Who Is Getting Acquired?
Dr. Harrington: Tell the audience broadly what you found. What are those clinics? And how often does this happen?
Dr. Bartlett: We looked at acquisitions between 2013 and 2023, and in that 10-year span, we found 41 acquisitions of outpatient cardiology practices, which corresponded to 342 acquisitions of clinics. The vast majority of these, pretty much 95%, occurred between 2021 and 2023. We calculated that about 3% of cardiology clinics in the US are owned by private equity. The states with the highest number of acquisitions were Florida, Texas, and Arizona, and particularly the urban areas in those states, ie, Jacksonville, Houston, Dallas. And interestingly, that mirrors what we’ve seen before in anesthesia and dermatology.
Our last question was around community characteristics, we looked at several that had a statistically significant association with private equity acquisition, and we found that private equity firms were less likely to acquire clinics in the highest poverty communities. Within the communities, we looked at the proportion of adults over 65, the proportion of racial and ethnic minorities, educational level, rurality, and didn’t find any significant associations between private equity acquisition and those characteristics.
Dr. Harrington: Thank you. Rishi, do you want to interpret why private equity was targeting certain areas?
Dr. Wadhera: Private equity goes where they can actually acquire practices. Those states, in particular, have more independent practices than, say, Massachusetts does. Then there’s the target population available in those states. Building on what Ed said earlier, why all of a sudden? Because Victoria just pointed out that the vast majority of these acquisitions happened between 2020 and 2023 and you see the surge, and I expect that surge to continue over the next several years. And the question is why?
We know with the rise in cardiometabolic risk factors at a population level, that the cardiovascular disease is only going to become more common. Cardiac procedures are very well reimbursed. There’s likely a lot of appeal in entering a specialty with a highly profitable service line. Over the past decade, federal policymakers very intentionally have created incentives to shift the delivery of cardiac procedures to nonhospital settings. We see that with the rise of ambulatory surgical centers and more cardiac procedures are being reimbursed in these types of settings. And I think that private equity firms may see this as an opportunity to maximize profits.
Victoria created this beautiful map in our study that showed how concentrated these acquisitions are. They really concentrated in specific markets. And I think that parallels what we’re seeing with health systems more broadly, this consolidation, and concentration is the ultimate goal. These different stakeholders, it’s not just private equity, have more market power, so that when they go to insurers, they can demand higher prices for procedures and services.
Dr. Harrington: It’s hard to look at the dates of 2021 or 2020 to 2023, and not wonder if there is a COVID effect. Victoria, do you think there’s a COVID effect, or is it just true, true, unrelated?
Dr. Bartlett: COVID definitely put a lot of financial pressure on providers, and particularly small independent practices. They would have felt that the most, and I certainly think is a piece of the picture but may not be all the picture.
Dr. Harrington: That’s what I would have guessed. We were all under financial pressures, but the small, independent practices didn’t have the big health system behind them to backstop things. Ed, as a former leader of the ACC, and the ACC very much works at the local level, are you hearing from the governors of these states that this is an issue, and not hearing from other states?
Dr. Fry: Certainly this activity is concentrated in the states that Victoria and Rishi described for the reasons that they outlined. This is still a very small number and probably will remain relatively small if we consider that 85% of cardiologists are employed, and the bar to exit an employment arrangement and enter into a private equity situation is pretty darn high. There’s a lot of costs associated with that. So it may have a finite cap to it, and that may be part of what buffers some of the response.
I would like to go back and address other reasons why this is happening. Particularly because of the aging population of cardiovascular patients, we’ve also seen the rise of Medicare Advantage, which is a type of value, if you consider it a type of value-based care. There are incentives built into Medicare Advantage to manage costs and to do various things so there is certainly a reward incentive. I am not wearing my hat as a representative of the ACC nor Ascension, and I will probably be a consumer of these services before I’m ever a participant, but I would say that private equity in some respects, is acting as a disruptor in this entire process. One of the positive outcomes from this is for a reevaluation of the role of clinicians in the overall delivery of care for health systems and academic medical centers. I think that can be a positive; I always try to look at the bright side of things too.