Older Doctors Selling Out to Private Equity

Private Equity Firms Are Making Partial Purchases of Physician Practices.

The Deals Are Frequently Structured as Follows:
--The Private Equity Firm Offers an Up Front Lump Sum of Money and Administrative Services Such as Billing and Collections for the Practice.
--In Return, the Doctors in the Practice Agree to Have 30-40% of All Future Revenue Go to the Private Equity Firm.

The Up Front Lump Sum Can Be Equal to as Much as 10 - 20 Years of Income for a Physician.

The Older Doctors in the Practice Who Are Usually the Partners Frequently Take This Deal, Resulting in the Younger Partners Making Less Take-Home Pay.

Implication for Employers: Private Equity Firms Create Larger Group Practices to Have Better Negotiating Leverage with Commercial Insurance Carriers and Obtain Higher Fee-for-Service Reimbursement.

Overall Healthcare Costs for Physician Services Go Up, While the Take-Home Pay for Doctors Goes Down... and the Private Equity Firm Keeps the Difference.

**Correction: The Older Doctors Who Are Paid the Lump Sum Are Still Required to Stay at the Practice for a Certain Number of Years After the Transaction.

Sources: Personal Correspondence with Physicians

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