The pace at which private equity firms acquire physician practices is picking up, affecting nearly all medical specialties. There’s evidence the consolidation of physician practices into larger organizations reduces competition, leading to higher prices for patients and payers. But how do these deals play out for the providers themselves?
To understand how private equity, or PE, may be reshaping the way physicians experience the practice of medicine and their relationships with hospitals, insurers, and patients, we interviewed six doctors who have worked for PE-backed practices and four advisers who guide physicians through the partnership process.
We wanted to know if an infusion of capital from private investors with plans for expanding or restructuring a practice makes it easier for physicians in private practice to maintain a sense of independence and even lessens burnout. Or instead, if these transactions convert once-independent doctors into employees with less agency than before.
The physicians we interviewed included two urologists who ran one of the largest PE-backed specialty practices in the United States before it sold to Cardinal Health; two orthopedic surgeons and one obstetrician/gynecologist (ob/gyn) whose practices were acquired; and an anesthesiologist who saw his own practice disrupted when two PE-backed staffing companies shook up the local market. All but one agreed to speak on the record about their experiences. The other asked to remain anonymous because his comments focused largely on former colleagues.
When Investors View Doctors as Partners, Satisfaction with Private Equity Deals Is Higher
For physicians, the value of private equity investment is very much in the eye of the beholder, and it’s largely contingent on whether physicians are treated by the investors as employees or as business partners. The PE deals that go awry — sometimes publicly, due to litigation or physician departures — often involve ventures where PE firms extract profit by changing productivity standards, staffing models, and hours of operations. When profits are achieved by expanding a practice’s services or its geographic reach, there’s more opportunity, if not incentive, for partnership.
Specialties in which changes in technology or treatment protocols are redefining the role of physicians can create growth opportunities for PE firms and the practices themselves. Urology provides an instructive example. Over the past three decades, as treatment modalities for prostate cancer have evolved, urologists have assumed a more sizeable role in cancer care. While it can be lucrative to provide radiation therapy, immunotherapy, and oral oncolytics or infusions in outpatient settings, or establish ancillary businesses such as pharmacies, these require upfront capital and management expertise. Practices with 10 or fewer urologists, once the norm in the U.S., may lack the resources to take advantage of these opportunities. They also may struggle to compete with nearby health systems that command higher payments from insurers and larger discounts from suppliers.
Add in the difficulty of recruiting younger urologists to replace retiring doctors and administrative burdens such as managing payer contracting and cybersecurity threats and PE begins to look more like a savior than a threat. Indeed, while nearly half of urologists were employed by hospitals or other institutions as of 2019, PE acquisitions of urology practices have become a dominant form of practice consolidation in recent years.
Upfront Payment Leads to Practice Changes and a Big Payday
Solaris Health, at one point the largest of at least six PE-backed urology practices in the United States, scaled quickly — from 130 physicians when it was launched in 2020 to almost 800 in August 2025. It did so by pitching itself as a national practice controlled by physicians but backed by Lee Equity, a firm with investments in many specialties. Those who signed on received stock and a lump-sum payment that, in keeping with the conventions of PE transactions, was a multiple of a practice’s future income that physicians were willing to forgo. Although the cash is an advance on future earnings, the payment is often taxed at a capital gains rate, enabling physicians to reduce their tax burden and begin investing.
“I always tell doctors if you’re tempted to buy a boat with the money, don’t. Take the cash and invest it,” says Gary Kirsh, MD, cofounder of Solaris Health. He served as the company’s CEO until Cardinal Health, a pharmaceutical and medical products supplier, paid $1.9 billion for the business in 2025.
In the lead-up to such sales, PE firms recoup their investment through what’s known as “the scrape” — taking a percentage of practice profits, typically between 20 percent and 30 percent. While this makes a sizeable dent in physicians’ take-home pay, many PE firms promise to restore income to previous levels by increasing practice revenues or reducing expenses. Known as “income repair,” it’s a process that can take a few years to play out.
Raj Patel, MD, a urologist from Homewood, Ill., who joined Solaris Health in 2021 and served on its corporate board, was initially skeptical of promises of revenue growth because he was already so entrepreneurial. He also valued his independence. “I would tell my partners, our group doesn’t need private equity,” Patel says.
Over time, however, Patel began to see that joining a large PE-backed practice, with more than 120 urologists in the Chicago area alone, might be a way to enhance access for patients and professional satisfaction for doctors. Instead of everyone performing the same procedures and sending advanced cases to large health systems, they could begin to subspecialize and refer patients to one another.
While the MSO took a share of profits, it also assumed an equal share of an individual practice’s expenses, including the cost of hiring advanced practice providers to handle low-acuity cases and manage calls from staff in local emergency departments — a pain point for Patel’s practice, as this support was expected by hospitals but not reimbursed. Solaris also hired navigators to support patients as they explored different options for treatment. And it had the financial resources to invest in a laboratory for genetic testing, a pharmacy, and the data analytics to determine why some practices had better clinical outcomes or financial performance than others. Although clinicians are expected to follow clinical pathways, Patel says those are determined by clinicians that advise the MSO. “Physicians really need to lead that,” he says.
After he joined, Patel was also able to begin enrolling his patients in clinical trials, another income stream. As revenues increased, Patel achieved income repair in just one year. While some might worry this may lead to higher health care costs, Kirsh believes the opposite is true — that consolidation of physician practices enables clinicians to steer patients to outpatient settings, which, he says, can be significantly cheaper than hospital-based care due to lower fixed costs and the avoidance of facility fees.
Our business model is not to acquire scale and hold insurance companies hostage on rates. We’re creating a national network that shares best practices, professional management, and ancillary services, and doing it in a way that streamlines care for patients.
Gary Kirsh, MDcofounder, Solaris Health
Cardinal Health says it hasn’t made changes to Solaris’s operations or pricing since the acquisition; whether that holds true remains to be seen. Its management services organization, The Specialty Alliance, formed in 2025, now has a stake in the practices of roughly 3,000 providers specializing in gastroenterology and urology. The company also has acquired practices affiliated with Integrated Oncology Network, which has 50-plus community-based oncology centers and more than 100 providers. Sen. Elizabeth Warren (D–Mass.) has raised concerns that the company is buying physician practices as a means of locking customers and physicians into restrictive contracts for drugs and other supplies, reducing competition among wholesalers, and driving up costs. She’s also concerned that practice acquisitions will reduce competition between hospitals and nonhospital providers and has called on the Federal Trade Commission to scrutinize pending sales.
Soon after the deal was announced, Kirsh retired as CEO, handing the reins to James Weber, MD, a gastroenterologist from Southlake, Texas, who became CEO of Specialty Care Alliance after Cardinal acquired a majority stake in GI Alliance in November 2024 for $2.8 billion. Weber says Cardinal’s investment enabled his group to get off the private equity “merry-go-round” and begin partnering with urologists and other specialists who aren’t solely dependent on hospitals for delivering care. Instead of buying a stake in the MSO only to sell it again, as a private equity investor might, Cardinal sees value in building a long-term relationship with physicians as this diversifies its customer base and opens up the possibility of selling higher-margin products and services, Weber says. Rather than forcing such supplies and services upon doctors, Cardinal competes with other vendors in an open-bidding process and profits when the MSO gets the best deal it can — even if it’s from a competitor, he says.
Where Growth Is Harder to Achieve, Tensions Are Magnified
Partnering with private equity firms may have less upside for specialists who have reduced practice expenses to the bare minimum; have maximized their income from ancillary services like imaging, physical therapy, and durable medical equipment; or are working at full tilt. In these instances, income repair may be impossible, especially if the firm tacks on new charges or takes away benefits.
Two orthopedic surgeons we spoke with, one in Pennsylvania and the other in Florida, said partnering with PE had cost them financially. Both had worked in what they described as well-respected practices that faced competition from large academic medical centers intent on expanding, in one case by buying up primary care practices that influenced local referrals patterns. As nonprofits, the systems had several advantages: a lower tax rate and access to the federal 340B Drug Pricing Program, which allows safety-net providers to purchase drugs at a discount and receive reimbursement from insurers at market rates.
Adrienne Towsen, MD, an orthopedic surgeon from West Chester, Pa., says that after her 75-physician practice was sold in 2022 to a management company backed by PE, promised changes to back-office functions never materialized, and the accounting grew more opaque. Then came cuts. Doctors were told they needed to start paying for their own cellphone plans, as well as life and disability insurance. Management fees also increased, and the ancillary income physicians once earned from physical therapy and MRIs — worth as much $100,000 a year to each doctor — was carved out of their compensation.
While she had received an upfront payment, she found it didn’t make up for the cuts in her take-home pay. Towsen says part of the problem was that the revenue target she and her colleagues needed to hit to bring fees down was set at an all-time high, the year of the sale.
Towsen says she started to feel like she was caught in a bad relationship. Problematic behavior was followed by unfulfilled promises from management to do better. She wanted to exit, but the contract required her to pay back the lump sum if she left before three years. Leaving also would trigger a noncompete clause, severing relationships with patients she’d built over two decades. She resigned the first day she could, giving up her shares in the company.
Equally painful was the disruption in her relationships with patients. “I had very frank discussions with patients and told them exactly why I was leaving. They were upset,” she says. Many reported experiencing similar problems with other specialists.
I kept hearing, ‘I’m losing all my good doctors.’ It makes you feel so guilty.
Adrienne Towsen, MDorthopedic surgeon
When the Math Doesn’t Add Up
R. James Toussaint, MD, an orthopedic surgeon in Florida who worked in investment banking before going to medical school, chose to join The Orthopaedic Institute in Gainesville because it had a reputation for high-quality care and was large enough for him to subspecialize in foot and ankle surgery. When PE firms came calling in 2017, he had a hard time persuading his partners that it would be the PE firm that benefited, not them. “I had structured deals like this myself and knew what the benefits and drawbacks were. I also knew once you sell your house, it’s nearly impossible to buy it back,” he says.
Once the sale went through, he says the firm added new layers of management overhead, including executives tasked with business development and marketing. “These aren’t positions generating revenue the way surgeons do. They’re essentially cost centers,” Toussaint says.
Since he had already maximized the hours he worked, as well as opportunities to earn income from ancillary services like MRIs, physical therapy, and durable medical equipment, there wasn’t a way to offset these expenses and other management fees by working longer hours. “There’s no eighth day in the week to work,” he says.
He says the lump-sum payment he’d received wasn’t sufficient to cover the loss of income. After a couple of years, he decided to resign and negotiated a settlement to release him from the noncompete clause. He then joined the academic medical center that was once viewed as a competitor, a move he wishes he made sooner. “Looking back, the whole transaction just made no sense. I should have just left immediately because there literally was no upside.”
Toussaint says in some cases patients are left in the dark when physicians leave. “It’s embarrassing for the group,” he says. “So they just say they left or they retired and the patients are left trying to figure out where their doctor is. It’s unfortunate.”
We reached out to the private equity–backed ventures that help run the two orthopedic surgery practices for comment. Both offered to connect us to physicians with a different perspective.
John Stevenson, MD, a neurosurgeon who’s been at The Orthopaedic Institute for three decades, agreed the early days of partnering with a private equity–backed firm had its ups and downs, in part because they were the first orthopedic practice to do so and it took time to develop and execute a growth strategy. But over the long run, he says he’s come out ahead because he’s been able to see more patients with the help of midlevel clinicians and gained access to better insurance contracts, lower-cost supplies, and other resources that help patients, including staff with pain management expertise.
Jason Sansone, MD, an orthopedic surgeon in Madison, Wis., found it helpful to partner with the private equity–backed venture Towsen did — Healthcare Outcomes Performance Company (HOPCo). He’d been employed by a multistate health system but found its bureaucracy and the inability to innovate stifling. “We wanted more autonomy and offered to assume financial risk in exchange for it,” he says, but the health system insisted on an employment model.
In 2023, he and 10 other doctors struck out on their own, betting they could negotiate contracts with payers that would reward them based on the value of services they provided rather than the volume. “Sometimes that means more conservative treatments and other times, it’s just doing surgery instead of requiring patients to go through physical therapy and steroid injections that you know aren’t going to help,” he says. Having fought for their independence, he and his partners were reluctant to give up equity in their practice, so they hired HOPCo to provide management services and built an ambulatory surgery center as a joint venture. Sansone says he’d only consider giving up equity in the practice itself to fund an expansion. “We view private equity as a source of capital for growth rather than a means of generating liquidity,” he says.
From Boutique to Big Box Store
The ob/gyn we spoke with, now working in North Carolina, joined a large obstetrics practice just three months before its partners voted to sell it to a PE-backed venture. As a new hire, Dr. M (who asked for anonymity because his comments focused largely on former colleagues) wasn’t eligible for the lump-sum payment, but he figured that banding together with other doctors in his state would improve payer contracts and make it easier to participate in value-based contracts.
Dr. M didn’t anticipate how hard it would be to lose the ability to make business decisions — like choosing a vendor or launching an infusion clinic so pregnant patients experiencing nausea didn’t seek emergency care. Merging practices brings standardization that tends to lift low performers but restricts the flexibility of high performers, he says. “It’s like going from being a boutique specialty store to being bought out by Walmart. We were doing everything in-house and doing things well. It cheapened our brand.”
Dr. M also didn’t like having salaries capped. He figured his fellow physicians were leaving as much as $200,000 on the table each year despite seeing as many as 35 patients per day.
I think there are people who are happy just going to work and getting a paycheck, but if you are in medicine to take care of patients and be in business, private equity ownership is a frustrating thing.
Dr. MOb/gyn
After three years, Dr. M left to become a “locum tenens” provider, a temporary worker paid at a premium by a hospital to fill a critical workforce gap. While there is a baseline level of job insecurity inherent in being a locum provider, they usually command high hourly rates for short-term work, giving providers flexibility but potentially disrupting relationships between patients and providers. “Locums is inherently bad for obstetrics,” he says, and some doctors may avoid it because they can’t foster long-term relationships with patients, but he believes younger patients view doctors more interchangeably and prioritize having timely access to any doctor rather than a specific one. “They’re not necessarily as sentimental as their parents were,” he says.
Dr. M thinks locums jobs may be increasingly attractive to physicians with young families who want substantial time off and to new residency graduates who don’t want to work as employees in large provider groups but have trouble identifying smaller independent practices. As for his old colleagues, he says, “I’m not mad at them that they joined with private equity. I am more frustrated by the fact that they felt like they had to.”
Trying to Sidestep Private Equity
Not all medical specialties draw interest or upfront cash from private equity firms. Since the No Surprises Act went into effect in 2021, preventing hospitals from charging out-of-network rates for the services of emergency physicians, anesthesiologists, and other emergency care providers who opt out of insurance networks, PE firms have had less incentive to invest in their practices.
Marco Fernandez, MD, an anesthesiologist and former president of Midwest Anesthesia Partners, the largest group of independent anesthesiologists in Illinois, turned down such offers when they came in because he doesn’t like how PE-backed anesthesia groups tend to assign cases to certified nurse anesthetists and make physicians their supervisors. “We wanted to do our own cases and take care of our own patients,” he says. “If we’d sold or joined a staffing company, we’d be managing as many as 10 surgeries at once. It would make us glorified rescuers, running in for emergencies and filling out paperwork,” he says. “It’s a different level of stress.”
Retaining hospital contracts for the then-300-physician group became much harder when PE-backed staffing companies using such models stepped into the market, offering a less expensive service. “Within a two-week span, we lost two contracts,” Fernandez says. Some physicians in the group opted to join PE-backed ventures or become hospital employees. The remaining 100, who wanted to retain their model, now primarily serve ambulatory surgery centers or work in three hospitals as locum providers. Similar disruptions are playing out in other markets, leading to delays in surgeries.
Fernandez worries that not having the same anesthesia staff in facilities will impede communication and quality improvement, but he hasn’t found hospitals willing to subsidize a physician-centric approach. In 2022, he joined three other anesthesia groups in forming the Association for Independent Medicine, an advocacy organization that’s been calling for greater regulatory oversight of PE ventures and protections of clinicians’ decision-making. Another organization, the Coalition for Patient-Centered Care, is pursuing a similar mission, in part by asking state and federal lawmakers to apply antikickback and fraud and abuse laws to PE acquisitions of physician practices.
Partnership Is Crucial
The experiences of these physicians, while purely anecdotal, suggest private equity investment can be advantageous if the partnership is structured in a way that aligns physician and investor interests. “A lot of the bad case studies you see involve private equity firms turning physicians into employees whose income is tied to what they generate, mirroring what health systems do,” says Robert Aprill, a partner with Physician Growth Partners, an investment banking and advisory firm that represents physicians in transactions with PE firms. There’s higher satisfaction when investors tie compensation to practice profitability and add value by helping clinicians gain access to data and discounts on supplies, he says. “Private equity can become a vehicle to create super groups across state lines.”
Physicians have to be flexible, Patel says. “Whenever you sell to private equity, it’s not a lifetime achievement award where you walk away with a check. It’s a growth model. That’s where I see private equity deals fail. Both sides aren’t willing to grow together.”
If a partnership goes awry, there can be severe consequences for physicians. Toussaint says that half of the partners at his former practice were gone at the time he spoke with us, and that there was a “mind-boggling” amount of litigation happening. While MSOs typically pick up the cost of a defense, such expenses cut into the profitability, and thus the resale value, of the business. Towsen has also seen instances in which doctors departing from PE-backed ventures had to hire lawyers and forensic accountants to protect their interests.
Keep the Exit Pathway Clear and Well Lit
Too often physicians get distracted by the lump sum that private equity firms offer and sign away rights via letters of intent before showing them to a lawyer, says Randal Schultz, JD, CPA, a health care lawyer with Lathrop GPM in Kansas City. He encourages his clients to capture what matters most to them in contracts, including the hours and years they are expected to work, the terms of compensation that can and cannot be altered, and, perhaps most important, the circumstances under which they can exit without being subject to a noncompete clause or a clawback of the initial payment. “If you get terminated without cause, or they breach the contract, you should be able to walk away without any restrictions,” he says.
PE firms often understand and will try to exploit physicians’ risk aversion, Toussaint says. They know that clinicians with children and tuition bills in their future may be hesitant to start practicing in a new area. In addition to uprooting a family, they’d be subjecting themselves to additional background checks and licensing paperwork. “It’s really time-consuming and draining,” he says.
Ericka Adler, JD, LLM, who leads the health law practice at Roetzel and Andress in Chicago, encourages physicians to think about how they will continue to practice if things go south. “I’ve seen doctors who were terminated from their practices after selling it be subject to a noncompete clause,” she says. Adler also sees a lot of young doctors who are very opposed to working with a PE firm. They want an exit pathway written into their contracts if the practice they join decides to sell to one, so they can move on to a practice that isn’t PE-owned or PE-managed.
Invest in Yourself
Toussaint hopes physicians will consider a third way: capitalizing themselves. “If you have a good management team for your practice, tell them to borrow money to pay partners who want to retire. Then use some of that money to stay true to your growth strategy,” he says.
Now in academia, Toussaint warns the residents he trains to preserve their freedom at all costs. “I tell them your entire life as a doctor has been trying to get in — to the best high school, the best college, and the best medical school. Now your goal when you are negotiating these contracts is to figure out how the hell to get out.”
HENRY KOTULA 