Comment on: “Conflicts of interest for physician owners of private equity–owned medical practices”

Waldman, Reid A.; Kelsey, Andrew; Grant‐Kels, Jane M.

doi:10.1016/j.jaad.2019.08.087

Cited by 5 publications

(4 citation statements)

References 2 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Under PE involvement, the common opinion that ‘economics must serve the goals of medicine—and not vice versa’ [ 47 ] (p. A1692) is called into question. Indeed, some concerns are linked to the belief that with PE involvement, quality of care (QoC) is no longer the highest priority, as it is substituted by the profit interests of PE companies [ 8 , 11 , 13 , 14 , 37 , 40 , 45 , 48 , 49 , 50 , 51 , 52 ]. Here, a close relation to autonomy concerns is observable because both are frequently combined in the argumentative constructs.…”

Section: Resultsmentioning

confidence: 99%

Physicians’ Perspectives Regarding Private Equity Transactions in Outpatient Health Care—A Scoping Review and Qualitative Analysis

Nolte

Miedaner

Sülz

2022

IJERPH

View full text Add to dashboard Cite

Private equity (PE) investments in health care have increased drastically over the last decade, and the profit interests of these companies have triggered a vivid discussion among medical professions. However, what are the key underlying perceptions among physicians regarding this trend? Unravelling the argumentative structure of this debate is the purpose of this paper. With physicians being a major stakeholder group in the outpatient health care setting, this paper explores physicians’ perspectives regarding increasing PE activities. We systematically searched, selected, and synthesized existing knowledge in a scoping review and complemented the findings through 14 semi-structured interviews with physicians working in the outpatient health care sector in Germany. The results outline a complex network of arguments, concerns, and fears whereby the first intuitive perception of physicians is of critical nature. Arguments cluster around central perceptions of how PE involvement affects the individual autonomy of physicians in their daily work and decision-making, the impact on quality of care, work-life balance considerations, PE investment strategies, lack of medical vs. managerial expertise, and taxation issues. The high number of opinion papers among the literature underlines the actuality of the topic and emphasizes the need for empirical research.

show abstract

Section: Resultsmentioning

confidence: 99%

Physicians’ Perspectives Regarding Private Equity Transactions in Outpatient Health Care—A Scoping Review and Qualitative Analysis

Nolte

Miedaner

Sülz

2022

IJERPH

View full text Add to dashboard Cite

show abstract

“…It is important to compare and calculate the differences in expected compensation over the time period under the PE model versus under private practice. Fourth, the selling ophthalmologist will need to understand the consequences of leaving the employment for certain reasons [9,31]. Under a signed agreement, this may result in the departing physician to repay some of the purchase price that they received.…”

Section: Contractual Considerations In Ophthalmologymentioning

confidence: 99%

Contractual considerations in the private equity era

Patel

Nijm

2022

Current Opinion in Ophthalmology

View full text Add to dashboard Cite

Private equity (PE) has grown rapidly in medicine. The reintroduction of PE in ophthalmology has necessitated a greater understanding of the potential contractual relationships with PE firms from both a practice owner and an employee physician perspective. There are contractual obligations that need to be met as PE agreements are designed to ensure clear investment patterns and abide by legal mandates. A practice owner entering into a PE contract needs to consider how the practice is being valued, what their obligations are to the PE entity after the sale has been completed to attain full compensation and understand their new role at the practice. On the other hand, employee ophthalmologists must carefully evaluate the compensation package being offered in terms of the type of equity, vesting of shares, obligations to the PE firm under the agreement such as a noncompete clause, and what occurs under a subsequent sale of the practice. Overall, contractual considerations in the private equity era need to be carefully evaluated in order to ensure the agreement is in the best interest for the clinician, practice, and their patients.

show abstract

“…Dermatology is an attractive target and has been recession-resistant during past economic downturns . Dermatology PE-backed groups state there is safety and security in economies of scale; however, dermatologists are concerned about PE’s effect on their profession and patients . The evolution of DPEGs and their investment objectives, including acquiring or opening practices, leveraging physician assistants and nurse practitioners, maximizing profitability, and ultimately selling to another entity in 3 to 7 years, has been detailed previously .…”

Section: Introductionmentioning

confidence: 99%

“…2,3 Dermatology PE-backed groups state there is safety and security in economies of scale; however, dermatologists are concerned about PE's effect on their profession and patients. 1,[4][5][6][7][8] The evolution of DPEGs and their investment objectives, including acquiring or opening practices, leveraging physician assistants and nurse practitioners, maximizing profitability, and ultimately selling to another entity in 3 to 7 years, has been detailed previously. 1,4,9,10 Some DPEGs may merge with each other, as seen recently with Water's Edge and Riverchase Dermatology, and the next buyer may be another PE firm, a health care conglomerate, the public via an initial public offering, or an insurance company.…”

mentioning

confidence: 99%

Trends in Debt Valuations of Private Equity–Backed Dermatology Groups Before and During the COVID-19 Pandemic

Memon

Francis

et al. 2022

JAMA Dermatol

View full text Add to dashboard Cite

IMPORTANCE Private equity (PE) firms have invested in and consolidated dermatology practices. Private equity firms typically operate by conducting leveraged buyouts, which occur when target companies are acquired with capital from PE firms and a combination of debt, which may include debt instruments held in business development corporations (BDCs).OBJECTIVE To investigate the valuations of dermatology PE-backed group (DPEG) debt instruments in BDCs' portfolios both before and during the COVID-19 pandemic. DESIGN, SETTING, AND PARTICIPANTSThis cross-sectional study, conducted from August 1, 2016, to August 31, 2021, examined public financial statements filed by BDCs lending to DPEGs. The public filings of BDCs were searched from inception of the DPEG's debt instrument in a BDC's portfolio, and the amortized cost and fair value of each debt instrument were tabulated. MAIN OUTCOMES AND MEASURESThe premium or discount at which each debt instrument was valued at a given time was calculated by dividing the difference between the fair value and the amortized cost by the amortized cost. Different testing methods were conducted for normal or nonnormal data to test differences in debt valuations across all DPEGs between 2 consecutive or nonconsecutive quarters. RESULTSThe search of the public filings found 10 BDCs containing data on 9 unique DPEGs. Overall, there were 15 trackable DPEG debt instruments because multiple BDCs can hold debt instruments for a given DPEG. Data were available from August 2016 through August 2021. During the study time frame, the amortized cost of the loans for an individual DPEG ranged from a low of $1.7 million to a high of $100 million. The valuation of debt instruments was stable for many DPEGs until some were discounted starting in May 2018, with a significant decrease from May 2019 to August 2019 (-1.4%; 95% CI, not applicable; P = .04), prior to the COVID-19 pandemic. Another significant decrease occurred during the pandemic from February to June 2020 (-9.0%; 95% CI, -13.6% to -4.4%; P = .002). US Dermatology Partners decreased to the lowest valuation (Golub BDC, -39.7%; TCG BDC Inc, -48.8%; TCG BDC II, -48.8%) of the DPEGs examined in November 2020 even after receiving a $10 million forgivable Small Business Administration Paycheck Protection Program loan in May 2020. After pharmaceutical companies announced effective COVID-19 vaccine candidates in November 2020, there was a modest and significant improvement in debt valuations (2.3%; 95% CI, 0.2%-0.4%; P = .03); however, they remained discounted. Only PhyNet Dermatology's debt instruments improved to a premium valuation by August 2021.CONCLUSIONS AND RELEVANCE Debt valuations of some DPEGs found in this cross-sectional study suggest a lower probability that their loans will be repaid in full. This could be a signal that some DPEGs are not performing well financially.

show abstract

Comment on: “Conflicts of interest for physician owners of private equity–owned medical practices”

Cited by 5 publications

References 2 publications

Physicians’ Perspectives Regarding Private Equity Transactions in Outpatient Health Care—A Scoping Review and Qualitative Analysis

Physicians’ Perspectives Regarding Private Equity Transactions in Outpatient Health Care—A Scoping Review and Qualitative Analysis

Contractual considerations in the private equity era

Trends in Debt Valuations of Private Equity–Backed Dermatology Groups Before and During the COVID-19 Pandemic

Contact Info

Product

Resources

About