Why Private Equity Is Furious

Over a Paper in a Dermatology

Journal
Oct. 26, 2018

Dr. Matt Leavitt heads Advanced Dermatology and Cosmetic Surgery, the largest dermatology practice in the
United States, which is backed by private equity. It is one of the practices that objected to the article.Jennifer Sens
for The New York Times

Early this month, a respected medical journal published a research paper on

its website that analyzed the effects of a business trend roiling the field of
dermatology: the rapid entrance of private equity firms into the specialty by
buying and running practices around the country.

Eight days later, after an outcry from private equity executives and
dermatologists associated with private equity firms, the editor of the
publication removed the paper from the site. No reason was given.

Furor over the publication and subsequent removal of the article has
deepened a rift in the field over what some see as the “corporatization” of
dermatology and other areas of medicine.

[The once sleepy field of dermatology is booming these days.

Read our story.]

The paper was published on the website of the Journal of the American
Academy of Dermatology on Oct. 5, posted along with numerous other
articles labeled “In Press Accepted Manuscript.” Most articles with this
designation eventually appear in a print edition of the journal; some remain
online.

Dr. Dirk Elston, the journal’s editor, said in an email that he replaced the
article with a notice of “temporary removal” after receiving multiple calls and
emails “expressing concerns about the accuracy of a few parts” of the article.

On Wednesday, nearly two weeks after removing the article, Dr. Elston told
the authors they had a choice: They could correct “factual errors” or retract
the paper.

The authors maintain that the article does not contain any factual errors and
that several of the corrections requested had to do with protecting the
reputation of the specialty and the leaders of the American Academy of
Dermatology, the association that publishes the journal. Later on Wednesday,
they submitted some revisions.

The article had gone through the standard editorial process of academic
journals, undergoing multiple revisions based on feedback from peer-
reviewers selected by the journal, before being accepted for publication. It
presents data to support a conclusion that private equity firms acquire
“outlier” practices — that is, practices that perform an unusually high number
of well-reimbursed procedures and bill high amounts to Medicare.

“It was interesting when we ran the numbers and we were counting how
many practices with billing outliers were being acquired by private equity,”
said Dr. Joseph Francis, a dermatologist in Florida who is a co-author on the
paper. “With every revision of the paper, that number kept increasing. So it
didn’t seem like an anomaly.”

He added, “It wasn’t clear whether these investors realized that the high
billing might point to anything irregular. They might have just seen that this
was a practice with booming business.”

The paper also notes that many practices backed by private equity firms have
opened or acquired labs to process pathology specimens, potentially another
source of profit.

Among those who objected to the article was Dr. George Hruza, the incoming
president of the American Academy of Dermatology. Dr. Hruza, whose one-
year term as president begins in March, is a dermatologist in Chesterfield,
Mo. In 2016 he sold his own dermatology practice to United Skin Specialists,
a firm that manages dermatology practices and is backed by private equity.
He currently serves on the board of directors of United Skin Specialists,
which he said is an unpaid position.

Dr. Hruza is not named in the journal article, but he said he is easily
identified by the authors’ reference to his pending presidency of the academy,
and to United Skin Specialists.

In an interview, Dr. Hruza said he did not ask that the paper be taken down.
He did, however, confirm that he expressed his concerns to Dr. Elston, the
editor, after it was posted. Two days later, Dr. Elston removed the paper. A
flurry of intense conversations ensued among Dr. Elston; Dr. Hruza; the
current academy president, Dr. Suzanne Olbricht; a lawyer for the
dermatology academy; and the paper’s authors.

Dr. Sailesh Konda, left, and Dr. Joseph Francis, authors of a paper that has caused a stir in the field of dermatology.

Specifically, Dr. Hruza said, he objected to one of the paper’s conclusions:

Influential dermatology leaders are being recruited to work for and promote
dermatology practices backed by private-equity firms.

“Implying motivation is a stretch,” he said. Dr. Hruza has asked for specific
wording changes to that section of the paper.

Among the changes the editor of the journal asked the authors to make was
the removal of identifiable references to influential dermatologists, including
Dr. Hruza.

Interference with a scientific paper from within the ranks of a medical society
is highly unusual, say experts in the medical publishing field. The sudden
disappearance of the paper has others in the medical publishing world
scratching their heads.

“The process of science requires that people be allowed to publish their data
as long as it has been reviewed by peers who find it accurate in that moment,”
said Dr. Mitchell Katz, president and chief executive of NYC Health &
Hospitals and Deputy Editor of the journal JAMA Internal Medicine.

As for corrections, Dr. Katz added, “usually you would post a correct copy
rather than removing a paper for days on end.”

Dr. Elston said others who objected to the article included Dr. Darrell Rigel, a
prominent dermatologist in New York who is a former president of the
academy and whose practice is now owned by Schweiger Dermatology, a
private equity-backed practice. Dr. Rigel did not respond to requests for
comment.

Dermatologists account for one percent of physicians in the United States,

but 15 percent of recent private equity acquisitions of medical practices have
involved dermatology practices. Other specialties that have attracted private
equity investment include orthopedics, radiology, cardiology, urgent care,
anesthesiology and ophthalmology.

One of the paper’s five supplemental tables lists 32 dermatology practices in

the United States that have been formed or acquired by private equity firms.
Many are large practices with dozens of physicians.

Shortly after the article disappeared from the journal’s website, a copy was
posted to a Facebook group composed of some 3,500 dermatologists. Several
participants in the Facebook group praised the article for shining a light on
the effects of private equity on their specialty, and were outraged that the
article had been withdrawn.

“If this were an article on psoriasis no one would be questioning it, but this
was going to ruffle some feathers,” said Dr. Curtis Asbury, a dermatologist in
Selbyville, Del., and an active participant in the Facebook group.

The lead author of the paper was Dr. Sailesh Konda, an assistant clinical
professor of dermatology at the University of Florida College of Medicine. Dr.
Konda, 34, said he first grew interested in the topic when several of his
trainees went to work for private equity-backed practices and told him of
clinical environments that emphasized profits at the expense of patient care.
He said that over the past year he had given 16 talks around the country to
medical residents and dermatology societies about private equity. Dr. Francis
has joined him for some of the sessions.

Dr. Konda said he and his co-authors spent a year working on the paper.
After the paper went out for review, he said, “we received constructive
feedback.” Most of the comments, he said, were about maintaining a neutral
tone.

“We strived to not use any polemic words, which could be interpreted as
bias,” he said. “We decided to just deal with the facts, which would speak for
themselves.”

This week a lawyer for Advanced Dermatology and Cosmetic Surgery, which
is backed by private equity and is the largest dermatology practice in the
United States, called the general counsel at the University of Florida, where
two of the authors are employed, demanding specific changes to the paper.
The general counsel for the university declined to comment. Dr. Matt Leavitt,
the chief executive of Advanced Dermatology, did not respond to requests for
a comment.

Dr. Konda says he plans to continue his research into private equity. “I am
passionate about this topic,” he said. “I realize we live in a capitalist society
and money is a driving force behind many decisions regardless of the
industry. However, I believe there has to be a balance between profit and
patient care.”
Correction: October 26, 2018

An earlier version of this article gave the wrong location for an office of Dr.
Curtis Asbury. He has a dermatology practice in Selbyville, Del., not in
Maryland. The article also misstated where Dr. Asbury practices medicine.
He is licensed in Delaware and Maryland, not only in Delaware.