Private equity acquisitions drive high physician turnover rates: study
WASHINGTON, D.C., UNITED STATES — Private equity (PE) acquisitions of physician practices were assessed as having a high impact on the hiring and turnover rates of physicians in a recent study published in the March issue of the Health Affairs journal.
The study reviewed 200 ophthalmology practices with 1,980 clinicians that PE firms acquired between 2014 and 2021 and compared the changes in the workforce with those of other similar unacquired practices.
Dramatic growth and turnover following acquisition
Ophthalmology practices that were acquired by PE had 46.8% higher employment rates among clinicians in the first three years than the control groups. This growth was seen in the hiring of ophthalmologists (30.7% increase) and optometrists (36.2% increase).
Nevertheless, there were some worrying findings in terms of turnover. The share of physicians leaving the PE-acquired practices rose by 265% compared to unacquired practices. The physicians who left were older (40-60 years), and the researchers argued that younger doctors were less likely to be partner-owners of their practice at the time of acquisition, “which may have limited their financial benefit from the acquisition itself.”
Policy implications and future research
As PE is increasing its presence in the healthcare industry, policymakers need to pay attention to the findings of the study. The writers said, “As PE expands its footprint, policy makers should monitor the long-term implications of PE ownership on physician employment and turnover to mitigate potential undesirable effects on patient health.”
The Health Affairs study was published days after a JAMA Health Forum analysis, which established that physicians working in PE exits were 16.5 percent more likely to practice elsewhere within two years. The authors of that study argued that “the aggregate long-term effect of PE investment is to reduce physician retention.”
The researchers identified several possible causes of the high rates of turnover, including “altered performance incentives, practice conditions, physician autonomy, job satisfaction, and burnout.” The authors agreed that there is a need for more work to be done to understand these factors and how they affect the clinical workforce composition.
This trend occurs against the background of a reduction in the number of independent physician practices, with a recent PAI-Avalere report showing that by early 2024, 77.6% of doctors will be employed by hospitals or other corporate entities.
