American College of Physicians Calls for Greater Scrutiny of Private Equity

In a new position paper, the American College of Physicians makes the case that private equity investment in healthcare requires increased regulatory oversight to better protect patients and physicians from the adverse impact of growing corporate interests.

Published in the Annals of Internal Medicine, the paper, “Regulatory Framework for Private Equity and Corporatization in Health Care: A Position Paper from the American College of Physicians,” looks at the impact of private equity investment on clinical autonomy, healthcare costs, quality, access, equity, and innovation, and makes recommendations to help ensure that patient-centered care is protected.

Private equity investments grew from $41.5 billion in 2010 to $119.9 billion in 2019, with the trend expected to continue in the upcoming years. These investments have increasingly focused on primary care and multispecialty practices, driven in part by financial pressures on physician practices. 

Physicians have been leaving private practice due to high costs, inadequate reimbursement rates, and burnout. Instead of physicians funding and expanding their practices, investment patterns have shifted toward institutional investments by large firms that may not have expertise in healthcare delivery, the ACP paper notes, adding that some evidence associates private equity investment in healthcare with higher costs and, in certain settings, adverse effects on care delivery and patient outcomes.

In the new paper, ACP outlines a series of recommendations to better regulate private equity investments. The paper argues that policymakers should establish safeguards to ensure that physicians retain control of patient care and discourage prioritizing profits over patients. 

ACP calls for greater transparency in healthcare investments, including requiring private equity firms to disclose information on patient experiences and outcomes. 

ACP said there should be regulatory oversight of private equity activities to prevent practices such as inappropriate self-referrals, excessive reliance on non-physician clinicians without appropriate physician involvement, or consolidation that reduces competition. 

Another recommendation is increased scrutiny of practices that disproportionately affect vulnerable and underserved communities. ACP says federal officials should strengthen enforcement and impose penalties on firms that violate the False Claims Act or engage in fraud or kickbacks.

ACP also recommends enhanced oversight of private equity entities that receive funding from federal payment programs such as Medicare and Medicaid. ACP calls for further examination of the impact of private equity and consolidation in the healthcare sector, including research into how these investments affect enrollment, spending, clinical outcomes, and health equity in Medicare, Medicare Advantage, and other federal health programs.

Finally, ACP calls for additional research into how private equity affects the physician workforce and practice composition, including whether there are circumstances in which private equity investment could help expand access in rural communities or support investment in value-based care models.