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UPJ INSIGHT Acquisition of Urology Practices by Private Equity Firms and the Merit-Based Incentive Payment System

By: Kassem S. Faraj, MD, MS, University of Michigan, Ann Arbor; Samuel R. Kaufman, MA, University of Michigan, Ann Arbor; Lindsey A. Herrel, MD, MS, University of Michigan, Ann Arbor; Avinash Maganty, MD, MS, University of Michigan, Ann Arbor; Mary Oerline, MS, University of Michigan, Ann Arbor; Megan E. V. Caram, MD, MS, University of Michigan, Ann Arbor, Center for Clinical Management Research, VA Ann Arbor Healthcare System, Michigan; Vahakn B. Shahinian, MD, MS, University of Michigan, Ann Arbor; Brent K. Hollenbeck, MD, MS, Massachusetts General Hospital, Boston | Posted on: 27 Nov 2023

Faraj KS, Kaufman SR, Herrel LA, et al. Acquisition of urology practices by private equity firms and performance in the Merit-Based Incentive Payment System. Urol Pract. 2023;10(6):596-603.

Study Need and Importance

Private equity firms are increasingly engaged in the acquisition of urology practices. Firms acquire practices with potential for growth, increase their value through a variety of strategies (eg, spending cuts, investing in new services), and subsequently sell the practice over a short time horizon to realize a profit. The implications of these strategies on quality are unclear. We evaluated the effects of private equity acquisition of urology practices on quality, as assessed by performance in the Merit-Based Incentive Payment System (MIPS) program.

What We Found

Using a difference-in-differences framework, we found that compared to urologists in practices not acquired by private equity (n = 2,368), those in acquired practices (n = 181) had worse overall MIPS performance after acquisition (difference, −14 points, P = .04; Figure). The decrease in the overall score was driven by worse performance in the quality score (difference, −28 points, P < .001). Finally, acquisition was associated with fewer urologists receiving bonus payments (difference, −43%, P < .001).

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Figure. Adjusted Merit-Based Incentive Payment System performance of urologists whose practices were acquired by private equity compared to urologists whose practices were not acquired by private equity in the year before and after acquisition. Overall performance significantly decreased over time in urologists whose practices were acquired by private equity compared to practices that were not acquired (difference-in-differences, −14, P < .001).

Limitations

One limitation of this study is the small sample size of acquired urologists. Yet the effect of acquisition on performance was substantial, which likely represents meaningful changes. Another limitation is the inability to determine how changes in MIPS performance correlate with patient quality of care. However, MIPS quality measures often involve patient experiences, making it likely that patients are being affected by these changes.

Interpretation for Patient Care

Private equity acquisition of urology practices was associated with worse performance in the MIPS program. However, it is unclear how these decreases in performance affect the actual care delivered to patients. Until more research is done to determine the effect of private equity acquisitions on patient care, practices should be transparent with patients and referring providers about their relationships with for-profit entities, like private equity.

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