Updated: Apr 13
It feels like year after year we hear more and more about how costs associated with healthcare continue to rise. Insurance premiums go up, out-of-pocket amounts (i.e., deductible and catastrophic caps) go up... It begs the question – what the heck is going on?
This is a multifactorial issue, meaning that the answer to "why" isn't a simple, singular thing. However, there are some trends that we've observed in the research and published data. For starters, we've seen an increase in profitability among commercial health insurance companies – for example, Cigna had a reported shareholders' net income of $6.7 billion for the 2022 calendar year, and they weren't even the most profitable insurance company in the country.
Beyond some of the considerations of the health insurance industry, we've seen another interesting trend over the last several years. When utilizing large-scale companies, especially private equity-involved healthcare practices, the data suggests that this may cost you more money and be more associated with an increased number of office visits and treatments or procedures compared to utilizing independent healthcare groups.
Size matters – but bigger healthcare isn't always better, and it definitely doesn't appear to be cheaper
From a data perspective, several publications however have shown that seeking care at a large-scale, private equity-backed healthcare option is more expensive and may involve a greater number of office visits compared to an independent, non equity-backed healthcare option. There are a number of reasons suggested in conjunction with this – large, equity-backed groups appear to have to cover additional overhead costs, from physical spaces to administrative costs. A recent study from Singh and colleagues identified a difference, on average of $71 per claim more when filed by an equity-backed firm compared to an alternative. Just think for a minute – if you could save $70 every time you went to a healthcare office, what would you do with that? And speaking from experience in working for larger, equity-backed companies, the expectations for the number of patients to be seen each day is often much higher when working for a large company compared to being in an independent clinic.
"Shop small" applies to effective physical therapy
We routinely see patients that express a mix of surprise and concern – "Why aren't you seeing 3 or 4 or 5 people at a time?" A lot of this has to do with our values as a company – we prioritize quality and want the best for you and your health. Ultimately, we feel that individualized attention is most effective. For certain types of tendon pain, the evidence supports a workload that causes soreness to
increase slightly. If we don't have the direct oversight and capacity to monitor symptoms and to ensure you're working at the appropriate threshold, it's impossible to know if you're on track. Certain nerve-related pain and conditions appear, especially acutely, to respond favorably to specific hands-on treatments that don't aggravate symptoms. If we're trying to tend to several people simultaneously, this is incredibly difficult to achieve.
We've even seen trends with some insurance carriers where the amount billed for the exact same services is greater when coming from a large system. This often comes down to a few other things, like garnering certain business credentials (not related to clinical qualifications), but ultimately these business credentials don't appear to have any bearing on how well you do or how quickly you might get better.
Small businesses often prioritize being there for the community and delivering a good service or product. This is as true for the farmers' market vendor as it is for your local healthcare provider.
Gondi S, et al. Potential implications of private equity investments in health care delivery. JAMA. 2019;321(11):1047-1048.
Bruch JD, et al. Changes in hospital income, use, and quality associated with private equity acquisition. JAMA Internal Med. 2020;180(11):1428-1435.
Singh Y, et al. Association of private equity acquisition of physician practices with changes in health care spending and utilization. JAMA Health Forum. 2022;3(9):e222886.
Meier D. Private equity and health care delivery. JAMA. 2021;326(24):2533-2534.