Trends in Private Equity Acquisition of Dermatology Practices in the United States | Dermatology | JAMA Dermatology | JAMA Network
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Original Investigation
July 24, 2019

Trends in Private Equity Acquisition of Dermatology Practices in the United States

Author Affiliations
  • 1Department of Dermatology, Brigham and Women’s Hospital, Boston, Massachusetts
  • 2Harvard Medical School, Boston, Massachusetts
  • 3Harvard Business School, Boston, Massachusetts
  • 4Associate Editor, JAMA Dermatology
JAMA Dermatol. 2019;155(9):1013-1021. doi:10.1001/jamadermatol.2019.1634
Key Points

Question  What are the recent trends in private equity dermatology practice acquisitions throughout the United States?

Findings  This cross-sectional study of 5 financial databases found that private equity–backed dermatology management groups acquired 184 dermatology practices from 2012 to 2018, with the number of acquisitions increasing over time and broadening in geographic reach. These acquired practices comprised an estimated 381 dermatology clinics as of mid-2018, and the number of financing deals in which dermatology management groups raised capital increased over time.

Meaning  In recent years, private equity firms have increased their financial stakes in dermatology practices throughout the United States.


Importance  Private equity (PE) firms invest in dermatology management groups (DMGs), which are physician practice management firms that operate multiple clinics and often acquire smaller, physician-owned practices. Consolidation of dermatology practices as a result of PE investment may be associated with changes in practice management in the United States.

Objective  To describe the scope of PE-backed dermatology practice acquisitions geographically over time.

Design, Setting, and Participants  This cross-sectional study examined acquisitions of dermatology practices by PE-backed DMGs in the United States. Acquisition and investment data through May 31, 2018, were compiled using information from 5 financial databases. Transaction data were supplemented with publicly available information from 2 additional financial databases, 2 financial news outlets, and press releases from DMGs. All dermatology practices acquired by PE-backed DMGs were included. Acquisitions were verified to be dermatology practices that provided medical, surgical, and/or cosmetic clinical care. Private equity financing data were included when available. The addresses of clinics associated with acquired practices were mapped using spatial analytics software.

Main Outcomes and Measures  The number and location of PE practice acquisitions over time were measured based on the date of deal closure, the geographic footprint of each DMG’s acquisition, and the financing of each DMG.

Results  Seventeen PE-backed DMGs acquired 184 practices between May 1, 2012, and May 22, 2018. These acquired practices accounted for an estimated 381 dermatology clinics as of mid-2018 (assessment period from May 1 to August 31). The total number of PE-owned dermatology clinics in the United States was substantially larger because these data did not reflect DMGs that opened new clinics (organic growth); acquisitions data represented only the ownership transfer of existing practices from physician to PE-backed DMG. Practice acquisitions increased each year, from 5 in 2012 to 59 in 2017. An additional 34 acquisitions took place from January 1 to May 31, 2018. The number of financing rounds to sustain transactions mirrored the aforementioned trends in practice acquisitions. Clinics associated with acquired practices spanned at least 30 states, with 138 of 381 clinics (36%) located in Texas and Florida.

Conclusion and Relevance  The study findings suggest that PE firms have a financial stake in an increasing number of dermatology practices throughout the United States. Further research is needed to assess whether and how PE-backed ownership influences clinical decision-making, health care expenditures, and patient outcomes.