Private Equity Acquisition of Oncology Clinics in the US From 2003 to 2022

Abstract

This cross-sectional study examines private equity–backed acquisitions of medical and radiation oncology clinics in the US from 2003 to 2022 using financial databases and publicly available data.

Over the past 2 decades, private equity (PE) firms have become increasingly involved in the acquisition of health care practices across the US, particularly in oncology.^1,2 These PE firms use capital from institutional funds and investors to create or invest in so-called platform companies, then seek financial returns by acquiring practices, opening new clinics, reducing costs, and increasing revenues.³ Although this approach may enable operational efficiencies, critics point to potential conflicts of interest and the implications for the accessibility and affordability of care.⁴

To date, PE-backed investments around oncology clinics have not been well characterized. We used a systematic and reproducible method to characterize PE-backed acquisitions of medical and radiation oncology clinics in the US.

Methods

In this cross-sectional study, using financial databases and publicly available data (including press releases, news sources, clinic websites, and financial 10-K reports), we screened for PE-backed transactions involving medical and radiation oncology clinics from 2003 to 2022. The PE-backed transactions were defined as any financial investment, including partnership, recapitalization, and direct acquisition of clinics. Detailed search methods are provided in eMethods in Supplement 1. We used the Medicare Care Compare Database to approximate the total number and location of oncology clinics as well as practicing medical and radiation oncologists during the study period.^5,6 This study followed the STROBE reporting guideline. Institutional review board approval was not sought per the Common Rule (45 CFR §46) because of the use of publicly available data.

Our final database included PE-backed platform companies and each oncology clinic acquired, as well as acquisition date, practice location, type of oncology service, and number of affiliated oncologists. ArcGIS (Esri) was used to map clinic locations and the proportion of PE-affiliated oncology clinics per state. GraphPad Prism version 8.0 (Dotmatics) was used to generate charts.

Results

During 2003 to 2022, 724 oncology clinics (53% radiation, 32% medical, 15% multi-oncologic) became affiliated with a PE-backed platform company (Figure 1), constituting 10% of an estimated 6919 oncology clinic locations in the US. At least 2060 oncologists (64% medical, 36% radiation) were affiliated with clinics at the time of initial PE acquisition, constituting an estimated 10% (1318 of 13 531) of practicing medical oncologists and 15% (742 of 4886) of radiation oncologists.^5,6 Thirty-three percent of clinics underwent multiple changes in PE ownership, with a total of 1074 PE-backed transactions occurring during the study period.

Figure 1. Cumulative Private Equity (PE)-backed Transactions and Clinics Gaining First-time PE Affiliation.

The separation between the 2 curves suggests that some clinics underwent multiple PE-backed transactions and ownership changes after initially gaining PE affiliation, due largely to consolidation between PE-backed platform companies.

We located 715 of 724 (99%) PE-affiliated clinics (Figure 2). The PE-backed transactions spanned 45 states, with many in Florida (19%) and California (16%). The PE-affiliated clinics accounted for more than 20% of all oncology clinics in 7 states, including Tennessee (28%), Florida (27%), and Nevada (26%).

Figure 2. Geographic Distribution of Oncology Clinics and Platform Companies Involved in PE-backed Transactions.

A. Geographic location of all oncology clinics involved in a PE-backed transaction from January 2003 to June 2022. Each color-coded circle indicates an individual clinic. States are shaded based on the proportion of total oncology clinics in that state that are affiliated with PE firms. B, Geographic footprint of oncology clinics acquired by PE-backed platform companies as of June 2022. Each color-coded circle indicates an individual clinic. The map excludes de novo clinic expansion and does not represent the full geographic footprint of each platform company today. Certain clinic locations no longer appear due to the platform company terminating operations or selling the clinic to a non-PE entity.

^aUS Oncology prior to their acquisitions by McKesson, a public company.

^bVantage Oncology prior to their acquisitions by McKesson, a public company.

We identified 23 PE-backed platform companies, of which 10 were acquired by another PE-backed entity or public company. Many platform companies had a regional focus and expanded their geographic footprint through acquisitions in areas with little competition.

Discussion

There has been a marked increase in PE acquisition and consolidation of oncology practices over the past 2 decades. Similarly, PE-backed platform companies have undergone substantial consolidation through mergers and acquisitions. The number of medical and radiation oncologists identified at PE-affiliated practices was estimated to constitute 10% to 15% of practicing oncologists in the US. Given that we focused only on clinics involved in PE-backed transactions and excluded clinics that were newly opened, our results likely underestimate the true total footprint of PE-backed involvement in oncology clinics.

Involvement of PE in oncology should continue to be evaluated to determine implications on patient outcomes and health care costs. As increasing consolidation continues to affect the landscape of independent oncology practices, patients may face additional barriers to both accessibility and affordability of care.

Supplement 1.

eMethods

Supplement 2.

Data Sharing Statement