Hospital groups buy doctors’ practices: buying frenzy in the healthcare sector

More and more profit-oriented groups are buying their way into outpatient healthcare. The Hamburg Association of Statutory Health Insurance Physicians now wants to take countermeasures.

What will become of medical practices when the doctor retires? Perhaps the care center of a hospital group, fears the Association of Statutory Health Insurance Physicians Photo: dpa

Is outpatient medical care in Hamburg threatening to fall into the hands of large companies and hospital groups? That’s what the Association of Statutory Health Insurance Physicians fears, and that’s why it wants to buy up doctors’ practices itself in the future.

Walter Plassmann, Chairman of the Board of the Association of Statutory Health Insurance Physicians in Hamburg, fears that financial investors and hospital groups are not prioritizing outpatient care. They are concerned with returns, he said. "Hospitals represent hospital interests. If such a group takes over a practice, it is no longer focused on outpatient care," says Plassmann. Instead, it becomes the "vanguard for the hospitals" and directs the appropriate patients to them.

One example of such a hospital group is Asklepios in Hamburg, he says. Asklepios MVZ Nord GmbH currently has twelve locations in Hamburg, with three more in Elmshorn, Norderstedt and Uetersen.

"Behind every medical care center that Asklepios operates is a practice that used to be run by a doctor in private practice," says Plassmann. Medical care centers (MVZs) have existed since an amendment to the law in 2004, and are intended to ensure interdisciplinary outpatient care.

Practices as patient bait?

However, not only doctors are allowed to operate MVZs, but also hospitals and dialysis service providers. This gives access to the outpatient care system to a group that puts profits first when in doubt, Plassmann said. "There is a danger that outpatient care will not only become more expensive, but also worse, because lucrative treatments will be focused on and other services will no longer be offered."

Asklepios cannot understand this assessment, a spokesperson tells taz. "There is a lack of any evidence to support this criticism."

What impact the groups’ meddling in the outpatient healthcare system will have is actually not entirely clear. Ulrich Montgomery, president of the German Medical Association, also called for "a scientific answer to the questions of who the actual profiteers of these developments are and how the pursuit of profit, chain formation and regional concentration affect patient care" in the German Medical Journal. Politicians also need to act and take a closer look at the changing circumstances in outpatient care, he said.

Investors in outpatient healthcare

Criticism of investors in outpatient healthcare is not new. In 2012, the legislature therefore already subsequently restricted the group of possible MVZ operators and excluded providers of medical aids and remedies, rehabilitation facilities and pharmacists.

According to Deutsches arzteblatt, more healthcare facilities were nevertheless acquired by private equity companies in 2017 than ever before. Private equity companies raise private capital and invest it. One focus of the investments, it says, is on MVZs.

"We are seeing increased interest from investors, particularly in technology- and capital-intensive specialist disciplines such as laboratory medicine or dialysis facilities," Jessica Hanneken, department director of healthcare markets and policy at Deutsche Apotheker- und arztebank, told Deutsches arzteblatt. Radiology, ophthalmology and, most recently, dermatology and the nursing sector have also already caught the eye of investors, she added.

Prices in the seven- or eight-figure range

The origin of the problem lies, according to Plassmann, in the fact that there used to be more partnerships in medical practices. If a partner retired, the partners would take over their shares. Today, more and more physicians are employed by physicians in private practice, he said.

In fact, the number of employed physicians is continuously increasing, according to the physician statistics of the German Medical Association. The salaried employment relationship is particularly attractive, among other things, because it allows flexible part-time work.

However, the direct succession for a physician in private practice is lacking if he or she only has employees, says Plassmann. If the boss retires, he or she would naturally want to give up the practice at a certain price. "The price for a well-run practice can sometimes be in the seven- or eight-figure range," Plassmann says. This is an amount that no one can simply pay – except for financially strong investors or corporations.

The KV wants to buy practices itself

To prevent Hamburg’s panel doctors’ offices from falling into the hands of these investors, the panel doctors’ association wants to take action itself. The idea is to buy the practices and tailor them so that they are affordable for interested doctors, says Plassmann.

The KV wants to finance the purchase of the practice through an existing fund into which physicians, among others, pay. For example, a practice with six employed physicians could become three smaller practices with two physicians each. "We are preparing this internally right now," says Plassmann. "The rules of the game have to be defined precisely."

The basis is also a change in the law, he says. Until now, the Association of Statutory Health Insurance Physicians has only been allowed to buy practices where there is an undersupply. The new Appointment Service and Supply Act (TSVG) would change that, according to Plassmann. A corresponding draft has already passed the federal cabinet.