The biggest questions I field regarding private equity are:
1. When they have overpaid for the practice the first time, who is going to overpay for the practice the second time?
2. Will PE continue to overpay for practice acquisitions in the future?
After 23+ years in the industry, I have seen some "corporate version" of today's private equity. In each model, those on the front end make out like bandits. Those joining later, it never works out well.
While they have "money", several physicians have been let go by PE practices due to COVID. Others were given the choice of a major pay cut or a layoff. One private equity practice had the office copier repossessed! A physician in the practice had his paycheck reduced to around $450 pre-tax. Again, a take it or leave it. Obviously COVID has been something we could not forsee, and this might be an outlier, but it is happening.
The idea that the management will be "hands off" will not happen. Obviously, they need to show a "profit". I don't see management allowing a physician to continue to see current patient levels after the proposed 6% CMS cut. Investors want a profit and there is only two ways of doing that, cutting expenses (staff/salaries/benefits) or seeing more patients. If you don't like it, you still have the choice of staying or leaving.
I have seen some equity models as
@MstaKing10 mentioned, that could be a nice "partnership" between the PE and Physicians. The problem is that we will not know if these models work for several years.
My two cents.