AUANews. 2022;27(8):1.

To the Editor: The authors of the article entitled, “Examining the Impact of Private Equity Investment in Urology” published August 1, 2022, are to be commended for their detailed and objective review of this important subject.¹ Although there are minor inaccuracies with respect to the number and distribution of practices with private equity (PE) affiliation (likely attributable to timing of data collection), these differences do not detract from the authors’ conclusion. That said, a question that is not addressed is perhaps the most crucial: Why do urologists seek PE affiliation?

Data suggest that consolidation of physician practices and hospital systems increases cost^2,3 and that independent practices are the most cost-effective site of service in value-based care arrangements.⁴ Despite this, hospital acquisition of physician practices, fueled by profits generated by site-of-service payment advantages and the 340B drug purchase program, exploded in the last decade⁵—indeed, the number of urologists in private practice declined by 17.4% from 2015-2021.⁶ Practices that seek to invest in technologies and systems to better serve patients, reduce overhead costs and increase access to care while remaining independent have found themselves at a tremendous competitive disadvantage in their local markets. For physicians who believe that preservation of the independent practice of medicine is crucial to the vitality of health care in the United States, affiliation with a PE firm is a means, not an end.

The interest in growth is not only on the practice side; PE-backed platforms seek to partner with dynamic groups that have demonstrated a desire to grow their practices over time. Indeed, the authors’ data support this notion—groups that choose PE affiliation were historically more likely to have increasing revenues than those that do not. This growth is achieved both by adding providers (physicians as well as advanced practice providers) as well as investing in systems that enhance productivity. The authors’ data also support that this is successful on 2 fronts—the spending increase (11.0%) seen after PE affiliation is less than the corresponding increase (12.5%) in patient volume as well as in the 20.6% lower patient wait time to see a provider.

The authors do raise an important concern with respect to quality of care, yet one important point is not articulated in the article, that of the doctrine prohibiting the corporate practice of medicine (CPM).⁷ These laws, which vary on a state-by-state basis, require corporations created to employ physicians in an outpatient clinic to be incorporated under the state’s professional service corporate laws. While a detailed discussion of the ramification of CPM laws is beyond the scope of this letter, in general, they serve to severely limit or prohibit the ability of nonclinical investors to dictate to providers how care is rendered—importantly, with certain exceptions, hospital employers are generally considered professional service organizations with respect to CPM. At present, 33 of the 48 continental United States (69%) have some type of CPM regulations or statute in place.⁸

It is important that the business practices of a subset of the hospital industry not be conflated nor denigrate the valuable care provided by the nation’s hospitals, especially the critical tertiary care and resident teaching provided therein. That said, in this challenging environment, the entire health care industry must work to ensure that we preserve access to care while simultaneously improving outcomes and reducing costs. Those of us who have opted to seek the economic and business resources of a PE partner to maintain independence believe that by bringing high-quality practices together in a national practice of we are able to share both business and clinical best practices, enhance efficiencies, and thus ultimately better serve our patients and our communities.