The growing trend of private equity ownership of dermatology practices is raising concerns about the quality of care offered at these practices, a study published recently in JAMA Dermatology suggests.
Seventeen dermatology management groups acquired 184 dermatology practices nationwide from May 2012 to May 2018, including 34 practices bought in just the last 5 months of the study period, report Arash Mostaghimi, MD, MPA, MPH, of Brigham and Women’s Hospital in Boston, and colleagues, in the study.
As of mid-2018, the researchers counted 381 individual dermatology clinics coming under management-group ownership during the 6-year period. One such group — Advanced Dermatology & Cosmetic Surgery Inc — acquired 47 practices with 92 individual clinics from 2012 onward, Mostaghimi and colleagues found, and now runs a total of 193 clinics in 14 states across the country.
Notably, the rate of acquisitions increased nearly 12-fold from only five in 2012 to 59 in 2017, the authors write, according to a media release from MedPage Today.
Private equity involvement in the number of acquired practices and amount of financial deals has increased over the last several years, and this requires being vigilant and doing further research, Mostaghimi notes.
“I think the jury’s out. I think the reason we have to be vigilant is because anytime you introduce a potential profit motive in dermatology or in medicine, you have to be very thoughtful to make sure it doesn’t lead to negative impacts for patients,” Mostaghimi says.
Mostaghimi and colleagues used five financial databases to gather investment and acquisition information regarding dermatology practices. Transaction information was supplemented with publicly accessible data from dermatology management groups’ press releases, other financial databases, and financial news outlets. Acquisitions were confirmed to be dermatology practices offering cosmetic, surgical, and medical clinical care. Using spatial analytics software, the locations of clinics linked with acquired practices were mapped out.
Limitations of the study included that publicly available information on private-equity transactions is inherently limited, making it challenging to determine the extent of missing information. Mostaghimi and colleagues wrote that one venture capital database listed 15 dermatology management groups not identified in the researchers’ own search, supporting their suspicion that the study underestimated the extent of clinic acquisitions. In particular, they likely missed small physician-owned practices directly acquired by small private equity firms.
Mostaghimi and colleagues also note that their estimates of the number of clinic locations were approximate because the clinic addresses linked with each practice acquisition came from internet searches, the release explains.
“Further research is needed to assess whether and how private equity-backed ownership influences clinical decision-making, health care expenditures, and patient outcomes,” the investigators conclude.
[Source: MedPage Today]