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I just think it's too early to have that strong of an opinion, the kinds of opinions that we see in some of the commentaries out there that really, I think, really kind of vilify private equity. You

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Austin, welcome to off the chart, a business of medicine podcast featuring lively and informative conversations with health care experts, opinion leaders and practicing physicians about the challenges facing doctors and medical practices. My name is Austin Latrell. I'm the Assistant Editor of medical economics, and I'd like to thank you for joining us today in today's episode medical economics, senior editor Richard perryton is joined by Jared Rhodes, founder and director of the Center for modern health, and senior lecturer of health policy at the Dartmouth Institute for Health Policy and Clinical Practice. In their conversation, they'll dive into private equity and healthcare, why it's so hard to get a clear picture of its impact, and why the debate around it has become so polarized. They also talk about GMA funding, how incentives shape behavior across healthcare, and what changes might help strengthen physician pipelines and improve care long term. So Jared, thank you for joining us, and now let's get into the episode.

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Thank you for joining us today. It's good to be here. Thanks. Recently, we had published a guest article from yourself actually examining some of the different factors around private equity investment in healthcare, and we're going to hopefully talk a little bit more about that here today. And in the last few years, there has been a lot of discussion and some concern about private equity firms investing in health care. To start, how would you characterize that level of scrutiny? It's well, as I, as I describe in the article that I wrote for you guys, it's been interesting to watch. It is, it is very negative, and I think, and you know, the point I make in the article is, I think it's, it's arguably too negative, potentially unjustified. I mean, I'm glad people are looking at it, glad people are studying it, but I think it's too early to know exactly where, where things are empirically, because there's, there's, there's there's the empirical question of, you know, what exactly is the effects of private equity ownership on, you know, this kind of health care entity, you know, a nursing home, or that kind of health care entity, you know, physician practice or hospitals, right? Those are typically the three big kind of kind of avenues that they that private equity gets involved in. There's the so there's the empirical question of, like, you know, what actually happens to outcomes? Do they go up? Do they go down? What happens to prices and utilization and all these, all these variables that we should be studying. I'm glad that people are studying it. There's also the, almost like a moral kind of case to it, where, where some people, I think, are seeing that, oh no, there's, there's business getting involved. There's, there's a profit mode, mode of getting involved. Some people have an allergy to that right away, I don't, I mean, I'm happy to see businesses getting, you know, being becoming interested. Of course, I want them to be doing it, you know, well, and doing doing it above board, and doing it fairly and so on and so forth. But yes, suffice it to say, the takeaways that you often read, especially with opinion pieces, are definitely lean toward the negative. And I was trying to question the that so far regarding private equity investment in healthcare, what evidence is there, either anecdotally or informal studies, about benefits and drawbacks of that investment? That's that's a, that's a great question. There is a, probably the best single source to look at, if you're just looking for, like, you know what's like, one good paper that grabs it all. There was a systematic review done a couple of years ago by Borsa and colleagues, published in the BMJ, and that does a pretty good job of looking at basically outcomes, quality and prices, I think was the other kind of variable that they were looking at. And they, you know, they noted that, that the on some of the some of the variables, so, for instance, costs and prices, they noted that those tend to go up, but they noted on the on the effects of outcomes and in quality, that things tend to be fairly mixed. There are some, some studies out there that will find, let's say, for instance, in nursing homes. You know, there's a study that found that patient falls went up after nursing after nursing homes were acquired with but by private equity. Okay, so that's something to be to be concerned about, for sure. So there's also things about, like the prices that I mentioned, you know, prices go up ambulatory surgical centers, there was a study on that. And so all of these, all these studies, are kind of summarized and analyzed in that systematic review. But, you know, again, though it's a bit mixed. And the other thing I would say is that the the settings, when, when you look at them, they're, they're very different. And you know, to say something about private equity as the intervention in that, right? Because that's sort of the, you know, what is the intervention that we're studying? Okay? This is private equity acquisition, right? Well, it might play out differently, in in nursing homes versus, you know, anesthesiology practices versus dermatology practices, versus big hospitals versus small hospitals and and what we're seeing is, is, is, I think opinions are getting formulated based on kind of scattered evidence that's getting, you know, Very piecemeal put to put getting put together, very piecemealed and, and what, you know, what I prefer to see is, you know, to get to the bottom of this at, you know, at pick, pick, a particular type of specialty dermatology practices, and have lots of studies based on looking just at that. At that point, maybe we could say something empirically about the effects of it on dermatology studies. And then we need a separate study that looks at it for, you know, large hospitals or small hospitals. I think, I think it's very heterogeneous the the subjects that are getting studied and and the findings, and the findings themselves are sometimes mixed, and so I just, I just think it's too early to have that strong of an opinion, the kinds of opinions that we see in some of the commentaries out there that really, I think really kind of vilify private equity. I think that's a great segue to a point I wanted to ask about, because when you talk about some of those studies, those may lead to some opinions, maybe some generalizations, but that, in turn, can lead to calls for stricter regulation of private equity investment and ownership in healthcare. How would you describe the current level of regulation, and what are your thoughts on an appropriate level of regulation in the market as of right now. Yeah. So the, I think, the the the people who want to critique private equity in in health care, would say there's, there's inadequate regulation. You know, one of the things that they'll point to is that the is that the threshold for review of these deals is pretty high. It's several couple 100 million dollars. And so only, only very, very large deals, private equity deals, get reviewed, and what they would like to see is a lowering of that, or maybe even an elimination of that. It somehow, somehow, and have more of these, more of these deals reviewed by regulators. I guess I'm not a fan of that. And that's just, that's just one potential regulation that that's been proposed. There's, there's been outright bans. Maybe we shouldn't even have it, things like that. Also bans of specific practices like maybe there shouldn't be land sale, land lease sell. Land sale, lease backs. Some of these, like, you know, very kind of sophisticated financial instruments and techniques that that private equity firms use a lot of this is some of this is getting discussed at state level, and it's in a sort of all over the place. It's, there's not a lot of regulation right now, but there's a lot of call for regulation now. I'm not a fan of that, you know, being, being wanting to take a pro market side, you know, I'm not particularly a fan of that. I think, you know, regulation is preventative law. I'm not for a whole lot of that, although I will, I do want to be be clear, though, I'm willing to throw the flag on something that that that would if there's a practice that we can identify that violates a market norm, I'm willing to to to throw the flag on that. And there is 111, thing that I identify in the in the longer paper, which has to do with basically extracting resources if it leads to, if it's if it causes a bankruptcy, well, then you could, there's a particular kind of scenario where you could say, well, that that kind of looks like a fraudulent transfer, and maybe we should not allow that because it's sort of like an abuse of the bankruptcy protection. There's one thing that I would be, you know, willing to take a closer look at, and it's basically for the reason that, as somebody for pro market, I don't want there to be a situation where there's some. In some way that that affirm has maybe craftily identified a way for gains to be privatized while losses socialized and spread apart. I mean if, in my view, if you acquire and a business, and you make great changes, and you do well, and, you know, it grows and it becomes more valuable, and you you then have an exit. You know, the firms will exit after five to seven years. If you make, if you create value there, you should have a profit. That's, that's great. I'm for that. I just don't want to see losses being able to be sort of collectivized. And socialized. It should be a like, like a normal business transfer, which is that if you, if you create value, should you should profit, and if you destroy value, then you should suffer the loss.

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The Hey there. Keith Reynolds here, and welcome to the p2 management minute in just 60 seconds, we deliver proven, real world tactics you can plug into your practice today, whether that means speeding up check in, lifting staff morale or nudging patient satisfaction north. No theory, no fluff, just the kind of guidance that fits between appointments and moves the needle before lunch. But the best ideas don't all come from our newsroom. They come from you got a clever workflow. Hack an employee engagement win or a lesson learned the hard way. I want to feature it. Shoot me an email at kreynolds at mjh, lifesciences.com, with your topic, a quick outline or even a smartphone clip. We'll handle the rest and get your insights in front of your peers nationwide. Let's make every minute count together. Thanks for watching, and I'll see you in the next p2 management minute.

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And I'm curious about your thoughts on scenarios in which private equity, equity investment might actually help certain health care entities, whether they be again, some of those large hospitals, small hospitals, physicians, practices, healthcare business can be tough. And can you envision a scenario where private equity investment could be helpful? Definitely can. Yeah, but those are underrepresented in the literature. I think if you go looking for those. They're hard to find. And here's the thing, I don't think it's because they don't exist. I think it's because maybe a couple of reasons, but the leading one, I think, is that they're the private equity firms. They're, you know, they're, they are short term oriented. This is something that you you do, you make the acquisition, you make some managerial changes, etc, within five to seven years, you're looking to make that exit. And they don't. They don't, typically draw a lot of like to draw a lot of attention to the fact that even a practice or a hospital has been acquired. They don't. They don't advertise that, and so it's hard to identify, you know, the subjects for study. And it's probably also because they're the private equity firms are, they're aware that that there's a negative sort of public opinion about the practice, and they're, I don't know they're, maybe they're not willing to to take on that battle or something. Maybe they just, they figure that the the cards are stacked against them. But I say to the private equity firms out there, if you've got wins, you should, you should. You should make those known, both in this sort of to the general public, as well as to, you know, people who would be interested in researching this and kind of documenting that and being able to, you know, you know, measure it accurately and everything. No, it's an interesting point. And I think I had sent a link to the one organization, aim pub, regarding the Independent Medical Practice Association, and they, you know, they are, they are, I think, both advocates for it and also hopeful to develop a literature that shows, yes, it can be successful in some instances. So that develops, yeah, just to jump in. I mean, I think, there are some, some positive cases. It's just like I said, I think there, there's almost, like a publishing bias against it, but there's, there's certainly, certainly cases where, look, if you have, you know, if you're a hospital and you you know, you're on tougher times and you're struggling financially, you might, that might be your best option to to bring in new capital and right and or if you're in dire need of of upgrading some, you know, critical infrastructure or something like that, that it could be the best way of of taking on that project. In late 2024 you conducted a survey for for a report on the likelihood of a number. Of health policy predictions, and there were 28 propositions relating to health care policy and availability in light of the Make America healthy again initiative under the administration of President Trump. Which of those propositions would you anticipate are most likely to happen? Yeah. So this was a study that we did last year, and we hope to make this actually an annual thing. So if there are, if there are physicians and readers who are hearing this right now and want to be be part of our survey, you can, you can reach out to us, but to the to the point of the question, things that are more likely to happen under, you know, Maha and the Trump administration. So we looked at those like 28 propositions. And these are things like, you know, will the share of the US, health care spending rise above 20% of the GDP? Like right now it's like 17% and the question is, in the next five years, how? What do you think the likelihood is that it'll be over 20% and so that's one example. Let me give one more example. The federal government will reschedule or deschedule medical marijuana, right? Like, that's another kind of like, common policy issue in healthcare. So we asked people, what is the you know over the next five years? What do you think about, about that? Yes or no, what do you think the probability is? So people were assigning a probability to these and and so the things that you know out of that list of 28 you know, policy propositions, the ones that I think stand the, probably the biggest chance of like increasing in likelihood, would probably be the one where we ask about psychedelic assisted therapy. So we say, as a proposition, at least several states will legalize the use of psychedelic assisted therapy. So that's like the use of, like psilocybin and DMA as part of, you know, recognized therapy, which involves some some legalization has to happen there in order for that to to occur. Last December, when we did this prediction survey, you know, averaging out all of the or taking the median of all the probabilities that people gave it, you know. So if you thought it was really likely to happen, maybe you put 90% if you thought it would never be really unlikely to happen, maybe you put 10% averaging all those medians that people reported. The median was 54% on that. So that that was, that was back then, I think that has probably gone up based on the fact that the surgeon general that Trump has nominated or has put into office and selected, he's made common, I mean, he's made positive statements with regard to that. I think the Trump administration, the Trump administration itself, has made some policy, some positive comments on that, so that that's probably gone up the likelihood there, I'll go through a couple more more quickly, substantial rise in direct pay, cash only, ambulatory surgical, surgical centers. So will there be a substantial rise in direct pay and cash only, kind of 50% as of last year? That's probably going up, because I think that's just something that's compatible with, like the MaHA idea of, you know, people maybe being more in charge of their health care dollars. It hasn't. It's not, it's not as if there's been some proposals exactly on that particular thing. But I just think it's, it's a compatible kind of idea with, with maybe the MaHA movement. Another one. I've got, like, a couple more to I can touch on. There will be the Proposition would be a substantial migration of physicians into direct primary care. So DPC practices, if you've heard of that, you know, back in December of last year, people put the average median probability guess on that, or prediction on that, was 30% I think that's probably gone up. I think we're going to see again that that's sort of like an idea that's probably in some way compatible with with, like the MaHA view. So that's that's probably more likely. So then here's one that that actually, you know, some, some movement actually has already happened. Contribution, the idea being, the proposition being contribution limits and other restrictions on HSAs will be lifted with the OB, Bb, the one big, beautiful bill, some some changes on that topic actually did happen. Now they weren't, they weren't, they weren't very they weren't very ambitious, I think the most ambitious proposals, and that ended up getting cut out of the final version, but, but, but there were some, some, some like contribution limit increases there. And so, you know, a year ago, people thought there was only maybe a 37% chance of anything. Significant happening there, but, but it actually did happen. Modestly, but, but it did happen. So that's again, so that's, that's just a few things where we're actually, you know, I think it's probably more likely that things will, will, will change. And we're going to be doing this prediction survey again this fall. And so, yeah, again, like, if you know, if you're hearing this and want to be part of the survey group, you know, you can reach out. We're always looking to add the, you know, get more get more predictions in there. I'm Richard payer and reporting for medical economics. My guest today has been Jared Rhodes, the founder and director of the Center for modern health. It's been a great conversation. Thank you for joining us today. Thanks, Richard. You

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all once again, that was a conversation between medical economics senior editor Richard perchin and Jared Rhodes, founder and director of the Center for modern health and senior lecturer of health policy at the Dartmouth Institute for Health Policy and Clinical Practice. My name is Austin Latrell, 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 so you don't miss the next episode. Be sure to check back on Monday and Thursday mornings for the latest conversations with experts, sharing strategies, stories and solutions for your practice. You can find us by searching off the chart wherever you get your podcasts. Also, if you'd like the best stories that medical economics and physicians practice published delivered straight to your email six days of the week, subscribe to our newsletter at medical economics.com and physicians practice.com off the chart, a business of medicine. Podcast is executive produced by Chris mazzolini and Keith Reynolds and produced by also Montrell. Medical economics and physicians practice are both members of the mjh Life Sciences family. Thank you.