A groundbreaking new study has uncovered a surprising trend in healthcare: physician practices tied to private equity firms are driving down Medicare costs and keeping patients out of the hospital more than their hospital-affiliated counterparts.
According to the report, “Medicare Service Use and Expenditures Across Physician Practice Affiliation Models,” Medicare beneficiaries seen by private equity-affiliated doctors saw their healthcare costs drop by nearly 10% on average in 2022 compared to patients treated by hospital-affiliated physicians. This study, commissioned by the American Independent Medical Practice Association (AIMPA), looked at data across five major medical specialties—cardiology, gastroenterology, medical oncology, orthopedics, and urology.
“This confirms what independent physicians have believed for a long time,” said Dr. Paul Berggreen, president and board chair of AIMPA. “We’re proving that private equity-backed practices can offer high-quality care while reducing costs. It’s a win for both patients and the healthcare system.”
The study’s findings are eye-opening. On average, Medicare spent $963 less per beneficiary for patients whose doctors transitioned from independent practices to private equity-affiliated ones. In stark contrast, when doctors moved to hospital or corporate-affiliated practices, Medicare expenditures skyrocketed—up to $1,327 more per patient for hospital-affiliated practices.
The findings don’t stop at cost savings. Patients seen by private equity-backed practices also spent less time in hospitals, with 13.5% fewer inpatient days and 7.9% fewer emergency department visits compared to those treated by hospital-affiliated practices. These results suggest private equity involvement isn’t just about dollars—it’s improving care by keeping people healthier and out of the hospital.
Dr. Jack Feltz, an OB/GYN and chair of AIMPA’s Federal Health Policy Committee, sees this as a critical moment for healthcare policy. “This data shows hospitals may be driving Medicare spending growth, not independent practices supported by private equity. Policymakers should take note—encouraging this model could be the key to both reducing costs and improving patient outcomes.”
The report offers a fresh perspective on private equity’s role in healthcare, which has often been met with skepticism. However, with Medicare savings and fewer hospitalizations to back up its claims, the private equity-backed model could be a game changer.
As healthcare continues to evolve, this study highlights the potential benefits of private equity support for independent physician practices. For patients and policymakers alike, this could signal a shift in how healthcare is delivered and managed, emphasizing value over volume.
For the full report, visit AIMPA’s website and dive deeper into how these evolving practice models are shaping the future of healthcare.