Private Equity Acquisition of Gastroenterology Practices and Colonoscopy Price and Quality.

Abstract

Importance: Private equity (PE) has rapidly been acquiring physician practices in the US, but a full understanding of its association with health care prices, spending, utilization, and quality is still unknown.

Objective: To examine changes in colonoscopy prices, spending, utilization, and quality associated with PE acquisition of gastroenterology practices.

Design, setting, and participants: This difference-in-differences event study and economic evaluation analyzed data from US gastroenterology practices that were acquired by PE firms between 2015 and 2021. Commercial claims covering more than 50 million enrollees were used to calculate price, spending, utilization, and quality measures from 2012 to 2021. The data were analyzed between April 2024 and September 2024.

Exposures: PE acquisition of gastroenterology practices.

Main outcomes and measures: The main outcomes were price, spending per physician, number of colonoscopies per physician, number of unique patients per physician, and quality (polypectomy detection, incomplete colonoscopies, and 4 adverse event measures: cardiovascular, serious gastroenterology, nonserious gastroenterology, and any adverse event).

Results: Data from more than 1.1 million patients (mean [SD] age, 47.1 [8.4] years; 47.8% male patients) undergoing 1.3 million colonoscopies were analyzed. The sample included 718 851 treated colonoscopies conducted by 1494 physicians among 590 900 patients across 1240 PE-acquired practice sites and 637 990 control colonoscopies conducted by 2550 physicians among 527 380 patients across 2657 independent practice sites. Colonoscopy prices at PE-acquired gastroenterology practices increased by 4.5% (95% CI, 2.5%-6.6%; P < .001) relative to independent gastroenterology practices. The estimated price effect increased to 6.7% (95% CI, 4.2%-9.3%; P < .001) when considering only colonoscopies performed by gastroenterologists in PE-acquired practices with market shares above the 75th percentile (24.4%) in 2021 as treated. Colonoscopy spending per physician increased by 16.0% (95% CI, 8.4%-24.0%; P < .001), while the number of colonoscopies and the number of unique patients per physician increased by 12.1% (95% CI, 5.3%-19.4%; P < .001) and 11.3% (95% CI, 4.4%-18.5%; P < .001), respectively; however, these spending and utilization measures were already increasing prior to PE acquisition. No statistically significant associations were detected for the 6 quality measures analyzed.

Conclusions and relevance: In this economic evaluation, PE acquisition of gastroenterology practices led to higher prices and spending but had no discernible effect on quality. Policymakers may be well advised to monitor PE investment in physician practices given the increase in prices and spending without a commensurate increase in quality.