Surgical Dermatology and Private Equity: A Review of the Literature and Discussion

Abstract

BACKGROUND While there has been substantial investment in dermatology by private equity (PE), the relevance of this trend to the dermatologic surgeon has not been assessed. OBJECTIVE The literature on PE investment in medicine was reviewed to provide interdisciplinary data relevant to the dermatologic surgeon. MATERIALS AND METHODS The PubMed database was queried for all peer-reviewed articles containing the term "private equity" and identified 70 unique articles across 18 medical specialties, comprising 20 original research articles and 50 commentary articles. RESULTS Significant PE growth across multiple medical specialties occurred in the 2010s. Private equity ownership was associated with higher levels of nonphysician providers relative to physicians. Pooled data suggest that PE ownership is associated with lower staffing levels, particularly for non-revenue-generating staff, as well as potentially lower levels of medical supplies on hand. Data on financial performance suggests that PE-ownership results in higher profits, revenues, and costs. Surveys of physicians demonstrate concern about autonomy, ethics, and career prospects. CONCLUSION For the dermatologic surgeon, issues related to consolidation, provider scope of practice, support staff availability, and supply management are important due to the nature of procedural intervention and the increased risk of adverse events.

Evaluating trends in private equity ownership and impacts on health outcomes, costs, and quality: systematic review

“…Few academic studies have systematically evaluated PE in healthcare. Our findings are aligned with two recent reviews of PE activity as it relates to dermatology, 26 27 reporting substantial growth, market penetration, and operational changes in association with PE ownership. Our findings are also more broadly aligned with existing research on the financialization of local and global healthcare systems, 90 91 92 93 94 95 including a shift towards increasingly complex corporate structures and modes of governance driven in part by PE ownership.…”

“… 21 22 However, the relatively nascent body of literature on PE ownership in healthcare remains disjointed, with studies ranging across different medical settings and academic disciplines such as sociology, health services research, and economics. Although several overviews have been published about PE ownership in healthcare 23 24 25 as well as two research reviews that focused on the growth of PE ownership and its impacts on dermatology, 26 27 no systematic reviews have been published that comprehensively evaluated the impacts of PE ownership across healthcare settings globally. If PE ownership becomes increasingly prevalent within and across health systems, it is imperative to understand its influence on healthcare delivery and whether it differs from other institutional arrangements and management strategies.…”

The Risks and Benefits of Physician Practice Acquisition and Consolidation: A Narrative Review of Peer-Reviewed Publications Between 2009 and 2022 in the United States

“…The acquisition and consolidation of physician practices is a well-documented phenomenon in the United States (US) that is likely closely associated with an ever-increasing web of legal and regulatory hurdles confronted by medical practitioners. [1][2][3] Physician practices may be acquired by hospitals and healthcare systems, private equity investors, [4][5][6] or practice management groups, who will directly employ the medical practitioners, and assume responsibility for financial and administrative matters. 7 Numerous potential consequences of this trend have been identified including increased market power with associated antitrust concerns, [8][9][10] increased healthcare spending on a per-patient basis, [11][12][13][14][15][16] modifications to physician compensation 17 and productivity, 18 and changes in referral patterns.…”