good story PP vs Private equity

[caligas]

https://www.anesthesiologynews.com/Commentary/Article/12-23/War-Games-Private-Anesthesia-Group-Versus-Hospital-System-Versus-Private-Equity-Firm/72202

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[TheLoneWolf]

https://www.anesthesiologynews.com/Commentary/Article/12-23/War-Games-Private-Anesthesia-Group-Versus-Hospital-System-Versus-Private-Equity-Firm/72202

Excellent article and should be required reading for anyone out in practice, particularly the new grads.

I identified with many of the same issues and situations he had noted.

 

[Ashers]

This part is telling

I penned this editorial, and it was accepted for publication in the ASA Monitor (January 2024). At the last minute, it was pulled because “it raised some objections with ASA [American Society of Anesthesiologists] senior leadership.” It was not created to blame but is a written account of an unfortunate series of events leading to the almost total dismantling of a proud and successful group of anesthesiologists, the placement of a national provider of anesthesia in an improbable situation for success, and a large hospital system pushed to near closure of surgical services.

 

[psychbender]

Knew a couple of those guys. Absolutely **** situation, but about what I expect from the dumb ****s with UPMC.

 

[Bertelman]

Experienced a related situation, though the timelines were mixed up a little bit. It’s a gamble, but much like the author, I have stayed within the system and made it to a stable place. I am intellectually challenged, mostly happy with my colleagues, and happy with the direction of the department.

My patience paid off, but only because ai became involved in the admin. Cultivated relationships. I admit that me staying probably had a 20% rate of success.

 

[Simba1711]

Depressing read but very real.

 

[UscGhost]

Experienced a related situation, though the timelines were mixed up a little bit. It’s a gamble, but much like the author, I have stayed within the system and made it to a stable place. I am intellectually challenged, mostly happy with my colleagues, and happy with the direction of the department.

My patience paid off, but only because ai became involved in the admin. Cultivated relationships. I admit that me staying probably had a 20% rate of success.

People say I am intellectually challenged as well

 

[ToKingdomCome]

Knew a couple of those guys. Absolutely **** situation, but about what I expect from the dumb ****s with UPMC.

This is confirmed a UPMC hospital? Name and shame

 

[psychbender]

This is confirmed a UPMC hospital? Name and shame

The author is with Riverside. They held the contract with the three hospitals that made up the core of UPMC's central PA expansion (they merged/acquired the Harrisburg-based Pinnacle system about seven years ago). The Lancaster, Lititz, York hospitals theoretically were to funnel patients toward Harrisburg to centralize care. It's been a ****-show ever since they moved in.

 

[pgg]

How depressing

 

[Urzuz]

How depressing

Is it depressing? I found the story quite optimistic and enjoyable.

Greedy hospital system gets burned by ****ty PE anesthesia company?

Hospital system comes back to original anesthesia group and begs for them to come back?

Inject it straight into my veins please.

 

[Dr. Rude]

Is it depressing? I found the story quite optimistic and enjoyable.

Greedy hospital system gets burned by ****ty PE anesthesia company?

Hospital system comes back to original anesthesia group and begs for them to come back?

Inject it straight into my veins please.

Only has a happy twist because of the current market conditions.

 

[pgg]

Is it depressing? I found the story quite optimistic and enjoyable.

Greedy hospital system gets burned by ****ty PE anesthesia company?

Hospital system comes back to original anesthesia group and begs for them to come back?

Inject it straight into my veins please.

Well it's depressing because these stories happen over and over again, there's a nonzero chance of my hospital's administrators doing the same thing. They're saying all the right words (for now), and they seem to recognize that subsidizing our group is a better choice than risking a complete burn to the ground by looking to bid us out. But administrators change.

I like living here and working here and I had my fill of locums and travel over the last ~10 years. I don't want to move or travel.

I'd rather just earn a reasonable market rate for the reasonable job I've got with the reasonable conditions, than hope I might be able to scramble a rung or two up some ladder after stumbling through the ashes after some c-suite clown played with matches.

 

[ambiturner]

Only has a happy twist because of the current market conditions.

Which begs the question, will we stop seeing hospitals go the PE route now that there have been so many colossal failures? Will they be a little more generous with the private groups until the market cools?

Seems to me the smart play would be to lay low for a while until you’re confident you can staff if you kick the group out, or get locums at a lower rate. Up the subsidy for 2-3 years and see what happens.

 

[Bertelman]

1) it is depressing, because many quality anesthesiologists were squeezed out by the uncertainty

2) administrators don’t care. Many of them treat these positions as stepping stones to the next big thing. Screw this hospital? Who cares, I’ll get a job somewhere else.

 

[aneftp]

The reason issue is I see is how dumb hospital’s administration can be in evaluating proposals for new contracts from different services.

The big management groups these days will claim they can provide all these services and even add “value”. Yet they all demand some type of subsidy for locums to bridge the gap.

If these management companies were so good. They wouldn’t need subsidies.

So X management group takes over from private group. Immediately gets 100% subsidy for locums for the next 12 months. They can run up the bill and not care. The months 12-24. They get a 50% subsidy. So money gets tighter. The 24-36 month the subsidy drops further (or re negotiated )

It’s the same playbook I see over and over again. Management companies will not operate at loss for very long before they pull out.

But hospitals are making such a killing on facilities fees they can afford to keep subsiding.

Only has a happy twist because of the current market conditions.

did the hospital go back to the original group? I don’t think that’s the case. The hospital fired the management company. But doesn’t say they went back to the original group.

 

[Maverikk]

Excellent article. I bet this hit hard for a lot of groups...Boise, Portland, Detroit. Answine is a great guy I've only interacted with peripherally but he was well respected.

If you were lucky your group got a buyout 10 years ago when things were better, now the AMCs can just swoop in and say we can offer more services for less, you have kids/family/a house in the area? Take the offer or find something else...they futz along for 1-2 years and the hospital ends up employing. It's a roulette game for the AMCs, if it doesn't work out they high tail it out of there after running up the bill, they keep the successful sites and dump the rest saying the hospital isn't subsidizing enough.

What is interesting and what groups out there still on life support should realize: the hospitals nowadays are businesses. "While we were enjoying what we created, the anesthesia market had passed us by." The 20+ year relationship you thought would matter in hard times doesn't at all. Offers out there are great, how can you keep your group competitive: yearly re-evaluation of contracts/stipends, no services for free. Keep your overhead as low as possible. You better have vacation/compensation/hours with what the current market offers, otherwise these vultures are ready to try to harvest your site for a few years to see if they can make it work. The C-suite is not your friend. The only leverage you have is how much a hospital doesn't want to self-employ or hire an AMC.

"At the last minute, it was pulled because “it raised some objections with ASA [American Society of Anesthesiologists] senior leadership.” This is the most depressing part of this article, AMCs are in bed with the ASA. I've been through and have seen multiple transitions like this. Patient care suffers.

@psychbender Which AMC did they go with, I thought they were going to be UPMC employed. I talked to the Lancaster location a long time ago because I always liked Lancaster. I think they were going through the transition at the time. I thought they were going to be UPMC employed not an AMC

 

[GravelRider]

I have two comments. This first is how telling it is that the ASA senior “leadership” objects to the article, which seemed very fairly written. I wonder what it would take to create a national alternative to the ASA that could cut that bloated rotting carcass of an organization off at the knees? I know that alternatives exist, but what would it take for it to be a viable enough alternative that at the very least the ASA would notice?

The other comment I have is that these private groups share much of the blame for these situations…as we already know. When I came out of residency ~10 years ago, the bar to become a partner in a successful private practice was unacceptably high. I don’t know if that was the case here, but I can imagine it was. I’m talking about long partner tracks, high buy-ins, and all manner of hoop jumping. Beyond the inherent unfairness of all that garbage, it made these jobs seem “disposable,” for lack of a better term. Employees feel no ties to the hospital, group, and community…and why should they? Employees are seen as just bodies for stools…someone to staff a room. There’s no involvement in higher level discussions about operations or hospital involvement. Sure, there may have been a “partner” carrot dangled in front of employees, but most often that was 3,4,5+ years away…an eternity in anesthesia. These private groups had no long term vision or plan. They were only concerned about short term profits for themselves and feeding off their young. It was shortsighted and greedy. A stable, cohesive, democratic group that maybe made a little bit less than the AMC down the road had a better chance at survival than the tiered fake partnerships. The situation in anesthesia right now is complex and private equity is a blight upon the American economy as a whole, but these private practices are not innocent victims.

 

[Anesthesia_Guy]

I have two comments. This first is how telling it is that the ASA senior “leadership” objects to the article, which seemed very fairly written. I wonder what it would take to create a national alternative to the ASA that could cut that bloated rotting carcass of an organization off at the knees? I know that alternatives exist, but what would it take for it to be a viable enough alternative that at the very least the ASA would notice?

The other comment I have is that these private groups share much of the blame for these situations…as we already know. When I came out of residency ~10 years ago, the bar to become a partner in a successful private practice was unacceptably high. I don’t know if that was the case here, but I can imagine it was. I’m talking about long partner tracks, high buy-ins, and all manner of hoop jumping. Beyond the inherent unfairness of all that garbage, it made these jobs seem “disposable,” for lack of a better term. Employees feel no ties to the hospital, group, and community…and why should they? Employees are seen as just bodies for stools…someone to staff a room. There’s no involvement in higher level discussions about operations or hospital involvement. Sure, there may have been a “partner” carrot dangled in front of employees, but most often that was 3,4,5+ years away…an eternity in anesthesia. These private groups had no long term vision or plan. They were only concerned about short term profits for themselves and feeding off their young. It was shortsighted and greedy. A stable, cohesive, democratic group that maybe made a little bit less than the AMC down the road had a better chance at survival than the tiered fake partnerships. The situation in anesthesia right now is complex and private equity is a blight upon the American economy as a whole, but these private practices are not innocent victims.

Agree 100%. You reap what you sow and these ane-sleazy-ologists got exactly what they deserved.

 

[neutro]

Sounds like every other practice

 

[kidthor]

I wonder what it would take to create a national alternative to the ASA that could cut that bloated rotting carcass of an organization off at the knees? I know that alternatives exist, but what would it take for it to be a viable enough alternative that at the very least the ASA would notice?

I’ve been dreaming for that to happen. This is what caused AAEM to form from people mad at ACEP. Basically what we need is AAEM for anesthesiologists.

 

[IMGASMD]

I have two comments. This first is how telling it is that the ASA senior “leadership” objects to the article, which seemed very fairly written. I wonder what it would take to create a national alternative to the ASA that could cut that bloated rotting carcass of an organization off at the knees? I know that alternatives exist, but what would it take for it to be a viable enough alternative that at the very least the ASA would notice?

The other comment I have is that these private groups share much of the blame for these situations…as we already know. When I came out of residency ~10 years ago, the bar to become a partner in a successful private practice was unacceptably high. I don’t know if that was the case here, but I can imagine it was. I’m talking about long partner tracks, high buy-ins, and all manner of hoop jumping. Beyond the inherent unfairness of all that garbage, it made these jobs seem “disposable,” for lack of a better term. Employees feel no ties to the hospital, group, and community…and why should they? Employees are seen as just bodies for stools…someone to staff a room. There’s no involvement in higher level discussions about operations or hospital involvement. Sure, there may have been a “partner” carrot dangled in front of employees, but most often that was 3,4,5+ years away…an eternity in anesthesia. These private groups had no long term vision or plan. They were only concerned about short term profits for themselves and feeding off their young. It was shortsighted and greedy. A stable, cohesive, democratic group that maybe made a little bit less than the AMC down the road had a better chance at survival than the tiered fake partnerships. The situation in anesthesia right now is complex and private equity is a blight upon the American economy as a whole, but these private practices are not innocent victims.

While I agree with you mostly, here’s some caveats….
When I came out five years ago, most of the groups had realized 5 year partnerships were stupid…. More than 1/2 dozen interviews that I went to, only 1 was crazy enough to ask for five years. Most of them were 1-2 years for financial parity maybe 2-3 years for voting rights. Maybe it was too little too late even then.

As it was discussed somewhere else. Some of the time for partnership was to vet out unfit anesthesiologist within the group. Most advocated 6 months maybe be enough, but when you have a big group and you hardly see each other sometimes weeks at a time, that can also be difficult. When I first came out, I needed a lot of help…. I might have gotten into more than I can chew a few times, 6 months can be rather insufficient to assess someone. Someone also brought out the idea of if you’re already seasoned anesthesiologists, then the waiting period should be shortened. I know, it’s hard to change minds, especially when you have a group of individuals who believe they’re one of the smartest in the room. Most of these groups, at their heyday, were rather “selective” about who they take on. Obviously, those demands/reasons don’t fly anymore.

I suppose the easiest way to rationalize everything is that when we enter the medical field, it was 75% calling, 25% make a good living. With the medical field now in general, maybe the ratio is skewered the other way.
I am not defending anybody’s behaviors. I’ve seen some shady PP out there. It’s just the truth is always somewhere in the middle.

 

[gator2886]

This is happening (or already has happened) at so many places. I just will never understand why hospital admins continue to believe there is some magic bucket full of CRNAs and and Anesthesiologists to replace a group. The same story plays out over and over: The hospital refuses to pay the Anesthesia group a stipend that would allow competitive pay and recruitment, the group slowly falls apart, AMC comes in and promises xyz, group continues to fall apart, prices continue to go up, AMC locums replaces what once was a cohesive group. Do the CEOs of these hospital systems not communicate? Do they not tell each other "yeah we tried that, does not work."

 

[Anesthesia_Guy]

Do they not tell each other "yeah we tried that, does not work."

Most likely. They just don't give a rat's ace.

 

[neutro]

Most likely. They just don't give a rat's ace.

Yup.

 

[NumTacos]

This is happening (or already has happened) at so many places. I just will never understand why hospital admins continue to believe there is some magic bucket full of CRNAs and and Anesthesiologists to replace a group. The same story plays out over and over: The hospital refuses to pay the Anesthesia group a stipend that would allow competitive pay and recruitment, the group slowly falls apart, AMC comes in and promises xyz, group continues to fall apart, prices continue to go up, AMC locums replaces what once was a cohesive group. Do the CEOs of these hospital systems not communicate? Do they not tell each other "yeah we tried that, does not work."

I asked that same exact question awhile back, these guys know what the landscape looks like. They must have some long term math that convinces them it will be a win.

 

[aneftp]

Crnas at most big hospitals have practices by the balls. In the act model.

MD only practices are overworked as well.

There are so few truly happy places that I know of.

Everyone is after two things
1. Time off
2. Money

 

[GravelRider]

While I agree with you mostly, here’s some caveats….
When I came out five years ago, most of the groups had realized 5 year partnerships were stupid…. More than 1/2 dozen interviews that I went to, only 1 was crazy enough to ask for five years. Most of them were 1-2 years for financial parity maybe 2-3 years for voting rights. Maybe it was too little too late even then.

As it was discussed somewhere else. Some of the time for partnership was to vet out unfit anesthesiologist within the group. Most advocated 6 months maybe be enough, but when you have a big group and you hardly see each other sometimes weeks at a time, that can also be difficult. When I first came out, I needed a lot of help…. I might have gotten into more than I can chew a few times, 6 months can be rather insufficient to assess someone. Someone also brought out the idea of if you’re already seasoned anesthesiologists, then the waiting period should be shortened. I know, it’s hard to change minds, especially when you have a group of individuals who believe they’re one of the smartest in the room. Most of these groups, at their heyday, were rather “selective” about who they take on. Obviously, those demands/reasons don’t fly anymore.

I suppose the easiest way to rationalize everything is that when we enter the medical field, it was 75% calling, 25% make a good living. With the medical field now in general, maybe the ratio is skewered the other way.
I am not defending anybody’s behaviors. I’ve seen some shady PP out there. It’s just the truth is always somewhere in the middle.

The market started getting competitive around 2018-2019. Then in 2020, COVID really shook things up. The partnerships that dropped their tracks to 1 year were ones that could barely offer anything beyond what the big hospital or AMC employers could offer. In other words, they had no business stringing someone along for multiple years. The very successful practices were either not offering partnerships or you had to be willed a spot after a death. I know a few of those practices have had complete collapses in recent years after mass exodus of employees and even partners. Those practices were completely mismanaged and thrived only on some sketchy out-of-network billing and leeching off their employees. The ol’ “we need to vet you for 3 years” excuse was either one of two things: 1.) Laziness in recruiting…aren't you properly vetting people in the recruiting process? Or 2.) A scam.

 

[DirtDocMD]

I asked that same exact question awhile back, these guys know what the landscape looks like. They must have some long term math that convinces them it will be a win.

The only “long term math” I’ve seen is their PERSONAL math (moving up the corporate ladder). They move around some budgets, and it may “look” like savings (because they drag extra money for locums out of some other pot), but you’d THINK some of these corporations would start formulating some LONG TERM plans, rather than “re-inventing the wheel” with new hospital administrators every few years.

For the last 2 decades, the non-profits (churches, municipalities, etc) have been selling out to the corporations, and these corporations keep thinking they can just change CEO’s (at the hospital level) every 3-5 years, who all come in with the same plan:

1) Cut departmental budgets
2) “Build stuff”
3) “Increase revenue”

Sure, it can be done a few times, but after 2-3 times, you run out of budgets to slash and capital improvements (that are really needed) to be made, etc. They’re (hospital CEO) not accomplishing anything other than “polishing” their own resume, to step up to a bigger/better hospital.

Our hospital has had a succession of such administrators (CEO/COO/CFO), virtually NONE of which worked their way up in the same hospital, or that have any desire to stay in the area long-term. They simply don’t care about the hospital. They’re either doing what someone at “corporate” expects them to do, or whatever they think it takes to step up to another “better” job. They step over “dollars” (that might come in 5 years) to pick up “dimes” (that are there NOW), because that’s all they get graded on.

(I realize some of this constant change of administration is to AVOID letting these folks build better relationships with the medical/nursing staff, so that they only make FINANCIAL (not sentimental) decisions. However, you’d THINK that corporate would have some long term “framework” for what they want to do, rather than thinking “Budget Cuts!!” every 2-3 years.)