Private Equity In Dermatology: Effect On Price, Utilization, And Spending

Area of Science:

• Health economics
• Dermatology practice management
• Healthcare market analysis

Background:

• Private equity (PE) firms are increasingly acquiring physician practices, with a notable trend in dermatology.
• Understanding the financial and operational impacts of these acquisitions is crucial for stakeholders.

Purpose of the Study:

• To estimate the prevalence of private equity acquisitions in dermatology.
• To analyze the impact of these acquisitions on dermatologist prices, patient volume, spending, and utilization.

Main Methods:

• Analysis of commercial claims data from the Health Care Cost Institute (2012-2017).
• Utilized a difference-in-differences design within an event study framework.
• Compared practices acquired by private equity with those never acquired.

Main Results:

• By 2017, 11% of dermatologists practiced in PE-owned settings.
• PE practices employed more advanced practitioners per dermatologist (4:10 vs. 3:10).
• Patient volume increased by 4.7%-17.0% post-acquisition; routine visit prices rose 3-5% at 1.5 years.

Conclusions:

• Private equity acquisition significantly impacts practice staffing and patient volume in dermatology.
• While prices for routine visits increased, overall spending and utilization of specific procedures remained largely unchanged.
• The evolving landscape of private equity in dermatology warrants continued monitoring by policymakers and practice leaders.