Association of Physician Management Companies and Private Equity Investment With Commercial Health Care Prices Paid to Anesthesia Practitioners

Abstract

IMPORTANCE Physician management companies (PMCs), often backed by private equity (PE), are increasingly providing staffing and management services to health care facilities, yet little is known of their influence on prices.OBJECTIVE To study changes in prices paid to practitioners (anesthesiologists and certified registered nurse anesthetists) before and after an outpatient facility contracted with a PMC. DESIGN, SETTING, AND PARTICIPANTSThis retrospective cohort study used difference-indifferences methods to compare price changes before and after a facility contracted with a PMC with facilities that did not and to compare differences between PMCs with and without PE investment. Commercial claims data (2012-2017) from 3 large national insurers in the Health Care Cost Institute database were combined with a novel data set of PMC facility contracts to identify prices paid to anesthesia practitioners in hospital outpatient departments and ambulatory surgery centers. The cohort included 2992 facilities that never contracted with a PMC and 672 facilities that contracted with a PMC between 2012 and 2017, collectively representing 2 255 933 anesthesia claims.EXPOSURES Temporal variation in facility-level exposure to PMC contracts for anesthesia services.MAIN OUTCOMES AND MEASURES Main outcomes were (1) allowed amounts and the unit price (allowed amounts standardized per unit of service) paid to anesthesia practitioners; and (2) the probability that a practitioner was out of network. RESULTSFrom before to after the PMC contract period, allowed amounts increased by 16.5%

Physician Management Companies—Should We Care?

“…Not surprisingly, at facilities involved with PMCs, allowed charges increased by an average of 16.5%. The subset of facilities involved with private equity–backed PMCs saw allowed charges increase by 26.0% …”

“…The subset of facilities involved with private equity-backed PMCs saw allowed charges increase by 26.0%. 1 What Are PMCs?…”

“…In this issue of JAMA Internal Medicine , La Forgia et al describe the prices paid for anesthesia services before and after health care facilities (hospital outpatient departments and ambulatory surgical centers) either contracted with or were owned by a physician management company (PMC), half of which had received private equity funding. Private equity firms typically invest in businesses for 3 to 7 years with the expectation of 20% to 30% returns .…”

Association of Private Equity Acquisition of Physician Practices With Changes in Health Care Spending and Utilization

“…Evidence of how private equity influences physician practices is limited to industry reports, academic opinion pieces, 2 and largely descriptive studies within single specialties. [13][14][15][16][17][18] A study that examined prices, utilization, and spending from 2013 to 2016 for dermatology services after private equity acquisitions found modest increases in prices and volume but not total spending. 19 Important gaps in knowledge remain on how private equity affects pricing, service or patient composition, and billing practices within physician practices.…”

Private equity in ophthalmology: lessons from other specialties

“…Unlike most specialties, demands in anesthesia care are generally dependent on the needs of other procedural medical specialties. Many private equity platforms employ their own in-house anesthesia providers to control quality, cost, and access [16 ▪ ]. A notable exception are interventional pain management specialists, who perform procedures mostly in surgical suites or ambulatory surgery centers (ASCs), and are attracting considerable private equity investment [17].…”