Impact of private equity
“Private equity deals are changing the health care landscape,” Mr. Wall said. “They are creating large, independent practices that help physicians remain independent from hospital systems and potentially have the clout to get more favorable reimbursements.”
“There is a lot of misunderstanding and mistrust among physicians about private equity,” Dr. Benavides said. “I imagine it will take a while for it to be accepted.”
Until the COVID pandemic, the annual number of private equity deals for doctors had been rising. Will it recover that pace? Mr. Pinto said rising interest rates may dampen activity in the near future.
“The private equity firm often performs a leveraged buyout using borrowed money,” he explained. “This works better when interest rates are low, but interest rates are trending higher. Private equity firms aren’t going away, but they may have to be less generous as the cost of money rises.”
A version of this article first appeared on Medscape.com.