Private equity firms are buying more surgical facilities

Over the past two decades, private equity firms have funded and purchased more surgical practices and facilities as time has gone on, Michigan Medicine researchers found.

The number of investments in surgical services by private equity firms increased every year between 2000 and 2020, peaking at 19 transactions per year. Most of these investments led to the private equity firm eventually buying the entire facility, at an average cost of $143 million.

“Involvement of private equity firms in the financing of health care services remains controversial,” said Jessica I. Billig, M.D., M.S., the chief resident of integrated plastic surgery at Michigan Medicine and the first author of the study. “Acquisitions result in consolidation of health care, which may offer benefits such as a larger market share and less administrative costs. Moreover, funding from private equity firms can potentially provide capital for new therapies, equipment and advanced techniques.”

“However, financial involvement of private equity firms in surgical care may lead to concerns about whether the firms’ goal to increase profits could affect the availability of procedures,” she added, “as well as surgical outcomes. More research is needed to fully understand the implications of private equity acquisitions for the overall quality of surgical care.” 

Billig's co-authored the study with Kevin Chung, M.D., M.S., a professor of plastic surgery at Michigan Medicine and a member of the U-M Institute for Healthcare Policy & Innovation. 

Paper cited: “Trends in Funding and Acquisition of Surgical Practices by Private Equity Firms in the US From 2000 to 2020,” JAMA Surgery. DOI: 10.1001/jamasurg.2021.3642