Growth of Private Equity and Hospital Consolidation in Primary Care and Price Implications

Consolidation of physician practices by hospitals and private equity (PE) firms has increased rapidly. This trend is of particular importance within primary care. Despite its significance, there is no systematic evidence on the emerging trends in ownership affiliation of primary care physicians (PCPs) and its association with prices paid for physician services.

To describe trends in hospital affiliation and PE affiliation in primary care and examine variation in negotiated prices paid by commercial insurers to hospital-affiliated, PE-affiliated, and independent PCPs.

Data from PitchBook and IQVIA were used to examine hospital and PE affiliation PCPs. PCPs and their affiliations were linked to novel cross-sectional Transparency in Coverage data. A total of 226.6 million negotiated prices were analyzed for evaluation and management office visits (Current Procedural Terminology codes 99202 to 99205 and 99212 to 99215) across 4 national insurers (Aetna, Blue Cross Blue Shield, Cigna, and United Healthcare). Linear regressions were used to examine the association between hospital-affiliated, PE-affiliated, and independent PCPs and cross-sectional prices paid for physician services, with fixed effects for service, state, and insurers. Data were collected from January to June 2024, and data were analyzed from July to October 2024.

The proportion of PCPs that are affiliated with hospitals and PE from 2009 to 2022. Using cross-sectional data from 2022, negotiated prices paid to physicians (physician professional fee) for office visits.

A total of 198 097 PCPs were analyzed. PCPs affiliated with hospitals increased from 25.2% (28 216 of 111 793) in 2009 to 47.9% in 2022 (82 890 of 172 964). Over the same period, 1.5% (2483 of 172 964) of PCPs became affiliated with PE firms. Relative to independent PCPs, negotiated prices for office visits were $14.91 (95% CI, 8.92-27.64) or 10.7% (95% CI, 10.1-11.4) higher for hospital-affiliated PCPs (P < .001) and $9.56 (95% CI, 2.24-14.55) or 7.8% (95% CI, 4.7-10.8) higher for PE-affiliated PCPs (P < .001).

In this cross-sectional study, nearly one-half of all PCPs were affiliated with hospitals, while PE-affiliated PCPs were growing and concentrated in certain regional markets. Relative to PCPs in independent settings, hospital-affiliated PCPs and PE-affiliated PCPs had higher prices for the same services.