There have been two waves of equity-based investment in physician practices. Both used a combination of public and private sources, but in different mixes. The first investment wave in the 1990s was led by public equity and physician practice management companies (PPMCs), with less involvement by private equity (PE). The second investment wave followed the Affordable Care Act (ACA 2010) and led by PE firms. It has generated concerns of wasteful spending, less cost-effective care, and initiatives harmful to patient welfare. This paper compares the two waves and asks if they are parallel in important ways. We describe the similarity in the players, driving forces, acquisition dynamics, spurs to consolidation, types of equity involved, models to organize physicians, and levels of market penetration achieved. The paper then tackles three unresolved issues. Does PE investment differ from other investment vehicles in concerning ways? Does PE possess capabilities that other investment vehicles lack and confer competitive advantage? Does physician practice investment offer opportunities for super-normal profits? The paper then discusses ongoing trends that may disrupt PE and curtail its practice investment. We conclude past may be prologue: what happened during the 1990s may well repeat, suggesting the PE threat is overblown.

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