February 7, 2024- Who hasn’t heard the story about a private equity deal gone bad? It usually goes like this: PE firm acquires old and beloved business, then slashes overhead and sells off bits and pieces of it, leaving a carcass and bad feelings.
That’s not how it has to be, says Gary Wayne Stewart, MD, FAAOS, a foot and ankle specialist at Resurgens Orthopaedics in metropolitan Atlanta, a successful practice that partnered with private equity firm Welsh, Carson, Anderson & Stowe (Welsh Carson) in December 2021. “Instead of becoming stagnant, our plan was to offer the next generation of care,” he says. The plan seems to be working out.
Private equity firms have been busy acquiring physician practices across several physician specialties since 2012, increasing from 75 deals in 2012 to 484 deals in 2021, according to a study from the American Antitrust Institute. At the local level, these firms are acquiring significant shares of physician practice markets. In 28% of metropolitan statistical areas (MSAs), a single PE firm has more than 30% market share in terms of full-time-equivalent physicians, and in 13% of MSAs, the largest PE firm’s market share exceeds 50%.
Case in point: Gastro Health, a gastroenterology medical group in Miami, Florida, which in 2021 was purchased by a private equity arm of a Canadian pension fund. Today the practice has a presence in seven states – Florida, Alabama, Washington, Virginia, Ohio, Maryland and Massachusetts – with over 375 physicians and 150 medical offices, infusion centers, imaging services and specialty pharmacies. Additionally, Gastro Health owns and operates endoscopy centers in five states and operates pathology and anesthesia services as well.
Read more in the latest issue of Repertoire Magazine.