Trends in Private Equity Involvement in Oncology Practices in the United States

Abstract

<h3>Purpose/Objective(s)</h3> Private equity (PE) firms have become increasingly involved in healthcare practices. Generally, PE firms pool financial capital and acquire clinics and physician practices. Then, by implementing operational changes that increase revenues or cut costs, they seek to increase the "value" of the practice before selling it—generally in 5 to 10 years. To date, PE-backed acquisitions among oncology practices have not been well studied. Thus, we sought to characterize the extent of PE involvement among medical and radiation oncology practices over time. <h3>Materials/Methods</h3> We performed a comprehensive analysis of PE-backed transactions involving oncology practices in the United States. Transaction data was compiled from 5 financial databases (CB Insights, Thomson ONE, Capital IQ, PitchBook, and Irving Levin) supplemented by publicly available press releases, clinic websites, and 10-K financial reports. Transactions included financial partnerships, recapitalizations, and direct acquisitions of clinics or physician practices, but did not include new clinics established by PE-backed companies through organic growth. We confirmed that all transactions involved practices providing clinical services in medical and/or radiation oncology and excluded acquisitions of hospitals, biotechnology, and pharmaceutical companies. The transaction date, geographic location, and number of affiliated clinics and physicians involved in each PE transactions were recorded when available. <h3>Results</h3> Between January 1, 2003 and June 20, 2022, we observed 1,074 PE-backed transactions among medical oncology and radiation oncology practices. Transactions were executed by 23 PE-backed healthcare companies and involved 723 individual clinics—including 232 (32.1%) medical oncology clinics and 381 (52.7%) radiation oncology clinics, and 110 (15.2%) clinics providing both medical and radiation oncology. Location data was available for 714 clinics and showed PE involvement spanning 45 states, with the most activity observed in California and Florida, accounting for 248 (34.3%) acquired clinics. Currently, at least 1,033 medical oncologists (55.6%) and radiation oncologists (44.4%) are affiliated with oncology practices involved in PE-backed transactions. The rate of PE-backed transactions increased rapidly over the past two decades, with 149 clinics acquired from 2003-2007, 218 clinics acquired from 2008-2012, 192 clinics acquired from 2013-2017, and 515 clinics acquired from 2018-2022. <h3>Conclusion</h3> PE firms have substantial financial stakes among medical and radiation oncology practices. The frequency of PE-backed transactions among oncology practices has rapidly expanded over the past two decades and is likely contributing to increasing practice consolidation. Further investigation is needed to determine the implications of PE involvement on health care costs, access, and patient outcomes.