Yashaswini Singh, PhD, MPH 00:00:00 Physician practices overall, but primary care in particular is facing significant pressures that make it difficult for independent practices to remain independent.

Austin Littrell 00:00:17 Welcome to Off the Chart: A Business of Medicine podcast featuring lively and informative conversations with healthcare experts, opinion leaders and practicing physicians about the challenges facing doctors and medical practices. I'm your host, Austin Littrell. This episode features a conversation between medical economics editorial director Chris Mazzolini and Yashaswini Singh, PhD, MPH, a health care economist and assistant professor at Brown University's School of Public Health. Dr. Singh joins the show to discuss her research article on private equity and hospital consolidation in primary care, talking price trends, patient access, and policy implications.

Chris Mazzolini 00:01:02 Dr. Yashaswini Singh, thank you so much for joining me today.

Yashaswini Singh, PhD, MPH 00:01:06 Thank you for having me.

Chris Mazzolini 00:01:08 So to get started, let's just talk a little bit about the trends that are sort of around the paper that that you co-authored. can you tell me a little bit about the consolidation trend with, you know, hospitals and private equity, you know, buying up primary care practices and other specialty practices? You know, what are some of like the large, like, sort of, macroeconomic trends that are sort of contributing to this.

Yashaswini Singh, PhD, MPH 00:01:35 So I'll start with maybe taking a step back. you know, we know that the United States has a market based healthcare system. And so for healthcare markets to work, which means, you know, for healthcare markets to give us certain levels of prices and access and quality measures that we desire. We really need competition to work because it's a market based system. And the problem in general in the US is that markets don't work very well because we don't have the level or the type of competition you need to deliver those affordable prices or accessible, care delivery patterns. Now, one reason that's the case is, as we show in our paper and others have written, there's been a steady increase in consolidation activity of hospitals and physician practices. It's been a long standing trend for over two decades now. And more recently we've seen the inflow of private capital into healthcare markets. So in the paper we write about private equity firms, it's certainly not the only type of private capital, but it's a pretty remarkable trend how fast PE firms have invested in healthcare.

Yashaswini Singh, PhD, MPH 00:02:39 you know, it's hard to come up with a specific estimate of how much money is invested by these firms in healthcare. But industry estimates say, you know, ballpark of about $1 trillion have been invested in the last decade by PE firms, in a variety of settings where care is delivered. Right. So from primary care and fertility care really from cradle to grave, all the way to hospice and home health, long term care, assisted living facilities and so on. So in our paper, we take a step back and just look at primary care. You know, given the importance of accessible, high quality, timely primary care on preventing chronic conditions and delivering population health outcomes, it's really an essential part of our health system. So in our paper we took a look at primary care to understand one. What are some of these forces in consolidation that shape the way primary care is organized and practiced by physicians in the US? And then two, what do these trends mean for the affordability of care and the prices that commercial insurers pay for health care, which ultimately trickles down to the the prices that patients and consumers like you and I pay for health care?

Chris Mazzolini 00:03:48 So, yeah, let's go into your paper a bit.

Chris Mazzolini 00:03:51 you and some coauthors publish it in, in Jama. What is it? Is it network? Forum I believe is what it is.

Yashaswini Singh, PhD, MPH 00:03:59 Is Jama Health Forum.

Chris Mazzolini 00:04:00 A.

Yashaswini Singh, PhD, MPH 00:04:00 Health policy arm of the Jama journals?

Chris Mazzolini 00:04:04 Yeah. So you publish it in January and, talk a little bit about your paper in terms of your methodology a little bit and what you found.

Yashaswini Singh, PhD, MPH 00:04:13 Absolutely. So in our paper, our objective was twofold. So first we set out to document changes in employment, status of primary care physicians in the US over about a 13 year period from 2009 to 2022. to do this, we relied on several unique data sets that helped us identify hospital affiliation of primary care doctors and also the affiliation of these doctors with private equity firms. You know, I must emphasize that understanding trends in employment is really a hard and difficult task to do, because there are no systematic reporting or disclosure requirements for these types of affiliations. And so our first task was, you know, let's shed some light on what the evolution of primary care physician affiliation and employment looks like.

Yashaswini Singh, PhD, MPH 00:05:01 and then our second objective was to examine how these differing trends in organization of primary care physicians ultimately influence the cost of care. And so for that, we relied on this really neat data set that's only recently become available to researchers. the transparency and coverage data set came about by the implementation of the Federal Transparency and Coverage Rules. you know, in a nutshell, the rules essentially required insurers to disclose their negotiated prices with a variety of health care providers. And so these are not chargemaster prices or made up prices. These are actual prices that insurers have negotiated with primary care doctors across affiliation types. Right. And so, we found again, two sort of big picture findings. first we found that over this 13 year span, primary care is really undergone a corporate transformation, right? We've seen from 2009 to 2022 the share of PCBs that have been hospital affiliated more than doubled, with over half of all primary care physicians as of 2022. belonging or practicing in hospital affiliated settings. relatedly, we found that a more recent trends from about the onset of the Covid 19 pandemic.

Yashaswini Singh, PhD, MPH 00:06:18 We've seen that private equity firms have been slowly expanding their footprint in primary care as well. And nationally, about 2% of primary care physicians are currently affiliated with PE firms, although there's substantial geographic variation. So some states are more affected than others. And then on the pricing side, you know, using the tick data, we found that these trends in PCP employment and affiliation have significant implications for the cost of care. we found hospital affiliated PCBs have prices that are about 11% higher than prices that independent primary care physicians can get, and PE affiliated PCP set prices that are about 8% higher. So if you put those two together, these amount in payments in excess of over $1 billion that go to hospitals relative to independent primary care physicians. And so then, you know, a natural question to ask is, is that increase in price going to improvements in the delivery of care or retention of the workforce? You know, we know primary care has been, you know, affected by clinician burnout and workforce shortages. And so these high prices are going to better the experiences of healthcare workers or patients.

Yashaswini Singh, PhD, MPH 00:07:29 It's not a bad thing. But we know from other settings that unfortunately, the prices or the high prices that result from consolidation don't tend to materialize in these benefits for patients or workers. And so, you know, this is why we think it's an area for policymakers and clinicians to pay more attention to.

Chris Mazzolini 00:07:48 So what? You know, what do we know? What accounts for the price differences? Is this a scale thing? So, like, you have a larger organization negotiating with a larger payer, that they have more leverage to get those higher prices compared to, you know, a smaller practice that maybe doesn't have the negotiation. You know, they don't have the army of attorneys and all that kind of stuff to negotiate. Is that is that what we're talking about? Are there any other reasons why those prices might be sort of different?

Yashaswini Singh, PhD, MPH 00:08:14 Yeah, that's a great question. And so our study design, you know, we use cross-sectional data for prices. That transparency and coverage data just gives you negotiated prices at a snapshot in time.

Yashaswini Singh, PhD, MPH 00:08:25 And so what that means is we can't really do a longitudinal analysis of the specific causes that might lead to higher prices at hospital affiliated or P affiliated settings. But we can make some educated guesses, right. And so there's a longstanding literature in health economics and health policy that tells us that consolidation increases the bargaining leverage that healthcare providers might bring in negotiations with commercial payers. And so what we're seeing in our study is certainly representative of that phenomenon. And now, relatedly, because it's cross-sectional, there are some other things that we can't rule out. And one important thing is, you know, on the private equity side, there's some, preliminary evidence that suggests that when PE firms initially purchase a physician practice, the practices that they select to invest in tend to be ones that are larger and might enjoy a steady stream of patients, have great brand recognition and so on. And so they might just already be commanding higher prices due to their kind of market presence. And so we can't rule that out. But certainly, you know, it's a confluence of factors that will be important to unpack in future work.

Speaker 4 00:09:42 Say, Keith, this is all well and good, but what if someone is looking for more clinical information? Oh.

Keith Reynolds 00:09:48 Then they want to check out our sister site, Patient Care Online. The leading clinical resource for primary care physicians. Again, that's patient care online.com.

Chris Mazzolini 00:10:02 One thing that you mentioned in the paper was that, you know, we're talking about hospitals sort of gobbling up in a regional area and private equity gobbling up in another region. And it sounded like that, that they were sort of staking out their own territory, that this wasn't necessarily happening in the same regions. Is that correct? And so can you talk through sort of the the regional geographic disparities that are going on here?

Yashaswini Singh, PhD, MPH 00:10:27 Absolutely. I'm so glad you brought that up. So I'll start with the private equity piece. So one way that private equity firms, drive profitability for their acquired practices is by embarking on what is called a platform and add on model of consolidation. What that means is PE firms will initially start out with an acquisition of a platform practice.

Yashaswini Singh, PhD, MPH 00:10:51 Now this is the practice I was just alluding to. You know, it could be a practice with a great geographic footprint, a steady stream of loyal patients, great brand recognition and so on. And then the PE firm will in general try to expand market share by rolling up smaller practices under the same parent entity. Now, if we believe that this is the model that PE firms use, necessary input in PE firms ability to complete this consolidation strategy is the availability of enough independent physicians who would agree to partner with them. And in general, we see that regions with a higher share of hospital affiliated physicians tend not to be where we see a higher share PE affiliated physicians. Again, you know, by definition, a PE firm will want the availability of many independent physicians, which would be hard to come by in regions where, you know, hospitals are already dominating the local labor market for primary care physicians.

Chris Mazzolini 00:11:48 Do we? Because obviously, like with this kind of consolidation, you mentioned, this is obviously been going on for a couple decades.

Chris Mazzolini 00:11:55 it seems to me that sort of hospitals were the first place was going in. Private equity has been sort of a newer player onto the scene, for starters. Is that accurate? And also like, do we see like, is this a situation where private equity is like accelerating. And they're they're we're seeing more private equity activity than hospital at this point. Like can you just kind of talk about the dynamic there.

Yashaswini Singh, PhD, MPH 00:12:16 Yeah, absolutely. That's a good question. And again, you know, a lot of our understanding of these trends is deterred by lack of data, lack of data on consolidation, but also lack of data on ownership transparency. And so, you know, researchers have made some progress being creative and linking together different types of really expensive, really proprietary data sources. And so I'll just kind of start with that caveat that, you know, our understanding is imperfect at present. But in general, I can say that certainly hospital acquisitions of physician practices has been the dominant trend in the organization of physician practices for, you know, over a decade or two decades.

Yashaswini Singh, PhD, MPH 00:12:59 At this point, it's hard to believe it's 20, 25 already. and then when we look at physician practices, that certainly has been a much more recent. And so p attraction to physician practices is something that started around 2015, 2016. You know, the initial emphasis on private equity firms investing in physician practices, was oriented towards hospital based specialties, emergency medicine, anesthesia and so on. and then sort of around 2018, 2019, the emphasis shifted to procedural specialties like dermatology and gastroenterology, where really the emphasis on revenue generation was tied to the emphasis on doing a lot of procedures, you know, in settings that are largely fee for service, in a fee for service environment. And then more recently, kind of, you know, overlapping with the time period in our study around the onset of the pandemic, we've seen PE firms shift their focus from these procedural specialties to specialties like primary care and cardiology and behavioral health, where the emphasis is a little different. They're not as many procedures to be done.

Yashaswini Singh, PhD, MPH 00:14:05 I mean, the emphasis from the clinician perspective is on managing kind of the overall, health of of the patient base and focusing on value based payment incentives rather than fee for service incentives. And so it's interesting to see how these, almost concurrent trends will evolve in the future. Up until now. Hospital consolidation has been the dominant trend. But, you know, we don't really see private equity activity slowing down anytime soon, so it'll be interesting to monitor.

Keith Reynolds 00:14:37 Oh, you say you're a practice leader or administrator. We've got just the thing. Our sister site, Physician's Practice. Your one stop shop for all the expert tips and tricks that will get your practice really humming again. That's physician's practice.

Chris Mazzolini 00:14:54 Where do you see the research going there. Like you had mentioned that. there's obviously more work to be done in this area. What is sort of the next horizons for for research in this area?

Yashaswini Singh, PhD, MPH 00:15:05 Absolutely. So I see that, question is being addressed by two sort of related but distinct, research priorities.

Yashaswini Singh, PhD, MPH 00:15:14 Right. One is kind of related to our study. At present, we don't really have a sense of whether one type of consolidation is better or worse than the other. And so in our paper, we look at the price implications of these trends using cross-sectional data. But that's not enough for us to know whether, p is causing outcomes that are different than hospital consolidation. And so first, I think, you know, understanding kind of the pros and cons of different consolidation strategies, not just on the cost of care, but also what it means for patient well-being and most importantly, the clinical workforce. You know, that's a lens that's often omitted from, work on consolidation, but increasingly important to consider. I think that will be an important direction for future research. And then the other is is sort of related but distinct. And it has to do with PPS exit strategies. And so, you know, we must remember that by definition, PE firms must exit investments to generate returns for their investors. And so understanding what does exit look like? Does it look like sale of an asset from one firm to another PE firm, or sale of an asset from a PE firm to a health insurance subsidiary or some other type of corporate entity in healthcare? Those are questions that are unanswered at present, but understanding the answer to that will help us determine if what we see as private equity's effects in healthcare are temporary in nature.

Yashaswini Singh, PhD, MPH 00:16:39 If they only lasts as long as the pee firm is involved, or if they're kind of more long term and persist even after the P firm has kind of moved on to its next investment target.

Chris Mazzolini 00:16:49 So our listeners and our audience and medical economics are the primary care physicians. And so for those physicians, you know, how should they, you know, based on your research and sort of, you know, your knowledge of the market, how should they perceive these changes in, you know, what what their careers are going to be like? You know, sort of, you know, the days of, like, hanging out a shingle and being, you know, the doctor in the small town is sort of over. Right. So, like, you know what? Like, what does this mean for the career of a primary care physician? This in the in 2025.

Yashaswini Singh, PhD, MPH 00:17:23 So that's such a good question right. It's also a really hard one to answer, but it's the right question to ask because I think it's important to acknowledge that, primary care in particular physician practices overall, but primary care in particular, is facing significant pressures that make it difficult for independent practices to remain independent.

Yashaswini Singh, PhD, MPH 00:17:43 So I want to acknowledge that, at the outset, at the same time, I think it's also important to realize that some of these purported benefits that are promised by either hospitals or PE firms, you know, as sort of a lifeline to independent primary care physicians. Some of those benefits do not seem to materialize in the data. The one consistent evidence we know from the research side is, consolidation trends lead to higher prices. And now, you know, I said at the beginning, one important follow up question we must all ask is, do these higher prices than benefit patients or physicians working at those practices? And increasingly, the research says that is not the case. to the contrary, you know, we've heard anecdotally a lot of these employment arrangements are often accompanied by non-compete agreements and non-disclosure agreements that can make it harder for positions to leave undesirable employment conditions. And so it's a balancing act. But certainly, you know, from a policy lens as well. The key question is how do we make it easier for independent practices to remain independent and at the same time, access capital and financial resources that make it possible to practice in the increasingly complicated business environment we have these days.

Yashaswini Singh, PhD, MPH 00:18:59 But at the same time, you know, have guardrails for patients and healthcare workers to make sure that the worst undesirable effects are in check.

Chris Mazzolini 00:19:09 Last question we haven't discussed that you think is important to mention.

Yashaswini Singh, PhD, MPH 00:19:15 That's a good question. So I'll just add, you know, in our study, we look at two types of trends that are emerging as dominant forms of primary care organization hospital affiliation and private equity affiliation. But increasingly, you know, the corporate transformation of primary care includes other types of entities. So, you know, there are a couple of notable entities that are missing from our study that will be important to monitor going forward. You know, we don't have visibility into payor affiliated entities or concierge medicine or venture capital backed primary care. You know, these are all evolving styles of primary care practices. And so I'm hopeful that with better data in the future, we can shed some light on this going forward.

Chris Mazzolini 00:19:56 Doctor Yasha Singh, thank you so much for joining me today and sharing your insights, which was very, very informative.

Chris Mazzolini 00:20:03 Thank you.

Yashaswini Singh, PhD, MPH 00:20:04 Thanks for having me.

Speaker 6 00:20:05 Thank you. Thank you.

Austin Littrell 00:20:16 Again, that was medical economics editorial director Chris Mazzolini and Yashaswini Singh, a health care economist and assistant professor at Brown University's School of Public Health. My name is Austin Littrell, and on behalf of the whole Medical Economics and Physicians Practice teams, I'd like to thank you for listening to the show and ask that you please subscribe on Apple Podcasts and Spotify. Also, if you'd like the best stories that Medical Economics and physicians practice publish delivered straight to your email six days of the week, subscribe to our newsletters at medicaleconomics.com and physicianspractice.com. And one more thing be sure to check out Medical Economics Pulse, a quick hitting news podcast that offers concise updates on the most important developments affecting your practice, your bottom line, and the broader health care landscape delivered by the editorial team at Medical Economics. Off the chart, The Business of Medicine podcast is executive produced by Chris Mazzolini and produced by Keith Reynolds and Austin Littrell. Medical Economics, Physicians Practice and Patient Care Online are all members of the MJH Life Sciences family.

Austin Littrell 00:21:15 Thank you.