Objective: To assess how private equity ownership affects prices, service mix, and Medicaid participation in dentistry at the practice level.
Study setting and design: We utilize a proprietary dental office database linked to administrative dental commercial claims data to estimate the effects of private equity ownership on the financial and operational outcomes of dental offices, employing a staggered difference-in-differences panel design that addresses the nonrandom acquisitions of facilities by private equity firms.
Data sources: We rely on private equity transaction data from 2015 to 2021, longitudinal dental office data from the 2015 to 2017 and 2019 to 2021 American Dental Association dental office database, and aggregated commercial dental insurance price and utilization data from 2015 to 2021.
Principle findings: Following acquisition, private equity-owned dental offices increased charges for dental care services by 3.3% (95% CI: 2.3%-4.4%), although allowed prices for these services remained statistically unchanged. Dental offices acquired by private equity firms tended to shift from diagnostic and preventive procedures to generally higher reimbursement restorative, specialty, and surgical procedures. Dental offices were more likely to become multispecialty practices after being acquired by a private equity firm.
Conclusions: Allowed or negotiated prices between dentists and payers did not change in dental offices after being acquired by private equity. Nevertheless, list prices for dental services increased in private equity-owned practices, meaning higher prices can still be passed on to patients. Private equity firms can enhance dental practice revenue by shifting from preventive procedures to higher-cost restorative procedures while not reimbursing providers at a higher amount. In other words, financial enhancement of dental practices under private equity may not translate into benefits for providers or patients. Policymakers should be aware of the effects private equity acquisition has on provider and patient welfare.
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