Weekly roundup
Here’s what you missed last week!
🏛️ Policy & Payers
An Illinois bill would ban AI-driven downcoding and require physician review before payers adjust claim levels, a trend we tracked across carriers in The Downcoding Playbook.
HHS reports $28.8 billion in Medicare FFS improper payments for 2025, with documentation and coding gaps driving the bulk of the errors.
Medicare Advantage payments now run 14% above traditional Medicare with 35.4 million enrollees, though disenrollment rates are climbing.
Minnesota Governor Walz proposed replacing Medicaid managed care organizations with a single statewide entity, cutting private payers out of the state's program entirely.
📈 Business & Tech
An AMA survey found physician AI usage doubled between 2023 and 2026, with 81% of doctors now using AI tools for documentation, diagnosis support, or workflow automation.
Polypharmacy waste costs billions annually, but tech platforms identifying risky drug combinations are showing early results in reducing adverse events and unnecessary spending.
Dermatologists treating chronic wounds should assess wound sites like real estate, evaluating blood supply, tissue viability, and infection risk before selecting a treatment path.
Digital patient recruitment is outperforming traditional referral models, with practices that invest in online channels reaching broader, more diverse patient populations at lower cost.
🩺 Clinical
Device-based acne treatments are gaining traction as clinicians report improved outcomes and higher patient satisfaction when pairing energy devices with standard topical and oral therapies.
A new study found that sunscreen SPF protection does not correlate with price, with budget and premium products performing comparably in controlled UV exposure testing.
AI-powered systems are showing early results in managing patient follow-up workflows, aggregating data from visits, labs, and imaging to flag overdue actions that would otherwise slip through the cracks.
The Deep Dive
PE isn't just buying practices. It's rerouting your referrals.
Thirty-five PE-backed dermatology platforms now operate across the U.S. Most practice owners are watching the acquisition headlines, but they should be watching what happens after these platforms reach scale.
The acquisition story is real. Across 2024 and 2025, the derm PE market saw $6.4 billion in deal value. 73% of those deals were add-ons to existing platforms, not new entrants. Forefront Dermatology alone closed 5+ acquisitions in late 2025. The buying isn't slowing down.
But acquisition volume is the headline story. The bigger, quieter story is what a 200-location platform does to your market once it's fully operational. Three things are already happening.
Referrals are being redirected
A Medicare claims study by Singh et al. found that PE-acquired multispecialty practices increase internal self-referrals by 7 percentage points. Total referral volume doesn't change. The referrals just shift from independent providers to affiliated ones.
The mechanism is structural, not conspiratorial. PE platforms build in-house pathology labs, add Mohs surgeons, open cosmetic arms. Centralized EHR systems default to affiliated providers in the referral dropdown. Compensation structures tie bonuses to internal capture rates. When a PE-backed PCP needs a derm referral, the platform's clinic is the path of least resistance.
The patient volume numbers tell the same story. Emanuel et al. in JAMA Health Forum found PE-acquired derm practices saw 25.8% more unique patients and 37.9% more new patients than matched controls. That growth isn't organic. It's being engineered through referral infrastructure.
Payer rates are falling behind
PE platforms don't just negotiate better. They negotiate from a fundamentally different position. When you control 100+ locations across a state, you're a must-have for network adequacy. The payer can't drop you without creating access gaps.
The data across specialties is consistent. In markets where PE penetration exceeds 30%, dermatology prices run 13.3% higher than in less concentrated markets. Braun et al. in Health Affairs documented PE derm practices charging 3-5% more for routine visits within 18 months of acquisition. Across physician specialties broadly, PE-affiliated providers command 8-28% rate premiums over independents.
An independent practice signing standard payer contracts doesn't have this leverage. And the gap compounds. Lower rates mean lower revenue, lower practice valuations, and a harder case for rate increases next cycle.
Talent pipelines are being outbid
Only about 544 dermatology residency positions exist nationally. Roughly 500-600 new dermatologists enter the workforce each year, into a market that already sits below the recommended provider-to-population ratio.
PE platforms have dedicated recruitment teams that begin outreach 12-18 months before graduation. They offer guaranteed salaries of $400,000-$500,000, signing bonuses up to $150,000, and structured onboarding with built-in patient volume from day one. An independent offering $350,000-$450,000 with a partnership track is making a longer-term pitch to a new grad carrying $200,000+ in student loans.
The talent drain doesn't stop at new grads. After a PE firm exits a practice, physicians are 10% more likely to join larger groups, further concentrating the workforce away from independents.
The regulatory picture
Regulators are catching up, slowly. The FTC settled with Welsh Carson over its USAP anesthesia roll-up in January 2025, the first time the agency targeted a PE sponsor directly. California's SB 351 and Oregon's SB 951 tightened corporate practice of medicine restrictions in 2025. But no dermatology-specific enforcement action has occurred. The guardrails are being built, but they're not keeping pace with consolidation.
Takeaways
Audit your referral sources quarterly. Pull referring provider data and track year-over-year trends. If a PCP group that used to send you 15 patients a month is now sending 8, find out whether they've been acquired or affiliated with a PE platform. That volume isn't coming back without deliberate relationship building.
Benchmark your payer rates against the market. Request MGMA or specialty-specific benchmarks and compare your top 5 payer contracts. If you're more than 5% below median, you're leaving revenue on the table that PE-backed competitors are capturing. Negotiate from data, not habit.
Build a recruitment pipeline before you need one. Contact residency programs in your region now. Offer shadowing rotations, mentorship, and a clear partnership track with equity. The PE pitch is short-term cash. Yours should be long-term ownership, clinical autonomy, and stability. But you have to make that case early, not after the resident has already signed.
Bottom line: Independent dermatology isn't disappearing. But competing on inertia against a platform with 200 locations, dedicated recruiters, and payer leverage isn't a strategy. The practices that track these signals and respond will keep their referral networks, their talent, and their independence. The ones that don't will wonder where the patients went.
Need a pro?
When you're ready for an expert to make your practice's billing bulletproof, schedule a strategy call with our team.
That’s it for this week.
This one was super fun. Hope you enjoyed it too.
