What’s your take, fearmongering or legit concerns over next five years?
“Currently, about 10% of dermatology practices in the United States are controlled by private equity. In 2009 there were 229 dermatology practices bought by private equity. In 2019, there were 747. “
They are bragging that in 5 years they are going to own 80% of dermatology in the United States,” said Dr. Grant-Kels.
Private equity firms may let go of more seasoned physicians in the practice, replacing them with younger physicians, who will work for less, as well as physician extenders such as nurse practitioners and physicians’ assistants.
A single physician may oversee as many as 5 to 10 physician extenders, who often see new patients or perform complex diagnoses and procedures that are beyond their scope of training. The private equity firm may also mandate more expensive treatment options, even if it goes against the patient’s best interests. “Any primary skin cancer on the face has to be sent for Mohs, even if you think you can excise it,” said Dr. Grant-Kels.
“They offer a young dermatologist a pretty good salary to start, and then they ‘normalize’ those salaries and lower them,” she continued. “They make them sign a noncompete [agreement]. … You owe your soul to them because the noncompetes can be very wide and very unreasonable. And although you could fight them if you go to court, that's very expensive to do it. Most young people don't have the funding to do that.”
There are wider consequences.
Private equity firms are starting their own residencies and then hiring their own residents. “Residents are paid an unlivable wage and are [therefore] required to borrow from the private equity practice. When they graduate, they immediately have to pay it back or work for the private equity firm,” said Dr. Grant-Kels. “It’s a form of indentured servitude.” Specialists are hired away from academic medical centers, making it more difficult to train new dermatologists in academic settings.