The American Medical Association, the nationâs most prominent doctors group, will study the effect that growing investments by corporate parties â including venture-capital and private-equity firms â have on physician practices, reflecting a growing concern among doctors regarding the trend.
The study will look at a variety of issues, including how widespread the trend is, how much has been invested and the effect it has had on how doctors practice, according to documents obtained by MarketWatch.
Powerful consolidating forces have been reshaping the health-care industry, and medical practices have become an increasingly attractive target for private-equity and venture-capital firms, hospital systems and health-insurance companies.
But doctors, especially those in specialties most affected by the trend, fear that the shift is having serious consequences, and especially that investorsâ focus on profit is coming at the expense of patient care.
Read: Medical practices are a hot investment â what does that mean for profit vs. patient care?
Though industry groups like the American Academy of Dermatology have been pressured to address the controversy, the latest AMA development shows that these concerns have reached the field more broadly, and at its highest levels.
âProfit is important, but we want to make sure whatâs done in the patientâs best interest is decided by a physician and not others who donât understand other nuances [of patient care],â said Dr. Sherif Zaafran, an alternate delegate who voted in favor of the resolution. âAs this is becoming much more prevalent, what are safeguards we can put in place to make sure physician autonomy and clinical decision-making processes with regard to their patients are safeguarded?â
Though the study does speak to worries among physicians, âI donât think thereâs an attempt here to label corporate investment as good or bad,â he said. Zaafran, a practicing anesthesiologist, is also president of the Southwest division of U.S. Anesthesia Partners, which is backed by the private-equity and venture-capital firms Welsh, Carson, Anderson & Stowe; Berkshire Partners; and GIC.
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A resolution spelling out the move got the go-ahead on June 11, during an annual meeting in Chicago of the AMAâs policy-making body, the House of Delegates, though the decision has not been publicized.
The study will also look at the effects that these companies have on the use of nonphysicians like nurse practitioners and physician assistants, who increasingly now take on roles that doctors once did. Other topics of interest include the impact on patient access, whether the ownership affects how financially viable practices are in the long term and how well independent practices can compete amid the sectorâs widespread consolidation.
The AMA is said to intend to share results at its next annual meeting, in 2019.
An earlier draft of the resolution focused on studying the role of venture-capital and private-equity firms, and requested the study report back earlier, or at a 2018 interim meeting.
MarketWatch reported earlier this month that equity and venture groups increasingly see medical practices as a lucrative investment, buying them up, rapidly expanding them and then, often, re-selling them. Critics worry about a bubble, and that lesser-trained providers are encouraged to carry out tasks that they arenât well-trained for.
However, based on AMA discussions, the studyâs focus was broadened to include other types of corporate ownership, and the timeline was extended as a result.
Zaafran, who along with other members of the Texas delegation pushed to broaden the resolution, said that they thought the change would capture increasingly blurry lines between different corporate investors. The day the resolution was voted on, for example, private-equity firm KKR & Co. revealed an agreement to buy hospital services provider Envision Healthcare Corp.
See: KKR nears $5.5 billion deal to acquire Envision Healthcare
Not everyone agreed, though. Notably, a committee discussing the resolution âheard substantial testimony regarding the need to specifically study venture capital/private equity firm acquisitions of physician practices and the impact of these acquisitions on practices and patients,â according to its report.
By broadening the discussion, âI think itâs a harder question to report, to be honest,â said Dr. Brian Gavitt, a delegate who was also at the June 11 vote. A practicing surgeon, Gavitt is also an assistant professor at University of Cincinnati Medical Center, and said these issues donât particularly affect him.
Studying a topic in this way is a relatively frequent tactic for the AMA as it determines whether a policy recommendation might be needed, he said.
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Interference by an investment firm in how a medical practice is run, or the âcorporate practice of medicine,â is, in fact, illegal in many states. But companies typically get around that stricture by buying or investing in practice management or support companies affiliated with physician practices.