Role of private equity in vascular care

Abstract

Objective

Private Equity (PE) investors have been rapidly expanding their presence in the health care industry, including investments in physician practices, asserting that this will benefit patients, physicians, and the health care system.

Methods

We summarize the literature related to PE partnering with physicians, discuss the pros and cons, illustrate the financial implications through a case study, and offer glimpses into the future clouded by governmental pushback.

Results

In a time of increasing regulatory burdens and decreasing reimbursement, PE offers vascular surgeons (VS) options for private practice, and corporate employment. PE contends that this relationship adds value by reducing inefficiencies and waste, and the capital infusion allows procurement of the latest technology and tools for better outcomes. Furthermore, PE management will negotiate with insurance companies to increase reimbursement, manage human resources tasks, billing, and accounting and allow the VS to concentrate on quality patient care. Management will also prepare the practice for new models of care (eg, whether value-based reimbursement or accountable care organizations). PE projects to expand market share and have VS partners share profits, based on a formula, when the entity is later sold to another buyer in the future.

Conclusions

Although there may be some advantages for VS to partner with PE entities, it may not be ideal for all career stages and requires considerable expertise in negotiations and vigilance for unfavorable regulatory actions.