to backstop things. Ed, as a former leader of the ACC, and the ACC very much works at the local level, are you hearing from the governors of these states that this is an issue, and not hearing from other states?
Dr. Fry: Certainly this activity is concentrated in the states that Victoria and Rishi described for the reasons that they outlined. This is still a very small number and probably will remain relatively small if we consider that 85% of cardiologists are employed, and the bar to exit an employment arrangement and enter into a private equity situation is pretty darn high. There’s a lot of costs associated with that. So it may have a finite cap to it, and that may be part of what buffers some of the response.
I would like to go back and address other reasons why this is happening. Particularly because of the aging population of cardiovascular patients, we’ve also seen the rise of Medicare Advantage, which is a type of value, if you consider it a type of value-based care. There are incentives built into Medicare Advantage to manage costs and to do various things so there is certainly a reward incentive. I am not wearing my hat as a representative of the ACC nor Ascension, and I will probably be a consumer of these services before I’m ever a participant, but I would say that private equity in some respects, is acting as a disruptor in this entire process. One of the positive outcomes from this is for a reevaluation of the role of clinicians in the overall delivery of care for health systems and academic medical centers. I think that can be a positive; I always try to look at the bright side of things too.
Patient and Clinician Satisfaction
Dr. Harrington: To your last comment. Ed, maybe I’ll ask you Rishi or Victoria, any insights into clinician wellness, how people feel when their practice has been bought by private equity? Are there any data out there?
Dr. Wadhera: Not that I know of. I will say that we have a study under review right now that doesn’t answer your question directly, Bob, but that looks at how private equity acquisitions of US hospitals affect the patient care experience. And what we found, using a rigorous, quasi experimental study design comparing private equity–acquired hospitals to neighboring control hospitals, is that private equity acquisition leads to a pretty marked decrease in patient care experience and satisfaction.
That’s capturing another dimension of quality that mortality and readmissions don’t necessarily reflect. It doesn’t answer your question directly, but I think an important area for future research is understanding the effects on the clinician experience as well as, most importantly, the patient experience.
Dr. Harrington: Nicely said, it seems like a good time to think about mixed qualitative methods such as focus groups, etc., coupled with the more quantitative research methods. Victoria, I suspect you talked to people in acquired practices. Any insight into whether it’s observational or rigorous data on the clinician experience?
Dr. Bartlett: Not that I have seen. I imagine it’s probably mixed because as we’ve been saying, there’s a lot of financial pressure on practices, small, independent practices, and it can become overwhelming to run them. Private equity firms offer a very attractive value proposition or can. But I think it’s a great point that should be highlighted.
Dr. Harrington: Ed, taking off your cardiovascular leadership hat, not representing any specific organization, what are the policy things that we should be thinking about?
Dr. Fry: There’s an opportunity to combine these conversations around research, collecting more data, and the advocacy issues related to that. One of the things that perhaps differentiates cardiology in this space from other specialties, or subspecialties, surgical subspecialties, is the plethora of data that we already have with well-established registry tools. We have good benchmarks. From a professional society standpoint, we have an obligation to make sure that the care that is provided in whatever environment meets the standards and is measurable, reportable, and provides a level of consumerism to patients and payers to be able to look at that. I think we have an obligation to advocate for the use of well-validated registry tools to track the data, to have objective data, to be able to demonstrate outcomes.
Interestingly, there’s an ACC/American Heart Association policy document from 2020 on professionalism and ethics in cardiology. And it calls for the obligation of the profession to make sure that in alternative sites of care, that we are achieving at least as good a result, if not better. We have to be true to that.
Dr. Harrington: I was actually a coauthor on that paper on professionalism and talking about some of the research and education issues within the academic medical centers. You’re spot on. And I love the comment about the importance of long-standing registries, whether maintained by the ACC, the Heart Association, or the Society of Thoracic Surgeons, where we can get insights into the quality issues.
We need more work done on the patient experience, the clinician experience, but I also take the positive, Ed, that this may be a disruptor that could lend itself to some positive change in other areas that need to change.
This has been a fantastic conversation on the appearance, if you will, of private equity in cardiovascular medicine and some of the observations made by colleagues at the Smith Center at the Beth Israel Lahey, with great commentary by Ed Fry on whether this is a symptom or a solution and what we should be thinking about from a broader societal perspective. I want to thank my three guests today, Victoria, Ed, and Rishi, for joining us here.
Dr. Harrington is the Stephen and Suzanne Weiss Dean of Weill Cornell Medicine and provost for medical affairs of Cornell University, as well as a former president of the American Heart Association. He disclosed ties with several companies. Dr. Bartlett is resident physician, Department of Internal Medicine, Brigham & women’s Hospital, Boston, and has disclosed no relevant financial relationships. Dr. Fry is chair, Ascension National Cardiovascular Service Line, Ascension St. Vincent Heart Center in Indianapolis, Indiana. Dr. Wadhera is associate professor, Harvard Medical School, and associate director, Richard A. and Susan F. Smith Center for Outcomes Research, Beth Israel Deaconess Medical Center, both in Boston. Dr. Wadhera disclosed ties with Abbott, ChamberCardio, CVS Health, the National Institutes of Health, American Heart Association, and the Donaghue Foundation.
A version of this article first appeared on Medscape.com.
This transcript has been edited for clarity.
Robert A. Harrington, MD: I’m continuing my series of conversations with leaders in the field of cardiovascular medicine who are working on interesting projects and making contributions in the science and policy space. We have three guests joining us today who have recently written two papers in the Journal of the American College of Cardiology. One is an original research paper dealing with the issue of private equity’s acquisition of outpatient cardiology practices. And the second is an editorial that really tries to get at why this is happening. Is it a problem? Is it a solution to a problem?
Fortunately, I have all three as guests to think about this important issue that has implications for clinical care, reimbursement, physician wellness, and clinician wellness, and it has implications regarding public policy and how we should be thinking about the practice of medicine in this country.
Dr. Victoria L. Bartlett is an internal medicine resident at Brigham and Women’s Hospital in Boston, and a research fellow in the Smith Center at the Beth Israel Lahey medical center in Boston. Dr Rishi K. Wadhera is the senior author of the paper written by Dr. Bartlett. Dr. Rishi is associate professor of medicine at Harvard Medical School, and he is the associate director of the Smith Center at Beth Israel Lahey.
Rishi K. Wadhera, MD, MPP, MPhil: Thanks for having us, Bob.
Dr. Harrington: The editorialist, Dr. Ed Fry, is the national service line leader for cardiovascular medicine, for Ascension Health. Dr. Frey is a recent past president of the American College of Cardiology (ACC).
Edward T. A. Fry, MD: Great to be here. Thanks.
What is private equity? Why the interest in medicine?
Dr. Harrington: I was intrigued by the papers and it caused me to do a deeper dive into some of the earlier works that you have referenced about this growing topic of private equity making its way into medical practice. Rishi, I’ll start with you. For the casual reader like myself, what is the business of private equity?
Dr. Wadhera: Private equity firms basically used pooled investments from multiple sources. These can be individual and institutional investors, pension funds, endowments, and they use those funds to invest in private companies that have the potential to return a profit. The goal really is to turn a profit for institutional investors over a shorter time horizon.
Dr. Harrington: How do they do that? I can understand, you buy a factory and you want to make the factory a little more efficient, and you think that perhaps, by combining some technologies, etc., that you might have in other factories, you can drive more value out of the one you just invested in in a short period of time. What’s the general business sense of how they’re going to do that in a cardiology practice? Is it all about making us more efficient?
Dr. Wadhera: Operational efficiency is the overarching theme here. One could argue that perhaps, private equity firms have the expertise to bring that kind of organizational know-how and operational efficiency to medicine. But there’s evidence that the way that private equity firms maximize their margin is maybe through mechanisms that aren’t necessarily good for patient care, such as reduced nursing staffing. When private equity acquires hospitals or practices in the same location, they have greater negotiating power at the payer table, to have higher prices for the services they deliver. There’s a lot of discussion about whether the sort of changes that private equity firms tend to implement are good or bad for patient care and also for clinicians.
Dr. Harrington: Great summary. Ed. Why is this happening in medicine? What did we do in medicine that made us ripe for investment by private equity? When you and I started out years ago, I don’t think we ever would have thought that this was in the future.
Dr. Fry: I think number one, as we know, is that medicine represents about 20% of our economy. There are huge amounts of money involved in these considerations. If players in this space can access even a small fraction of that money, it’s a lot of money and a lot of incentive for them.
In medicine in general, and then maybe more specifically, in cardiology, we’ve seen a shift away from private practice into employed practice. When people made those decisions over the past 10-15 years, there were certainly positives and risks that they took. I think for some, along the way, they realized that perhaps they gave up more than they thought in terms of control and running their own business and the opportunity to shape that themselves and be rewarded for that as they were in private practice. In cardiology, more specifically, we’ve seen this shift to the outpatient space: moving diagnostics and even therapeutics into ambulatory surgical centers and outpatient-based labs, and that is another potential source of revenue for these private equity companies.
As I wrote in the editorial, there are certainly a lot of pressures and frustrations that the day-to-day clinician feels, and maybe, this move to private equity is more of a symptom of those concerns and that this could be an opportunity to take the bull by the horns again in cardiology. We’ve evolved from a predominantly hospital-based acute care specialty into one of diagnosis, chronic disease management, and longitudinal care punctuated by diagnostics and therapeutics, which are, again, I think, attractive to private equity firms as potential sources for revenue.
Dr. Harrington: Ed, why cardiology? What’s happened over the years that has led to that appearance, if you will, of private equity and cardiovascular medicine?
Dr. Fry: Some of the earlier specialties were dermatology, ophthalmology, and gastroenterology, in particular. And interestingly, those tend to be specialties that have less chronic disease management and are more based on procedures and things like that. Within cardiology, obviously, the big driver is that our population is aging: 11,000 people turn 65 every day and become eligible for Medicare. With that, we see a rise in disease prevalence and then the rise in risk factors, obviously, with obesity and diabetes driving that, so there are more people who are going to have an illness that requires evaluation, diagnostics, and procedures. Because of that, it is a very target rich environment for private equity.
Dr. Harrington: That’s great background. Now, let’s dive into what you did, Victoria. What got you interested in the question? And give us some background on the literature that you were trying to build upon when you asked your series of questions.
Victoria L. Bartlett, MD: There’s been a lot of interest in private equity acquisitions and healthcare. A lot of the existing literature has been around hospital acquisitions and what happens there. There’s some literature, as you’ve mentioned, in outpatient practices, in certain specialties, where private equity has existed a little bit longer than in cardiology. They’ve been asking really similar questions to what we have been asking about cardiology, which is what happens when practices are acquired.
A kind of overview is that many of those studies have found increased costs to payers, to patients, and many have also found evidence of decreased quality. The evidence for the latter is honestly more difficult to figure out, but there has been evidence of decreased nursing ratios in nursing homes. There’s been evidence of changing the mix in clinics to more advanced practice providers than physicians. There’s been some evidence in hospitals that maybe quality doesn’t change too much. But the deeper layer under that is that these private equity–acquired hospitals may be selecting certain patients that are less sick, that are not going to negatively affect their metrics as much. That’s the environment that we had been reading about and starting to ask: Are we seeing that in cardiology too?
Dr. Harrington: Share with the audience what you did. You took what I would call a descriptive approach to try to understand the current landscape in cardiovascular medicine. As Ed already pointed out, a lot of the earlier data does not concern cardiology practices. My read of your paper is that you were trying to at least lay the groundwork for us to understand as a community what’s going on out there. Is that a fair interpretation?
Dr. Bartlett: Absolutely. Even that initial question of what’s happening is more challenging than it seems it might be to answer, partly because with private equity, these are private transactions. They don’t have to publicly report anything. So there’s a lot of manual work to gather these data. Our first questions were: What are these transactions? When are they happening? Where are they happening? What are the clinics that private equity is interested in? What are the community characteristics of those clinics? And what could that tell us about what’s going on?
Who Is Getting Acquired?
Dr. Harrington: Tell the audience broadly what you found. What are those clinics? And how often does this happen?
Dr. Bartlett: We looked at acquisitions between 2013 and 2023, and in that 10-year span, we found 41 acquisitions of outpatient cardiology practices, which corresponded to 342 acquisitions of clinics. The vast majority of these, pretty much 95%, occurred between 2021 and 2023. We calculated that about 3% of cardiology clinics in the US are owned by private equity. The states with the highest number of acquisitions were Florida, Texas, and Arizona, and particularly the urban areas in those states, ie, Jacksonville, Houston, Dallas. And interestingly, that mirrors what we’ve seen before in anesthesia and dermatology.
Our last question was around community characteristics, we looked at several that had a statistically significant association with private equity acquisition, and we found that private equity firms were less likely to acquire clinics in the highest poverty communities. Within the communities, we looked at the proportion of adults over 65, the proportion of racial and ethnic minorities, educational level, rurality, and didn’t find any significant associations between private equity acquisition and those characteristics.
Dr. Harrington: Thank you. Rishi, do you want to interpret why private equity was targeting certain areas?
Dr. Wadhera: Private equity goes where they can actually acquire practices. Those states, in particular, have more independent practices than, say, Massachusetts does. Then there’s the target population available in those states. Building on what Ed said earlier, why all of a sudden? Because Victoria just pointed out that the vast majority of these acquisitions happened between 2020 and 2023 and you see the surge, and I expect that surge to continue over the next several years. And the question is why?
We know with the rise in cardiometabolic risk factors at a population level, that the cardiovascular disease is only going to become more common. Cardiac procedures are very well reimbursed. There’s likely a lot of appeal in entering a specialty with a highly profitable service line. Over the past decade, federal policymakers very intentionally have created incentives to shift the delivery of cardiac procedures to nonhospital settings. We see that with the rise of ambulatory surgical centers and more cardiac procedures are being reimbursed in these types of settings. And I think that private equity firms may see this as an opportunity to maximize profits.
Victoria created this beautiful map in our study that showed how concentrated these acquisitions are. They really concentrated in specific markets. And I think that parallels what we’re seeing with health systems more broadly, this consolidation, and concentration is the ultimate goal. These different stakeholders, it’s not just private equity, have more market power, so that when they go to insurers, they can demand higher prices for procedures and services.
Dr. Harrington: It’s hard to look at the dates of 2021 or 2020 to 2023, and not wonder if there is a COVID effect. Victoria, do you think there’s a COVID effect, or is it just true, true, unrelated?
Dr. Bartlett: COVID definitely put a lot of financial pressure on providers, and particularly small independent practices. They would have felt that the most, and I certainly think is a piece of the picture but may not be all the picture.
Dr. Harrington: That’s what I would have guessed. We were all under financial pressures, but the small, independent practices didn’t have the big health system behind them to backstop things. Ed, as a former leader of the ACC, and the ACC very much works at the local level, are you hearing from the governors of these states that this is an issue, and not hearing from other states?
Dr. Fry: Certainly this activity is concentrated in the states that Victoria and Rishi described for the reasons that they outlined. This is still a very small number and probably will remain relatively small if we consider that 85% of cardiologists are employed, and the bar to exit an employment arrangement and enter into a private equity situation is pretty darn high. There’s a lot of costs associated with that. So it may have a finite cap to it, and that may be part of what buffers some of the response.
I would like to go back and address other reasons why this is happening. Particularly because of the aging population of cardiovascular patients, we’ve also seen the rise of Medicare Advantage, which is a type of value, if you consider it a type of value-based care. There are incentives built into Medicare Advantage to manage costs and to do various things so there is certainly a reward incentive. I am not wearing my hat as a representative of the ACC nor Ascension, and I will probably be a consumer of these services before I’m ever a participant, but I would say that private equity in some respects, is acting as a disruptor in this entire process. One of the positive outcomes from this is for a reevaluation of the role of clinicians in the overall delivery of care for health systems and academic medical centers. I think that can be a positive; I always try to look at the bright side of things too.
Patient and Clinician Satisfaction
Dr. Harrington: To your last comment. Ed, maybe I’ll ask you Rishi or Victoria, any insights into clinician wellness, how people feel when their practice has been bought by private equity? Are there any data out there?
Dr. Wadhera: Not that I know of. I will say that we have a study under review right now that doesn’t answer your question directly, Bob, but that looks at how private equity acquisitions of US hospitals affect the patient care experience. And what we found, using a rigorous, quasi experimental study design comparing private equity–acquired hospitals to neighboring control hospitals, is that private equity acquisition leads to a pretty marked decrease in patient care experience and satisfaction.
That’s capturing another dimension of quality that mortality and readmissions don’t necessarily reflect. It doesn’t answer your question directly, but I think an important area for future research is understanding the effects on the clinician experience as well as, most importantly, the patient experience.
Dr. Harrington: Nicely said, it seems like a good time to think about mixed qualitative methods such as focus groups, etc., coupled with the more quantitative research methods. Victoria, I suspect you talked to people in acquired practices. Any insight into whether it’s observational or rigorous data on the clinician experience?
Dr. Bartlett: Not that I have seen. I imagine it’s probably mixed because as we’ve been saying, there’s a lot of financial pressure on practices, small, independent practices, and it can become overwhelming to run them. Private equity firms offer a very attractive value proposition or can. But I think it’s a great point that should be highlighted.
Dr. Harrington: Ed, taking off your cardiovascular leadership hat, not representing any specific organization, what are the policy things that we should be thinking about?
Dr. Fry: There’s an opportunity to combine these conversations around research, collecting more data, and the advocacy issues related to that. One of the things that perhaps differentiates cardiology in this space from other specialties, or subspecialties, surgical subspecialties, is the plethora of data that we already have with well-established registry tools. We have good benchmarks. From a professional society standpoint, we have an obligation to make sure that the care that is provided in whatever environment meets the standards and is measurable, reportable, and provides a level of consumerism to patients and payers to be able to look at that. I think we have an obligation to advocate for the use of well-validated registry tools to track the data, to have objective data, to be able to demonstrate outcomes.
Interestingly, there’s an ACC/American Heart Association policy document from 2020 on professionalism and ethics in cardiology. And it calls for the obligation of the profession to make sure that in alternative sites of care, that we are achieving at least as good a result, if not better. We have to be true to that.
Dr. Harrington: I was actually a coauthor on that paper on professionalism and talking about some of the research and education issues within the academic medical centers. You’re spot on. And I love the comment about the importance of long-standing registries, whether maintained by the ACC, the Heart Association, or the Society of Thoracic Surgeons, where we can get insights into the quality issues.
We need more work done on the patient experience, the clinician experience, but I also take the positive, Ed, that this may be a disruptor that could lend itself to some positive change in other areas that need to change.
This has been a fantastic conversation on the appearance, if you will, of private equity in cardiovascular medicine and some of the observations made by colleagues at the Smith Center at the Beth Israel Lahey, with great commentary by Ed Fry on whether this is a symptom or a solution and what we should be thinking about from a broader societal perspective. I want to thank my three guests today, Victoria, Ed, and Rishi, for joining us here.
Dr. Harrington is the Stephen and Suzanne Weiss Dean of Weill Cornell Medicine and provost for medical affairs of Cornell University, as well as a former president of the American Heart Association. He disclosed ties with several companies. Dr. Bartlett is resident physician, Department of Internal Medicine, Brigham & women’s Hospital, Boston, and has disclosed no relevant financial relationships. Dr. Fry is chair, Ascension National Cardiovascular Service Line, Ascension St. Vincent Heart Center in Indianapolis, Indiana. Dr. Wadhera is associate professor, Harvard Medical School, and associate director, Richard A. and Susan F. Smith Center for Outcomes Research, Beth Israel Deaconess Medical Center, both in Boston. Dr. Wadhera disclosed ties with Abbott, ChamberCardio, CVS Health, the National Institutes of Health, American Heart Association, and the Donaghue Foundation.
A version of this article first appeared on Medscape.com.