Alongside growing interest in radiology, investors also are buying up an increasing share of cancer care clinics in the U.S., according to new research published Monday.
Between 2003 and 2022, private equity platform companies poured money into 724 oncology outposts. That represents about 10% of the 6,919 clinic locations across the country, Harvard experts detailed in JAMA Internal Medicine [1].
The transactions spanned 45 states, with Florida (19%) and California (16%) leading the way. About 33% of these clinics underwent multiple changes in private equity ownership, for a total of 1,074 transactions spanning the study period.
“There has been a marked increase in PE acquisition and consolidation of oncology practices over the past two decades,” Michael Milligan, MD, MBA, a radiation oncology resident physician, and co-authors concluded. “Similarly, PE-backed platform companies have undergone substantial consolidation through mergers and acquisitions.”
Researchers gathered their information from financial databases, publicly available press releases, and SEC filings, among other sources. They defined private equity transactions as any financial investment including partnerships, recapitalization or direct acquisitions.
“At least” 2,060 oncologists were affiliated with clinics at the time of the initial PE deal, constituting 10% (or 1,318) of all practicing medical oncologists and 15% (or 742) of radiation oncologists. Clinics affiliated with private equity accounted for more than one-fifth of all locations in seven states, including Tennessee (28%), Florida (27%) and Nevada (26%). Milligan et al. pinpointed 23 PE-backed platform companies, and 10 of them were gobbled up by another similar entity or publicly traded oncology operator.
Private equity firms typically use capital from institutional funds and investors to create such platforms, the authors noted. They then seek financial returns by acquiring more practices, opening up new clinics, cutting costs and boosting revenues. Examples in imaging include Radiology Partners, Rayus Radiology and US Radiology Specialists. Brentwood, Tennessee-based Verdi Oncology, OneOncology in Nashville, and Integrated Oncology Network (also in the Music City) are a few names in this specialty.
“Although this approach may enable operational efficiencies, critics point to potential conflicts of interest and the implications for the accessibility and affordability of care,” the authors noted. “Involvement of PE in oncology should continue to be evaluated to determine implications on patient outcomes and healthcare costs. As increasing consolidation continues to affect the landscape of independent oncology practices, patients may face additional barriers to both accessibility and affordability of care.
The authors did not include newly opened outposts, with the study likely underestimating the “true total footprint of PE-backed involvement in oncology clinics.”
A previous study estimated that about 70% of medical doctors in the U.S. are employed by PE firms, hospitals or other corporate entities. And another 2020 JAMA analysis charted a more than twofold uptick in the number of physician practices owned by such investors.
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.