Independent practices wither as primary care continues its ‘corporate transformation’

Key takeaways:

• PCPs affiliated with hospitals nearly doubled between 2009 and 2022.
• Independent PCPs had lower negotiated prices for office visits.

The proportion of primary care providers in the United States affiliated with hospitals nearly doubled in the last decade-plus, according to a cross-sectional analysis published in JAMA Health Forum.

In combination with those connected to private equity firms, affiliated providers office visit prices ranging from 8% to 11% higher than those charged by independent PCPs.

“The take-home message is that the corporate transformation of primary care is underway,” Yashaswini Singh, PhD, MPA, an assistant professor at Brown University, told Healio. “Hospital and [private equity] affiliation of PCPs has been increasing over time with the potential to increase the cost of care. At the same time, there is no evidence that these trends benefit patients or physicians.”

Because of factors like clinician burnout, underinvestment and low relative payments, “corporate investors in primary care may present a unique opportunity to improve the financial health of primary care practices by negotiating higher payment rates from payers and making investments in health information technology to facilitate value-based care contracts,” Singh and colleagues wrote.

“At the same time, the recent growth of private equity acquisitions of physician practices has also been associated with increased prices in certain procedural specialties, including dermatology, ophthalmology and gastroenterology.”

However, they noted that measuring and understanding the growth of hospital and private equity affiliation in primary care — an important area to research given its potential effects on practice patterns and prices — has been difficult because of a lack of price and ownership transparency, “ie, the absence of reporting and disclosure requirements for [private equity] acquisitions.”

In the analysis, the researchers used data from 2009 to 2022, retrieved from the PitchBook and IQVIA databases, to determine the increases in hospital- and private equity-affiliated PCPs and their negotiated prices for office visits.

Singh and colleagues assessed 198,097 PCPs.

The share of PCPs affiliated with hospitals jumped from 25.2% in 2009 to 47.9% in 2022, while providers affiliated with private equity rose to 1.5% during that period.

The researchers noted that PCPs affiliated with private equity firms and hospitals appeared concentrated in certain geographic markets. For example, the states with the highest proportion of private equity-affiliated PCPs included Florida (6.3%) and Texas (3.4%) North Dakota (86.2%) and Wisconsin (83.2%) comprised the states with the highest proportion of hospital-affiliated PCPs.

Compared with independent PCPs, a cross-sectional analysis showed negotiated prices for office visits of:

• $14.91 (95% CI, 8.92-27.64), or 10.7% (95% CI, 10.1-11.4), higher for hospital-affiliated PCPs; and
• $9.56 (95% CI, 2.24-14.55), or 7.8% (95% CI, 4.7-10.8), higher for private equity-affiliated PCPs.

This finding, which the researchers noted is consistent with past research, “suggests that large national insurers may not be using their bargaining power to negotiate lower prices that improve the affordability of care,” Singh told Healio.

Singh and colleagues explained that the results show “that vertical integration of physician practices with health systems is still the dominant trend in primary care,” although private equity investments “have emerged as a notable trend in certain local and regional markets.”

There were several study limitations. These included some potentially missed private equity acquisitions, inabilities to determine causality or assess mechanisms behind variation in prices and the findings not being generalizable to other payers or service categories.

“Corporate investments in primary care can alter the practice of medicine given investors' emphasis on short-term profitability,” Singh said. “In ongoing and future projects, we will be examining what the growth of private equity and other financial actors in primary care mean for physician practice patterns and patient health.”