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   Accepted Manuscript Future considerations for clinical dermatology in the setting of 21st century Americanpolicy reform: corporatization and the rise of private equity in dermatologySailesh Konda, MD, Joseph Francis, MD, Kiran Motaparthi, MD, Jane M. Grant-Kels,MDPII:S0190-9622(18)32667-7DOI:10.1016/j.jaad.2018.09.052Reference:YMJD 12848To appear in: Journal of the American Academy of Dermatology  Received Date:7 February 2018Revised Date:24 September 2018 Accepted Date:27 September 2018Please cite this article as: Konda S, Francis J, Motaparthi K, Grant-Kels JM, Group for Research of Corporatization and Private Equity in Dermatology, Future considerations for clinical dermatology inthe setting of 21st century American policy reform: corporatization and the rise of private equity indermatology, Journal of the American Academy of Dermatology   (2018), doi: https://doi.org/10.1016/ j.jaad.2018.09.052.This is a PDF file of an unedited manuscript that has been accepted for publication. As a service toour customers we are providing this early version of the manuscript. The manuscript will undergocopyediting, typesetting, and review of the resulting proof before it is published in its final form. Pleasenote that during the production process errors may be discovered which could affect the content, and alllegal disclaimers that apply to the journal pertain.  A CCEPTED MANUSCRIPT 1 Future considerations for clinical dermatology in the setting of 21 st  century 1 American policy reform: corporatization and the rise of private equity in 2 dermatology   3 Sailesh Konda, MD 1* ; Joseph Francis, MD 1 ; Kiran Motaparthi, MD 1 ; 4 Jane M. Grant-Kels, MD 2 5 6 Group for Research of Corporatization and Private Equity in Dermatology 7 8 * Corresponding author: 9 1 Department of Dermatology, University of Florida College of Medicine, 4037 NW 86 th   10 Terrace, 4th Floor, Gainesville, FL 32606 11 Phone: 352-594-1942; Fax: 352-594-1926 12 Email: sailesh.konda@dermatology.med.ufl.edu 13 14 2 Department of Dermatology, University of Connecticut School of Medicine, 21 South 15 Road, 2nd Floor, Farmington, CT 06030 16 17 Key words: corporatization, consolidation, dermatology, dermatopathology, venture 18 capital, private equity, outlier practice patterns 19 Funding sources: None 20 Conflicts of interest: None 21 Abstract word count: 99 22 Manuscript word count: 2481 23 Tables: 5 24  A CCEPTED MANUSCRIPT 2 Abstract 25 Within the last two decades, for-profit financial groups have become increasingly 26 involved in health care. Outlier dermatology practices with high volumes of well- 27 reimbursed procedures are attractive to consolidation backed by private equity. With 28 fewer choices for independent or group private practice, junior dermatologists are 29 increasingly seeking employment without ownership in private equity-backed corporate 30 groups, whose primary fiscal responsibility lies with investors. Medicare’s response to 31 corporatization and consolidation has already changed the practice of 32 dermatopathology. Dermatologists should be aware of this history, given the ability of 33 corporations and private equity groups to shape the present and future of our field. 34 35 36 37 38 39 40 41 42 43  A CCEPTED MANUSCRIPT 3 Introduction   44 During the last decade, venture capital (VC) and private equity (PE) have fueled the 45 consolidation and corporatization of dermatology. PE is composed of pooled funds from 46 investors that directly invest in established private companies or that engage in buyouts 47 of public companies. VC is a subset of PE that invests in start-ups with strong growth 48 potential. PE is attracted to dermatology because of an aging population, expanded 49 insurance coverage, dermatologist scarcity, and profitable medical, surgical, and 50 cosmetic procedures. 1  Dermatology generated $12.7 billion in revenue in 2015 and is 51 projected to generate $16.3 billion by 2020. 2  Furthermore, the dermatology market is 52 highly fragmented, which has attracted some dermatologists to team up with PE as 53 consolidators. This relationship may be inherently challenging given that PE’s primary 54 accountability is to investors. 55 56 The dermatology-industrial complex 57 The American Medical Association (AMA) created the Corporate Practice of Medicine 58 Doctrine (CPOM Doctrine) in 1847, which “prohibits corporations from practicing 59 medicine or employing a physician to provide professional medical services.” The 60 CPOM Doctrine was created due to: 1) commercialization of the practice of medicine, 2) 61 difficulty aligning a corporation’s obligation to its shareholders and an employed 62 physician’s obligation to his or her patients, and 3) the possibility of a corporation 63 interfering with an employed physician’s independent medical judgement. 3  While many 64 states followed suit and enacted laws prohibiting CPOM 4 , there are broad exceptions. 65 This has allowed some to successfully navigate around CPOM laws and structure 66
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