A growing number of physician practices are relying on private equity firms for investments, more than entrusting in hospital systems and larger physician organizations. Private equity firms are investing in physician practices specializing in certain profitable specialties, such as orthopedics, urology and gastroenterology.
As certain compliance requirements have increased while reimbursement has decreased, physicians practices are seeking aid to turn in more profits. With the funding from private equity firms, physician practices are able to sustain growth, serving more patients, adding more physicians and request higher payments.
Although physician practices receive investments from private equity firms, they are not owned by those firms and are still owned by their own professional corporation. Physicians are still making their own decisions for the clinic, which can strongly show to insurance companies that these practices can operate better than other practices.
The period of investments from these private equity firms can range from three to seven years and are usually not available to physician practices who are losing money, as these practices are not as profitable as other practices with the appealing specialties. Private equity firms usually see a return of at least 20% each year.
Read the original article from Modern Healthcare here.