The Rise of Private Equity in Gastroenterology Practices

Private equity (PE) investment in gastroenterology practices has significantly increased over the past several years. Because PE firms are prevented legally from owning a medical practice in many states, they usually form a management services organization to oversee all nonclinical aspects of the practice, leaving all clinical functions to the physician owners. Gastroenterology practices have become attractive investments to PE firms because of the willingness of gastroenterologists to join a PE-backed practice and the potential to earn profits through consolidating the market. Research has started to examine the effects of PE-backed practices on patients and on the gastroenterology specialty specifically. Questions remain regarding the benefits for physicians. This article examines PE investment in gastroenterology practices and how this may impact the specialty in the future.