WASHINGTON (September 18) — Medicare expenditures for beneficiaries in private physician practices affiliated with private equity were on average 9.8% lower than for similar patients in hospital-affiliated practices in 2022.
That’s among the key findings of “Medicare Service Use and Expenditures Across Physician Practice Affiliation Models,” a new, first-of-its-kind study of Medicare spending and healthcare utilization across four physician practice models in five specialties conducted by Avalere and commissioned by the American Independent Medical Practice Association.
“Independent physicians have long maintained that we provide high-quality care at lower cost than our physician colleagues who are affiliated with hospitals or vertically integrated insurers,” said Dr. Paul Berggreen, a gastroenterologist and president and board chair of AIMPA. “This study supports our hypothesis — and illustrates how private equity investment can be a force for good in our healthcare system.”
The Avalere report analyzed how physician practice models are changing, how Medicare expenditures vary across practice models, and how measures of healthcare cost and utilization differ across models. The five specialties Avalere examined were cardiology, gastroenterology, medical oncology, orthopedics, and urology.
The report also details how Medicare expenditures, emergency department visits, and inpatient days change after physicians in an unaffiliated practice shift to a hospital, corporate, or private equity affiliation.
Across the five specialties studied, per-beneficiary Medicare expenditures were on average $963 lower for beneficiaries whose physicians moved from an unaffiliated model to a private equity affiliation in the 12 months following the transition.
By contrast, per-beneficiary Medicare expenditures were on average $1,140 higher across the five specialties studied for beneficiaries whose physicians moved from an unaffiliated model to corporate affiliation in the 12 months following the transition.
And for beneficiaries whose physicians moved from an unaffiliated model to a hospital affiliation, per-beneficiary Medicare expenditures across the five specialties were on average $1,327 higher in the 12 months following the transition.
Beneficiaries attributed to hospital-affiliated physicians were associated with the highest total Medicare expenditures, followed by those attributed to corporate-affiliated physicians. Beneficiaries attributed to private equity-affiliated physicians were associated with the lowest total Medicare expenditures of these three affiliation models.
The report also found that, across the five specialties studied, beneficiaries in private equity-affiliated practices had on average 13.5% fewer inpatient days in the hospital and 7.9% fewer visits to the emergency department than similar patients in hospital-affiliated practices.
“This new analysis shows that many hospital systems are more likely driving spending growth in Medicare — not independent medical practices that are supported by private equity-backed management services organizations,” said Dr. Jack Feltz, an OB/GYN and chair of AIMPA’s Federal Health Policy Committee. “When independent practices affiliate with private equity-backed entities, Medicare spending goes down and patients spend less time in the hospital. Those are trends policymakers should encourage.”
“We applaud our hospitals for the incredible work they do and urge all stakeholders, including hospital systems, provider organizations, and policymakers to work together to support these evolving, economically sustainable models,” Feltz said.
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To download a complete version of “Medicare Service Use and Expenditures Across Physician Practice Affiliation Models,” please visit AIMPA’s website.
About the American Independent Medical Practice Association
The American Independent Medical Practice Association is a physician-led national advocacy organization representing approximately 600 independent medical practices that provide quality, affordable health care for more than 24 million patients each year.
These independent practices are critical access points for health care across the country at more than 4,200 medical office locations and over 575 independent ambulatory surgery centers in 44 states and the District of Columbia.
We advocate on behalf of more than 10,000 physicians caring for patients in the fields of Primary Care and Internal Medicine as well as the specialties of Cardiology, Dermatology, Emergency Medicine, Gastroenterology, Hematology/Medical Oncology, Nephrology, Neurosurgery, Ophthalmology, Orthopedic Surgery, Otolaryngology, Radiation Oncology, Urology, Vascular Medicine, and Women’s Health.