Private Equity Interest in Cardiology Has Spiked in Recent Years

Private equity firms have been buying up medical practices for the past decade, but cardiology has increasingly caught their eye as a way to generate profits, an analysis of such acquisitions shows.

Between January 2013 and September 2023, private equity firms bought 41 cardiology practices in the United States, encompassing 342 clinic sites, with the vast majority of such transactions (94.7%) occurring since 2021, researchers led by Victoria Bartlett, MD, and Michael Liu, MPhil (both from Beth Israel Deaconess Medical Center, Boston, MA).

Of note, these acquisitions were clustered in wealthy communities in the South and West, particularly in Florida, Texas, and Arizona.

The results were published in a brief report in the Journal of the American College of Cardiology to coincide with a presentation at the recent AcademyHealth 2024 Annual Research Meeting.

“Across the country, we’re basically seeing the growing financialization and corporatization of healthcare, and private equity firms are an example of that,” senior author Rishi Wadhera, MD (Beth Israel Deaconess Medical Center), told TCTMD, noting that these groups will acquire a practice with the goal of adding value over a relatively short time horizon and then selling it for a profit.

The involvement of private equity in healthcare more generally has attracted the attention of the public and policymakers, including various committees within the US Congress, he pointed out. “There’s significant concern that private equity firms’ incentive to generate financial returns on their investment quickly might lead to changes in the way we deliver care that adversely affect patients.”

Indeed, Wadhera said, there’s evidence that private equity acquisitions in other specialties have been associated with reductions in staffing, increases in costs, and decreases in quality of care. Now, these firms are turning their attention to cardiology for multiple reasons, Wadhera said, citing the high and growing prevalence of cardiovascular disease, the high reimbursement rates for cardiac procedures, and a relatively recent shift toward performing more of these procedures in the outpatient setting.

“As a cardiovascular community, we need to be paying close attention to what the effects of these acquisitions are, not only on our patients with cardiovascular disease but on clinicians and the way they practice,” Wadhera said.

Many Clinics Acquired More Than Once

For the study, the investigators identified acquisitions of outpatient cardiology practices by private equity firms—or groups owned by such firms—using the Irving Levin Associates Health Care M&A and PitchBook databases. Overall, clinics acquired by private equity accounted for about 2.9% of all cardiology clinics in the US.

Such transactions increased over the study period, with most occurring between 2021 and 2023. That sharp increase, the researchers note, comes after a change in Medicare rules in 2020 that permitted reimbursement for PCI performed outside hospitals, which suggests “that private equity firms may see opportunities to maximize profits by transitioning high reimbursement procedures from the inpatient to the outpatient setting.”

Acquired clinics spanned 20 states, with the highest numbers in Florida (n = 60), Texas (n = 53), and Arizona (n = 33). Moreover, by incorporating zip code-level information from the American Community Survey, the researchers found that private equity purchases were concentrated in the wealthiest areas.

This type of clustering has been seen in other specialties “and reinforces concern that private equity firms may target specific markets in order to establish monopolies and raise prices,” Bartlett et al write, adding that the focus on wealthier communities pulls resources from underserved parts of the country.

Of note, 64 clinic sites were bought by private equity firms more than once during the study period, representing a well-known strategy of short-term investments used by these groups, according to the researchers. “Shorter investment time lines incentivize changes that maximize profits quickly but may not increase quality—such as charging higher prices, increasing patient volume, and replacing physicians with advanced practice providers, all of which have been observed in other specialties.”

Impact on Cardiology Unclear

Regarding the potential effects of increasing private equity interest in cardiology, Edward Fry, MD (Ascension St. Vincent Heart Center, Indianapolis, IN), who wrote an editorial accompanying the JACC paper, told TCTMD that the jury is still out.

“I guess the real answer is nobody knows whether to be concerned or to be welcoming. I think the proof is in the pudding, and I think the onus of proof is on the new entities to be able to show that they’re providing the kind of care and value and quality of care and safety that would be expected,” he commented.

We can’t keep our heads in the sand. Rishi Wadhera

Fry, who is a past president of the American College of Cardiology (ACC) but provided TCTMD with his personal perspective, indicated that assessing the impact of private equity acquisitions will be tricky because the sources of information available in the outpatient setting are not as robust as those available for hospitals and health systems.

He notes in his editorial that the ACC responded to a request for more information from the US Federal Trade Commission, recommending that “additional research be done on the impact of private equity with respect to competition, patient care and safety, transparency and accountability, and effective regulation to align with the interests of patients and the public.”

Speaking with TCTMD, Partha Sardar, MD (NewYork-Presbyterian/Columbia University Irving Medical Center, New York, NY), observed that assessing the complex impact of private equity’s involvement in cardiology comes on the background of the rising costs of running an independent practice and shrinking reimbursements and profit margins.

On the plus side, he said, private equity firms provide know-how related to administrative tasks and logistics, which can lower costs, and improve bargaining power to negotiate better reimbursement rates from payers. On the flip side, there are potential concerns about how they’ll operate, an issue that will be difficult to study since these privately owned practices are not required to report as much publicly compared with large hospital systems, Sardar said.

A Watchful Eye

Ultimately, the quality of care delivered by private equity-owned practices will be determined by the level of interference these firms have on day-to-day clinic operations and practicing cardiologists. Prior studies in other areas of medicine have shown that there can be a worsening of patient outcomes after staffing cuts or overutilization of certain services, Sardar said, noting that it will take some time for these types of data to be available in cardiology.

Wadhera said “it is imperative” that the cardiology community monitor the effects of the surge in private equity acquisitions. Like Sardar, he said there could be some positives, including much-needed resources and capital for practices that continue to struggle coming out of the COVID-19 pandemic, and expertise on operational efficiency.

“But I still think the overlying concern is that because these firms generally have a strong incentive to generate profits quickly and then sell practices, that they might change things in a way that isn’t necessarily optimal for patient care, but maximizes profits,” Wadhera said.

Studying how this trend affects healthcare access, quality, cost, and outcomes is particularly critical in cardiology, Wadhera said, because “we know that patients with cardiovascular disease are higher risk, so they’re going to be more susceptible to shifts in quality and access. And I think any evidence on whether these acquisitions are good, bad, or don’t really change anything in terms of quality or outcomes is going to be really important, especially as Congress is thinking about whether there needs to be greater regulation of private equity in the healthcare space.”

Looking Ahead

Wadhera predicted that the sharp increase in private equity acquisitions in cardiology is going to continue in the coming years, stressing that “we as a cardiology community need to understand how the healthcare landscape around us is changing. We can’t keep our heads in the sand, because broad shifts in the organizational structure of healthcare entities could have a major impact on the way we are asked to deliver care, our ability to take the best possible care of our patients, and, most importantly, our patients’ health.”

Sardar similarly predicted continued growth in private equity involvement in cardiology—but not without some controls. “I think in the future, maybe 5 to 10 years, it’s going to be much more regulated because lawmakers are also concerned about the way they are operating.”

There are some inherent limitations, however, to how far this trend will go, Fry indicated, noting that most US cardiologists—up to 85%—are employed, leaving only about 15% who continue to work in independent practices that would be the most likely targets for private equity firms at this point. In addition, there’s probably a built-in cap on how many times a practice can be purchased and then resold for a profit, he said.

“Clearly more data and investigation are needed to understand the growing impact of private equity in cardiovascular practice and especially to understand the impact on clinical quality, access to care, patient experience, long-term physician satisfaction, total cost of care, coordination of comprehensive health services, and overall value,” Fry writes in his editorial.

In addition, he says, there’s a need to understand what factors make selling to a private equity firm attractive for cardiologists. “Clinicians, health system administrators, policymakers, and the public need to define the elements of clinical practice that encourage a growing number of cardiologists to seek out alternative employment models. Addressing them will be necessary to truly transform care and promote equity and value.”