Geographic Trends Emerge For Private Equity Firms Acquiring Physician Offices

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The Northeast, Florida and Arizona are the nation’s hotspots for private equity (PE) firms to acquire physician practices across six specialties.

A new study examined geographic trends of private equity acquisitions of physician offices specializing in dermatology, gastroenterology, ophthalmology, obstetrics/gynecology (OB/GYN), orthopedics, and urology. Among those, less than 10% of physicians worked in PE-acquired practices, as of 2019, based on figures from the IQVIA OneKey database, compiled with the American Medical Association Physician Masterfile and other data.

Health care industry analysts have been examining effects, good and bad, of PE investments in physician practices. The study did not attach financial values to PE transactions and did not examine consequences for patient care, but it did refer to potential price hikes if market competition dries up.

“Because some PE acquisitions consolidate physician practices into larger organizations, geographic concentration of PE penetration may be associated with reduced physician competition, which could lead to increased prices,” the study said. “If PE acquisitions induce practice consolidation among remaining independent practices with financial pressures, this spillover effect may further hinder competition, underscoring the importance of monitoring practice consolidation and the ownership and regulatory environment of acquisitions.”

The research letter, “Geographic Variation in Private Equity Penetration Across Select Office-Based Physician Specialties in the U.S.,” was published earlier this year in JAMA Health Forum.

How Many And Where

The study found in 2019, there were 97,094 physicians in the six specialties and 4,738, or 4.9%, worked in PE-acquired practices, the study said. PE penetration was:

• 7.5% for dermatology, or 851 of 11,324 physicians
• 7.4% for gastroenterology, or 845 of 11,484 physicians
• 6.5% for urology, or 492 of 7,609 physicians
• 5.1% for ophthalmology, or 741 of 14,493 physicians
• 4.7% for OB/GYN, or 1,325 of 28,493 physicians
• 1.9% for orthopedics, or 460 of 23,891 physicians

Based on state and hospital referral region data, PE penetration was greatest in the Northeast at 6.8%, or 1,270 of 18,708 physicians, and lowest in the Midwest at 3.8%, or 638 of 16,613 physicians. PE penetration was highest in:

• Washington D.C., 18.2 %, or 188 of 1,031 physicians
• Arizona, 17.5%, or 326 of 1,866 physicians
• New Jersey, 13.6%, or 464 of 3,49 physicians
• Maryland, 13.1%, or 195 of 1,488 physicians
• Connecticut, 12.6%, or 212 of 1,688 physicians
• Florida, 10.8%, or 741 of 6,852 physicians

 

Source: Medical Economics

Big Sky Medical Joins With GFH On $200M Medical Office Deal Across Seven States

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GFH, a leading institutional investor based in Bahrain with a global portfolio of investments, has a $200 million deal with Dallas-based Big Sky Medical to acquire 13 outpatient medical office buildings across seven states.

“Big Sky “complements our own global investment capabilities with deep knowledge of the US healthcare market,” Nael Mustafa Chief Investment Officer, Real Estate of GFH said in prepared remarks.

Earlier this year, Newmark assisted in arranging the joint venture, which was seeded by a $400+ million medical office portfolio aggregated by Big Sky during the past 12 months. Newmark led the portfolio financing.

 “The transaction “is a good indication that the market remains quite competitive for well-curated healthcare portfolios,” Newmark senior managing director John Nero said in a prepared statement.

Nero, along with executive managing director Ben Appel, senior managing directors Jay Miele and Michael Greeley of Newmark’s Healthcare Capital Markets group and vice chairman Alex Foshay and executive managing director Joseph Morris of Newmark’s International Capital Markets group, acted as sole financial advisors to the joint venture.

The transaction includes a component for future acquisition financing, which will allow the venture to continue its acquisition strategy under similar terms, according to a release.

 

Source: GlobeSt.

Vanderbilt University Medical Center In Nashville Announces $500 Million Expansion With Plans For A 15-Story Tower On Hospital Campus

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Meteoric growth in Middle Tennessee is spurring plans for Vanderbilt University Medical Center’s newly announced $500 million expansion, which will put a new 15-story tower on the Nashville hospital campus.

Rendering of VUMC Tower (IMAGE CREDIT: VUMC)

VUMC CEO Jeff Balser tells Axios the region’s population boom coincided with an explosion of patient needs. Hospital capacity hovers above 90% most of the time.

“The demand for Vanderbilt’s services is at an all-time high,” Balser says. “In order to meet the demands of the region, we just need a lot more space.”

Why It Matters: VUMC is a top regional resource for complex medical care, including organ transplants and complicated cancer surgeries.

“The new tower will increase capacity for those kinds of specialized procedures,” Balser says.

  • It will go alongside 21st Avenue South and will become the hospital’s de facto front door.

By The Numbers: The tower will add about 180 inpatient beds and 10 operating rooms, along with radiology services, specialty clinics and office space. The project also includes an addition of three floors and 600 spaces to the central garage.

State Of Play: Construction is expected to begin this summer. Officials say it will take four-and-a-half years to complete.

Flashback: Hospital officials began planning for gradual expansion in the years before the pandemic, transitioning three floors in the Medical Center East building from clinic space to patient beds. When COVID-19 hit, these were quickly designated as ICU beds for pandemic patients.

“After COVID hospitalizations ticked down, demand in other areas increased to fill the void, leading officials to plot out a more ambitious expansion plan,” says Balser.

Zoom Out: Balser says the hospital project won’t slow VUMC’s growth in other sectors. VUMC’s network of regional hospitals and clinics is still expanding, too.

Talks remain underway to lease a portion of the Hickory Hollow Mall space for an Antioch health care site.

“VUMC remains very much engaged with the mayor’s team on that project,” says Balser.

 

Source: AXIOS Nashville