Becker's connected with Nilesh Dave, MD, vice president of clinical effectiveness and chief medical officer at Arlington-based Texas Health Resources to discuss the role of profit-driven companies in healthcare.
Editor's note: Responses have been lightly edited for length and clarity. Views expressed are solely those of interviewees and not representative of views of affiliated organizations.
Question: Are you concerned about private equity and corporate ownership in healthcare?
Dr. Nilesh Dave: Yes, I am. It has been an issue for quite some time, especially with physician groups. The story is often the same: everyone is trying to make a profit.
With the way private equity works, being able to put a lot of debt onto the companies that they are operating doesn't always allow those companies to always survive long term, and depending upon how things go, it can also affect nearby communities.
Some physicians may be close to retirement, or contemplating it, and private equity can help them to fast track toward that goal. But for those who aren't, who are going to be in it long term, I think private equity can offer some efficiency improvements to a certain point, and after that, it concerns me.
Another aspect that's concerning to me is that healthcare’s margins are decreasing , unless you're doing cash only, in which case you probably wouldn't need private equity to be successful. Practices that have high profit margins should just keep doing what they are doing and avoid PE solicitations.
My question is, how is private equity supposed to profit from a business that has declining reimbursement?
Q: Do you think that will make private equity and corporations lose interest in healthcare?
ND: I think the pool of opportunity has shrunk quite a bit, and more and more physicians are hearing about situations where private equity didn't work out. I do think that interest is likely to decline over time, because given how things are going, with reimbursement cuts and inflation and other obstacles, it's hard to see what the draw is.