Consolidation is not new to health care. The most obvious example is of a hospital buying small clinics to expand its footprint. Those campaigns are not limited to getting the same name over more doors, however. Recent research published in the Journal of the American Medical Association (JAMA) has demonstrated that private equity firms are buying specialty clinics across a variety of practices. Why are these firms getting more involved in healthcare? The answer is, of course, money.

Two common threads appeared from the research. First, the specialties most commonly acquired, anesthesiology and emergency medicine, are two commonly involved in surprise billing. Second, firms are acquiring general practices that generate referrals to specialists that they own. That’s a tidy little circle.

Furthermore, the JAMA studies showed that the pace of private equity buying these practices has actually been increasing. And maybe worse, many of these purchases are covered by nondisclosure agreements. It seems these firms are interested in hiding who is actually funding the purchases.

So, should this pattern be concerning? It raised my eyebrows. Look at the intent of private equity: to generate maximum return for its investors. Should healthcare be in the business to maximize profits for a small (and secret) ownership group? Or do you think healthcare should be aimed at maximizing outcomes for its patients? Well I, for one, believe it should be the latter.

Also, one argument posed by the large entities buying up small clinics deals with economies of scale: a large medical system can provide better affordable service than a small independent one. That principle is turned upside down when the principle investors’ motivation is to maximize returns on investment. And at the expense of the community they claim to take care of.

Follow this link to the studies: The Blitzkrieg Acquisition of Medical Practices by Private Equity