Private equity firms continue to acquire physician groups at an increasingly fast clip, prompting closer scrutiny from state and federal lawmakers.

Private equity acquisitions of physician practices grew seven-fold between 2012 and 2021, according to a peer-reviewed study from University of California, Berkeley researchers. The study, published Monday in Health Affairs, said those acquisitions have led to a concentration of private equity firms’ market share.

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A single private equity firm controlled a majority of one or more specialties across 50 markets, researchers found. Some of the most concentrated markets were in the South and Northeast, including the Dallas-Fort Worth area and around Baltimore, Maryland.

“When you see market shares exceeding 50%, you expect to see significant price increases for consumers and payers,” said Richard Scheffler, a professor of health economics and public policy at Berkeley, director of Berkeley’s Petris Center and co-author of the study.

While the study does not estimate the impact of private equity ownership on physician practices’ quality or pricing, others have shown such ownership was associated with higher prices and workforce cuts that may have impacted care quality. That, in turn, has prompted legislation and lawsuits.

Rep. Pramila Jayapal (D-Wash.) introduced the Healthcare Ownership Transparency Act last year, a pending bill that would require private equity firms and other financial interests to disclose ownership stakes in healthcare facilities. In December, a bipartisan coalition of congressional members launched an investigation into the impacts of private equity’s ownership of hospitals.

Last month, California Assembly Speaker Pro Tempore Jim Wood (D) introduced a bill that would require the California attorney general to approve private equity firms’ acquisitions of healthcare facilities. Meanwhile, states including California, Oregon, Minnesota, Illinois and New York have passed legislation bolstering oversight of healthcare transactions.

“The penetration of private equity in these local markets should alarm regulators and raise some concerns around a lack of competition and the potential impacts to quality and the price of care,” said Ola Abdelhadi, lead author of the study and a health policy researcher at Berkeley.

Regulators are closely watching private equity’s growing hold of the healthcare industry. The Federal Trade Commission sued U.S. Anesthesia Partners, one of the nation’s largest anesthesia providers, and its private equity owner Welsh, Carson, Anderson & Stowe in September for allegedly consolidating its practices in Texas to drive up prices for patients. The case is pending.

Private equity’s purchasing patterns have contributed to the decline of independent physician practices. Health systems and insurers, along with private equity firms, have acquired physicians at an increasingly fast rate over the past decade.

More doctors are pursuing an employed model as they struggle to keep up with reimbursement, technology and regulatory changes, physicians say.