Private equity’s “voracious” appetite for acquiring radiology groups has led to increases in the cost for imaging and other healthcare services, according to a new analysis published Monday.

Such ownership changes were associated with an 8.2% price increase in radiology, with statistically significant upticks across 8 of the 10 specialties examined, the American Antitrust Institute reported. Oncology recorded the largest price escalation (16.4%) while dermatology saw the smallest (4%).

“Our findings underline the vast implications that rapid, stealth consolidation of physician markets by private equity funds have had for competition, patients and anyone who pays for healthcare practices,” report co-author Laura Alexander, director of markets and competition policy at the Washington Center for Equitable Growth, said in a July 10 announcement. “It’s clear that there is a need for attention and action from competition enforcers and policymakers to address these accelerating acquisitions.”

To conduct the study, researchers analyzed healthcare claims spanning 2012-2021, gathered by the Healthcare Cost Institute. The data included participating Blue Cross Blue Shield plans, Aetna and Humana, altogether covering 55 million lives per year through employer-sponsored plans. Alexander et al. conducted a “difference-in-differences” analysis, comparing practices acquired by PE between 2015-2021 against comparable groups that remained independent.

From 2012 to 2021, the number of private equity physician practice acquisitions grew by sixfold, the authors reported. Certain markets have been “highly penetrated” by such investors, with a single PE firm holding more than a 30% market share in one or more specialties. In radiology, average market share for PE firms crossing that mark was about 49%, tied with gastroenterology, but short of other specialties such as urology (58%) and oncology (57%). Oftentimes, such market dominance can lead to even steeper cost increases, the authors noted. However, this did not hold true in radiology, with prices rising 1.5% in metropolitan statistical areas where a single PE entity held more than 30% of the imaging market. That’s compared to an 18.2% surge for gastroenterology and 16% for OB/GYN care.

Alexander and co-authors also tracked private equity’s impact on expenditures per patient following an acquisition. Radiology was the lone specialty that recorded a decrease at -1.8% while gastroenterology saw the biggest jump at 16.4% per patient. However, radiology expenditures per patient increased by about 2% in geographies where a single private equity firm held more than a 30% market share. But other specialties such as OB/GYN (18.9%) and oncology (29.7%) saw much larger gains.

Authors of the analysis called for “immediate policy steps” lawmakers could take to address these trends. Those include greater scrutiny of small healthcare provider acquisitions, adjustments to the Hart Scott Rodino Act (something the FTC is already proposing), and expanding liability to PE funds for misconduct by their portfolio companies. Experts also emphasized the need to create alternative funding sources for physician groups seeking to enter concentrated markets.

“The report makes clear that physicians need more options for restructuring their practices so they can continue to do what they do best—practice medicine,” Diana Moss, PhD, President of the American Antitrust Institute, said in the announcement. “Selling out to private equity or other large corporate entities shouldn’t be the only options on the table.”

The report comes after the Washington Post recently published an article exploring how Welsh, Carson, Anderson & Stowe’s ownership of an anesthesia group has allegedly led to price increases. The New York-based private equity firm also is an investor in US Radiology Specialists, a growing group based in Raleigh, North Carolina. A USRS spokesman could not immediately provide comment Tuesday. However, an expert from WCAS recently commented on the topic of regulating PE firms in a Health Affairs opinion piece.

“The healthcare sector needs access to private capital to innovate, serve individuals with complex needs, and become more efficient and equitable in service to patients,” Adaeze Enekwechi, PhD, an operating partner at WCAS, wrote June 29. “What is the alternative to private capital in healthcare if we have a goal of expanding models of care and types of providers, and making the technological advances needed to serve more people better? Public resources are stretched thin and cannot be relied on to grow in perpetuity above the nearly $1 trillion spent on Medicare and Medicaid alone.”

Arnold Ventures funded the analysis, which also was authored by the University of California at Berkeley Petris Center on Health Care Markets and Consumer Welfare. You can read the full report, titled Monetizing Medicine: Private Equity and Competition in Physician Practice Markets, for free here.