Practices

Continued from page 1 of interest to private equity include gastroenterology, urology, cardiology, radiology, obstetrics and gynecology, and hematology and oncology. However, primary care and other specialties also may be able to sell to private equity firms.

“Private equity has to borrow the equity and pay it back to investors,” Adler said. So, they have to improve or grow the practice to make more profit. That may include reducing overhead, decreasing malpractice rates, negotiating better payor contracts, especially if the firm owns multiple practices.

Adler added that private equity firms look for practices with room for growth, no malpractice claims and compliance with regulators.

“Private equity in certain parts of the country, most especially in the Southeast and the West, is playing a gigantic role in organizing small primary care practices into larger entities, giving them the resources, the sophistication, and protection from the vagaries, like the next pandemic, and better information about their own cost structure,” said David Nash, MD, MBA, founding dean emeritus

Leagl Matters

Continued from page 3 expressed concerns about the impact of white bagging on patient safety, access, clinician burden and drug waste. In addition, some clinicians contend that the practice of white bagging can cause delays that lead to disease progression. HB 1467 seeks to protect patient choice and safety by limiting white bagging of clinicianadministered drugs.

Specifically, HB 1647 generally prohibits a health benefit plan for an enrollee with chronic, complex, rare or life-threatening conditions from:

1. Requiring clinician-administered drugs to be dispensed only by certain pharmacies or only by pharmacies participating in the health benefit plan’s network,

2. Limiting or excluding coverage for clinician-administered drugs based on the enrollee’s choice of pharmacy or because the drug was not dispensed by a pharmacy that participates in the health benefit and the Dr. Raymond C. and Doris N. Grandon professor of Health Policy at the Jefferson College of Population Health in Philadelphia.

Adler reported private equity firms are showing a huge interest in the Midwest for obstetrics and gynecology, dermatology and aesthetics practices, but not for primary care practices.

“Anesthesiology is a major area for private equity investors because of its high demand,” said Alex Milligan, co-founder and chief marketing officer of NuggMD in Marina del Rey, California. “Investors are seeking opportunities that provide high patient intake and the need for rapid expansion.”

Milligan explained that anesthesiology services are needed for both life-saving invasive treatments and more minor healthcare interventions.

“Millions of inpatient and outpatient surgeries occur each day, making it a high capital-generating industry,” Milligan added. “In turn, investors are able to see profits much sooner than, say, a general practice.”

Considering private equity?

Private equity for physicians has changed during the past 10 years, Adler said. Now, more equity firms include physician governance boards in their deals. Physician jobs may include giving the equity firm suggestions plan’s network, if the clinicianadministered drug is otherwise covered by the plan,

3. Requiring a physician of health care provider to bill for or be reimbursed for the delivery and administration of the clinicianadministered drugs under the pharmacy benefit instead of the medical benefit without: a. informed consent of the patient, and b. a written attestation by the patient’s physician or health care provider that a delay in the drug’s administration will not place the patient at an increased health risk, or about staffing or equipment or how to continue the growth.

4. Requiring that an enrollee pay an additional fee, higher copay, higher coinsurance, second copay, second coinsurance or any other price increase for clinician-administered drugs based on the enrollee’s choice of pharmacy or because the drug was not dispensed by a pharmacy that participates in the health benefit plan’s network.

There can be tax consequences and real estate involvement, so physician-owners are encouraged to surround themselves with a knowledgeable team if considering an offer from a PE firm.

“There is a lot to think about,” said Adler, and everything should be addressed before signing a letter of intent.

Private equity for physician practices will remain common and offer physicians who have traditionally worked in either acute care hospitals or private practices a third option.

“A steady paycheck and no administrative hassles is really the biggest benefit [of the PE model],” Adler added. “It can be a good option for doctors who are not the type to manage their own practice, but want to work in an ‘independent practice.’ Typically, the compensation, benefits and opportunity for bonuses can also be greater than other comparable employers.”

“There is no slowdown in private-equity deals,” she said. “There are more now than ever before.

The foregoing limitations on coverage for certain clinician-administered drugs apply only if the patient’s physician or health care provider determines that:

1. A delay of care would make disease progression probable, or

2. The use of a pharmacy within the health benefit plan’s network would: a. make death or patient harm probable, b. potentially cause a barrier to the patient’s adherence or compliance with the patient’s plan of care, or c. because of the timeliness of the delivery or dosage requirements, necessitate delivery by a different pharmacy.

HB 1647 is currently awaiting Governor Abbott’s signature. Once signed, the new law will be effective September 1, 2023.