A growing number of doctors are turning to a new source of funding — private equity. According to a UC Berkeley study, the number of private equity acquisitions of physician practices grew sixfold between 2012 and 2020. One joining that list is Charlotte's largest independent physician practice.
The doctors of Tryon Medical Partners formed the practice after breaking away from Atrium Health six years ago. Michelle Crouch looked into this trend and what it might mean for patients and wrote about it for the Charlotte Ledger business newsletter and NC Health News. She joins WFAE's Marshall Terry to discuss.
Marshall Terry: So give me a quick overview, if you will, of Tryon Medical Partners. Why did these doctors break away from Atrium?
Michelle Crouch: Tryon Medical Partners actually received a lot of attention back in 2018 for going against the trend of hospital consolidation. They left Atrium, about 88 doctors, because they said at the time that Atrium's practices were bad for patients. And that they wanted more freedom to do what was best for patients. Essentially, they said they could provide better care at a lower price by going out on their own.
Terry: OK, so why is Tryon turning to this private equity group TPG, which is based in San Francisco?
Crouch: I talked to Tryon CEO Dr. Dale Owen this week and he told me the biggest reason they are partnering with TBG is that Tryon wants to grow, growing will help them serve more patients, and it will help them compete against the big hospital systems in Charlotte, Novant and Atrium. It will also give them more leverage when they're negotiating with insurance companies on rates. In order to grow, you have to have money and this deal will give Tryon an infusion of cash and that money can help them buy real estate, open new clinics and hire doctors to serve patients.
Terry: And what does TPG expect out of the deal?
Crouch: Well, that's hard to say, but generally speaking, the goal of private equity firms is to make money. They are investment funds. They buy companies, restructure them and then resell them for a profit, usually three to seven years later.
Terry: It kind of seems like Tryon Medical left one big money-making organization to now be associated with another big money-making organization. Is it a good idea for investment firms to be getting into healthcare? What do critics say?
Crouch: Well, as you said earlier, Marshall, a lot of private equity firms are getting into the health care space. And so there's been a lot of research on the impacts and generally speaking, the research shows that when private equity gets involved, prices go up both for patients and for health insurance. And in some cases, the quality of care goes down, but the research on that is not as definitive.
Terry: And those who are more supportive of this growing trend. What's their argument?
Crouch: Well, Dr. Owen told me repeatedly that this change will not impact patient care, he said. TPG is a top-notch company, that it shares Tryon's goals of providing excellent patient care at a lower cost. He also said that TPG is going to be involved only in the business side of the practice and that the clinical side that handles patient care is going to continue to be physician-led and owned.
Terry: So what will this potentially mean for patients? I mean, you kind of already mentioned it a little bit talking about prices and the quality of care.
Crouch: Well, I don't think we know the answer at this point. As I said, Dr. Owen repeatedly stressed that patients should see no changes whatsoever. But critics say that business decisions and health care almost always impact patient care. Because the business side and the clinical side of a practice are so deeply intertwined. So I think we're going to have to wait and see what kind of effect this has on the patients of Tryon Medical.
