The overhead of medical practices keep going up, mostly in the form of staff required to successfully bill and collect from insurance.

Insurance plays this game where they tell you that they will send you patients if you take a discount on your fees.

So you do, and they send the patients. And then they don’t want to pay you.

To combat this, physicians hire billers, coders, prior auth etc. All of this extra overhead burden means that a physician needs to see more patients: now they need extra MAs, a bigger office space, more people at reception etc.

Health insurance drives all of these changes. As time goes on, they also reimburse physicians less, causing many private practices to not be profitable anymore.

An unprofitable private practice doesn’t work very well. So that leaves them in vulnerable positions for buyouts.

Hospitals usually love gobbling up anything, but many physicians see selling to them as losing to the hospital, and they can’t stomach it.

Now we have the perfect storm for private equity to come in. Vulnerable practices with doctors at their wits end and in need of cash flow.

“Now we have the perfect storm for private equity to come in. Vulnerable practices with doctors at their wits end and in need of cash flow.”

If you think private equity cares at all about you or your patients you are sorely mistaken. They only care about money. It’s not complicated.

They tell you that they are going to get 5X return in 5 years while “not changing your practice”.

They say they will consolidate your administration which means gut it, along with everything else, while trying to extract the maximum value from your work.

Look at how private equity affects almost any industry long term that it gets into and you will get an idea of what will happen to your practice. They will tell you whatever you want to hear to get the keys, then it’s all over.