What happens when Wall Street takes over health care? You may not realize it, but private equity firms — which invest money for wealthy individuals, pension funds and endowments — are buying up medical practices and hospitals all over the U.S., expecting a big return on their money.

The growing role of private equity in health care is generating a lot of debate and raising the question: What’s the priority — patient care or making money?

It’s both in the view of Dr. Kenneth Gregg, president and medical director of eyecarecenter, which has 40 locations in North Carolina, including six in Charlotte. A private equity firm purchased eyecarecenter six years ago and quickly added new practices.

“We got leaner, we got meaner, you know,” Gregg said. “They brought in technology and electronic medical records.”

By “leaner,” Gregg means consolidating the human resources, accounting and billing departments of the newly acquired companies. Eyecarecenter got more efficient because of investment in new technology, and the company also placed more emphasis on hiring technicians who make less than eye doctors

“A lot of the work is done by very competent technicians,” Gregg said. “It makes it easier for doctors to see more patients.”

The quality of care remains excellent, Gregg said. It must be to keep patients and attract new ones. The bigger, the better. It has more leverage with insurance companies.

“If you’re an individual practitioner, you basically have a plan you either accept or don’t,” Gregg noted. “We have 650 optometrists, so we get better pricing because of our size.”

report in the American Journal of Ophthalmology found that private equity firms bought 228 practices with more than 2,100 doctors nationwide between 2012 and 2019.

Eyecarecenter’s first private equity backers cashed out last year. In announcing the sale, the company said it grew the parent company, EyeCare Partners, from 63 locations to more than 450 sites in 13 states over five years. It said revenues increased 65% every year.

“(With private equity) you want to buy something and grow it as best you can and then sell it at a profit,” Gregg said. “And that’s what they do.”

It’s All Part Of A Growing Trend

It’s all part of a huge trend in American health care, says Gary Herschman, a New Jersey health care attorney who negotiates such deals. And it’s not just ophthalmology. Investors have been snapping up dermatologists, orthopedists, anesthesiologists, radiologists, emergency room doctors, health information technology and even hospitals

“Whether it be physician services or home health care or medical devices or cannabis, it just keeps growing,” Herschman said.

Private equity firms have invested $921 billion in U.S. health care since 2006, according to the industry trade association the American Investment Council. They own 4% of U.S. hospitals and 11% of nursing homes, the Medicare Payment Advisory Committee says. But it’s hard to know the number of medical practices because unlike publicly traded companies, which have to disclose information to the government, private companies can keep their records private.

There were 12 purchases of large North Carolina practices involving an estimated 300 doctors between 2013 and 2016 alone, according to research published in the Journal of the American Medical Association.

“Everyone says the bubble may burst, but it just doesn’t,” Herschman said. “It just keeps going and going and going.”

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