The phenomenon of private equity (PE) companies purchasing medical practices is receiving greater scrutiny from academicians, journalists, and government regulators. Many recent stories do not portray the private equity model in a favorable light.
As I discussed in an earlier Forbes piece, under the private equity model an investment fund purchases a medical practice. The current physician owners receive some combination of cash and/or stock in the larger entity (often with a vesting period and other restrictions such as a non-disparagement clause if they leave the practice). In exchange, they work as employees for the new owners, who set business policy. The new owners typically take a percentage of revenue off the top. Consequently, the physicians make less going forward, in addition to relinquishing control of their practice to the new owners.