Sale of Private Equity-Owned Physician Practices and Physician Turnover

Private equity (PE) acquisition of physician practices is increasing, with owners targeting sales, or exits, in 3 to 7 years. Little is known about the association of exit with physician retention and subsequent employment.

To examine whether PE exit of physician practices is associated with changes in physician retention and subsequent choice of practice size.

Using data from the Centers for Medicare & Medicaid Services Doctors and Clinicians National Downloadable File from December 31, 2014, to December 31, 2020, this case-control study compared employment changes for physicians at PE-exiting practices sold between January 1, 2016, and December 31, 2018 (treatment group), with employment changes for matched control physicians in practices not sold by PE owners but with the same specialty, hospital referral region, practice size, and time period. Physicians billing fee-for-service Medicare during the study period were eligible for inclusion. A difference-in-differences design was used to compare retention between the treatment and control groups in the 2 years before and after exit using a multinomial logit model that adjusted for physician decade of graduation. Data were analyzed from August 1, 2023, to November 9, 2024.

Exit of a PE-owned physician practice.

Physician employment outcomes included staying (continuing to bill through the initial practice), working elsewhere (only billing through other practices), and retirement (no longer billing). Whether a physician left to a join large (>120-physician) practice was also evaluated.

Of the 1215 physicians included in the analysis (405 at 70 PE-exiting practices and 810 matched controls; 814 [67.0%] male and 401 (33.0%) were female. Physicians in all PE-exiting practices were typically in practices of more than 20 physicians (471 [65.2%]) and often in the South (373 [51.7%]). Dermatology was the leading specialty (216 [29.9%]), followed by family medicine (94 [13.0%]). Physicians employed in PE-exiting practices were 16.5 (95% CI, 10.6-22.3) percentage points less likely to continue working in that practice 2 years after exit compared with matched controls. There was no significant change in the probability of retirement (0 percentage points; 95% CI, -4.1 to 4.0). Physicians in PE-exiting practices were 10.1 (95% CI, 6.5 to 13.7) percentage points likelier than matched controls to join a large practice of more than 120 physicians.

In this case-control study, PE exit was followed by an increase in physician turnover and subsequent employment at a large (>120-physician) practice relative to matched controls, notwithstanding similar turnover rates between these physicians and matched controls prior to exit. The increase in physician turnover and consolidation following PE exits has important implications for patients, physicians, investors, and physician markets.