Sale of Private Equity–Owned Physician Practices and Physician Turnover

Private equity (PE) ownership of physician practices is increasing, with owners targeting sales, or exits, in 3 to 7 years. Little is known about the association of exit with physician retention and subsequent employment. Using panel data over the period 2014-2020, we find physicians in practices sold by PE owners between 2016-2018 were 16.5 percentage points likelier to work elsewhere within 2 years after the sale and 10.1 percentage points likelier to join large (>120-physician) practices upon leaving than matched control physicians working in the same local markets and specialties in practices not sold by PE owners. Given the 60% mean rate of staying among controls, this represents a 27.5% reduction in retention. There was no significant difference in retirement probability. An analysis of “pre-trends” confirmed no differential trends in retention or retirement between the treatment group and matched controls in the 2 years preceding exit. The increase in turnover after PE exit occurred despite most exiting practices being purchased by PE investors, who may offer financial incentives to encourage retention. The increase in physician turnover and consolidation following PE exits has important implications for patients, physicians, investors, and physician markets, including disruption for practices and patients and likely for increases in costs of care.