Increases In Physician Professional Fees In Private Equity–Owned Gastroenterology Practices

Consolidation of physician practices, largely driven by health systems, has motivated policy efforts to move care toward lower-price, non-health system settings. At the same time, however, private equity (PE) firms are increasingly acquiring those non-health system practices, potentially negating the prior price advantages of those practices. We used novel ownership data on gastroenterology practices linked to commercial claims for the period 2015-20 to study how PE acquisitions affect the prices and volume of care relative to both health system-affiliated practices and independent practices. We examined both professional fees and facility fees. After PE acquisition, prices increased by $92 per claim, or 28.4 percent, driven by a 78.1 percent increase in professional fees. Facility fees did not exhibit a statistically significant change. Meanwhile, utilization also increased. These findings suggest that PE firms have multiple avenues for raising prices-in this case, primarily via professional fees. For policy makers, although moving care out of higher-price health system settings remains a key strategy to lower spending, unchecked growth in professional fees in PE-acquired outpatient settings may nullify some of the intended effects.