In Washington and in state capitals across the country, lawmakers and regulators are fomenting panic about private equity firms rolling up physician practices and squeezing them for a quick profit.

There’s just one problem with this narrative. It’s not true. New research empirically debunks it.

Medicare expenditures are lower for beneficiaries under the care of physicians in independent medical practices affiliated with private equity than for those in hospital- or corporate-affiliated practices. And when physicians shift from an unaffiliated model to a PE-affiliated one, their per-beneficiary Medicare expenditures go down.

There’s also evidence that PE-affiliated physicians provide a better patient experience and better-quality care. Medicare beneficiaries in PE-affiliated private practices spend fewer days in the hospital and go to the emergency department less than their counterparts in hospital-affiliated practices.

The research in question was published in September by healthcare consulting firm Avalere. The study analyzed 2022 risk-adjusted Medicare claims data across five medical specialties: cardiology, gastroenterology, medical oncology, orthopedics, and urology.

Researchers found that in the specialties studied, total Medicare expenditures for patients in PE-affiliated practices were on average 9.8% lower than for beneficiaries in hospital-affiliated practices.

Across all five specialties, beneficiaries in PE-affiliated practices had on average 13.5% fewer inpatient days than beneficiaries in hospital-affiliated practices — and on average 7.9% fewer visits to the emergency department.

Avalere also investigated what happened to Medicare expenditures after unaffiliated physicians in the five specialties studied decided to affiliate with a larger body — whether a hospital, a corporation, or private equity-backed management services organization that furnishes operational and financial support.

Contrary to the popular narrative, total Medicare expenditures went down in the 12 months after an unaffiliated physician moved to a PE-affiliated model across all five specialties.

By contrast, total Medicare expenditures went up in the 12 months after an unaffiliated physician transitioned to a corporate or hospital affiliation across all five specialties.

Given these findings, perhaps policymakers should encourage more physician practices to partner with private equity-backed entities.

PE-backed management services organizations offer physician practices access to capital that they can use to expand access to care.

For example, independent oncologists affiliated with one PE-backed MSO have been able to enroll their patients in more than 700 clinical trials for novel medicines. Without a financial partner, they never would have had the resources or the operational expertise to set up that kind of clinical trial infrastructure.