Private Equity Acquisitions in Ophthalmology Practices Lead to Increased Physician Turnover and Rapid Growth

A recent study published in the March issue of Health Affairs has shed light on the significant impact of private equity (PE) acquisitions on ophthalmology practices. The research, which analyzed data from 2014 to 2021, reveals a notable increase in both clinician hiring and turnover rates following PE acquisitions.

Rapid Growth and Workforce Changes

The study, focusing on 200 ophthalmology practices encompassing 1,980 clinicians, found that PE-acquired practices experienced a substantial 46.8% growth in clinician headcount within three years post-acquisition. This growth was attributed to the addition of both ophthalmologists (30.7%) and optometrists (36.2%).

Notably, the research uncovered elevated clinician replacement ratios in acquired practices, indicating higher hiring rates compared to non-acquired counterparts. The most striking finding was a 265% increase in the year-to-year physician turnover rate for PE-acquired practices relative to control groups.

Demographic Shifts and Financial Implications

The study also revealed interesting demographic trends among departing practitioners. Physicians aged 40 to 60 were more likely to leave PE-acquired practices. Researchers noted that younger cohorts, who were less likely to be partner-owners at the time of acquisition, may have had limited financial benefits from the transaction.

In contrast, partner-owners typically receive substantial financial payouts during acquisitions, potentially influencing retirement decisions. The researchers suggest that altered performance incentives, changes in practice conditions, physician autonomy, job satisfaction, and burnout may contribute to the observed workforce shifts.

Long-term Implications and Policy Considerations

As private equity continues to expand its presence in the healthcare sector, the study's authors emphasize the need for policymakers to monitor the long-term effects of PE ownership on physician employment and turnover. Their goal is to mitigate potential adverse impacts on patient health.

This research aligns with a recent JAMA Health Forum study, which found that physicians working under PE exits were 16.5 percentage points more likely to work elsewhere within two years and 10.1 percentage points more likely to join large practices.

The findings underscore the importance of understanding how PE investments and subsequent exits impact physicians, regulators, investors, and patients. As the healthcare landscape continues to evolve, these studies provide crucial insights into the changing dynamics of physician practices and the potential consequences for the broader healthcare ecosystem.