Have we reached peak AMC (Anesthesia Management Company)?

Discussion in 'Anesthesiology' started by C4C, Oct 3, 2017.

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  1. C4C

    C4C

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    New to the forum. Out of residency now 15 years, all that time in private practice in Connecticut and Colorado and--for the last two years--California. Moved west in search of physician-only anesthesia jobs. But enough about me.

    I realize this website is mostly for students (and residents), but there's no good place on the Internet (that I know of, anyway), for this sort of discussion. This is the kind of stuff I wish I would have known when I was seeking out my first job.



    I'm wondering if it's time to call peak AMC. I know that CEP (aka MedAmerica), Envision (formerly Sheridan, formerly Emcare, formerly MAC), and Somnia are still buying up practices--but less publicized is the fact that they are also losing contracts, and that CMOs and CEOs are growing wise to their empty promises.

    I would welcome input of present and former employees in any of these (or other) management companies to confirm stories. If nothing else, perhaps this thread will stand as a sort of "state of the practice" (in California, anyway) in autumn, 2017.

    Somnia: Somnia has lost contracts in Kern and Rideout. They are probably going to lose Desert Regional. Their strategy was to sneak into California by way of second- (or third-) tier hospitals and replace the FMGs with CRNAs, but that has proven to be a total disaster. The good news is that the CRNA model was such a disaster under Somnia that nobody else dares try it.

    Envision: Envision took a different tack, buying up a premier group in San Francisco. They have been able to keep the physician-only model alive because their first acquisition--MAC--has the most favorable payer mix in all of California. Their Northern division is growing slowly and deliberately (and wisely letting CEP overpay for sh***y practices), but their fentanyl-addicted Southern California director is trying to buy up everything in sight, despite the fact that even good old fashioned partnership track positions in the Inland, Apple, San Gabriel, and San Bernadino Valleys and High Desert have not not attracted domestically educated and trained physician anesthesiologists for decades. The latest insult was when they secured a contract at Queen of the Valley, only to lose it 72 hours later when it became apparent they would not be able to retain a single anesthesiologist. Note that they are now on their third company name change as they try to stay ahead of their terrible reputation.

    CEP: In a misguided case of "me, too" CEP--who had slowly grown its company by sticking to what it knew best: Emergency Room Physicians--decided they needed to get in the AMC game, too. They took over management of a very sad practice in a god-forsaken town in the dismal Central Valley, and when they didn't lose their shirt, they pressed their luck and suckered a decent group to sign up by promising them immediate partnership. What the docs didn't realize was that A) there are five levels of partnership and B) all the board members were ER docs, and they cared very little for anesthesiologists. Out of necessity, CEP then decided that their corporate charter was to "respect the autonomy" of the new anesthesia groups, a strategy that sounded fine until it struck up with the reality that many private practice anesthesiologists would rather look for a new job that have their autonomy respected by CEP brass. Nowhere was this more obvious than at Regional Medical Center, where the old group walked en masse, and CEP has spent now most of a year hemorrhaging cash while being unable to sign even a single FTE. Their original chief has since quit, and the resultant promotion of his second-in-command was such a catastrophe that the hospital CEO was fired in the immediate aftermath. CEP is trying to save face, by saying they didn't really even want the Regional contract, anyway, but that Regional sought them out. They are also proudly touting their new contract at Mercy General in Sacramento, Mercy's flagship. Funny thing, though, lesser Mercy hospitals, including Methodist, San Juan, and even Mark Twain have been able to recruit during the time that CEP has been unable to staunch the bleeding--even though those smaller hospitals warn of worse call schedules. Taking a page from Envision's book, CEP has started to run ads on Gaswork under their pseudonym, MedAmerica.

    What have I missed? Plenty, I am sure. Please correct me where I am wrong and tell me your experiences, good or bad. Also, I'd like to hear how AMCs are doing elsewhere in the country.
     
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  3. Noyac

    Noyac ASA Member SDN Advisor 10+ Year Member

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    Thanks for the run down. Anxiously awaiting more input.
     
  4. Stank811

    Stank811 Junior Member 10+ Year Member

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    I agree the rate of mergers has decreased tremendously. In my area multiple groups preparing for a merger who either decided against it or the hospital blocked it.

    As stated above many are tuned into the false promises that AMC represent both on the hospital end as well as the physician practice end.
     
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  5. GravelRider

    GravelRider SDN Lifetime Donor Lifetime Donor Gold Donor 2+ Year Member

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    I don't work for an AMC, but in the Northeast there are several AMCs that have lost contracts (EmCare, TeamHealth, and NAPA off the top of my head). The new enemies are these mega- hospital systems looking to employ all docs. From what I've seen, these can be worse than AMC jobs.
     
  6. GA8314

    GA8314 Regaining my sanity 2+ Year Member

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    Great post. Also, you are in the presence of many attending docs on here, not just residents and med students.

    I've seen a slow down in my state. I've spoken to other PP groups who do not want to sell out. Plenty left. I think hospital admin is wise to their antics (as you describe) and that word has FINALLY gotten around that their "value proposition" is weak and hard to pull off.

    I've heard story's from another hospital within our health system and they are still recovering after about 4 years to attract good docs, as most of the good docs left after the contract change. These stories seem to be multiplying.

    I hope it let's off or at least the memories of the CEO's and CFO's are not too short......
     
  7. caligas

    caligas ASA Member 5+ Year Member

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    Will be interesting to look back at this discussion in 10 years knowing if this is for real or just the "dead cat bounce" of anesthesia.
     
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  8. Stank811

    Stank811 Junior Member 10+ Year Member

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    But for it to be a "dead cat bounce" (had to look that one up) you would be suggesting that the underlying fundamentals of the business of anesthesia was declining which has not been the case or that AMC are able to deliver a better product compared to other models which they can't....the AMC model requires a couple assumptions for it to work as a long term plan which don't exist. I do not think AMC are going away but would be curious to see how they pivot away from their current model...the direction is already visible in some of the smaller AMC if you compare them in my opinion.
     
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  9. dr doze

    dr doze To be able to forget means to sanity Lifetime Donor 10+ Year Member

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  10. Ezekiel2517

    Ezekiel2517 Anesthesiologist 10+ Year Member

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    It hasn't peaked
     
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  11. sleepallday

    sleepallday ASA Member 7+ Year Member

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    It does currently seem to have peaked in my area. Northstar recently lost a couple contracts after NONE of the anesthesiologists decided to stay back and work for them. Took a lot of balls by these guys to stand their ground and risk being unemployed for an extended time period of time. Major props to them.

    NAPA recently, voluntarily, pulled out of a hospital after they realized they could not meet the terms of the contract without taking a huge loss. A new PP group came in and was able to get the contract. I'm sure this new group has negotiated a subsidy from the hospital. Otherwise, there's now way they can afford to pay the salaries that they are offering.
     
  12. Scotty_G

    Scotty_G Junior Member 10+ Year Member

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    Yes NAPA in the NE is hurting and having trouble recruiting for multiple sites :0
     
  13. FFP

    FFP Grunt, cog, body, pompous ass Gold Donor 10+ Year Member

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    NAPA is gaining new surgicenters all the time. Those are the big moneymakers.

    I agree that they have trouble recruiting. I would rather work out-of-state than for one of the AMCs. Although NAPA has been recruiting some quality people I know, too.
     
  14. dr doze

    dr doze To be able to forget means to sanity Lifetime Donor 10+ Year Member

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    But it is unlikely that they are giving them their best. No hustle. No taking risks to get the cases done. Just enough to stay under the radar and not piss anybody off.
     
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  15. Planktonmd

    Planktonmd Moderator Emeritus Lifetime Donor 10+ Year Member

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    Sorry, I had a tough time reading your long post to the end but I think I might have captured the essence of what you wanted to say. I think you are saying that AMCS are failing and that should be a good thing for private practice enthusiasts?
    Unfortunately it's not that simple!
    The reason AMCs even existed was that the private practice anesthesia groups had failed to evolve and adapt to the changing market, so if AMCs are not doing a good job, this means that the anesthesiologists of the future will be mainly hospital employees which might be a little better than working for an AMC, that's it!
    The failure of AMCs does not mean the return of the outdated and proven unsuccessful private practice model.
    I hate to rain on your parade but sometimes we have to face reality.
     
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  16. Stank811

    Stank811 Junior Member 10+ Year Member

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    I am confident no AMC the size of NAPA is happy losing large hospital systems and gaining surgery centers
     
  17. Stank811

    Stank811 Junior Member 10+ Year Member

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    Agree 100%. AMC served as a disruptor in the business of anesthesia because so many groups where unwilling to evolve. I would also suggest you are over simplifying by stating, "outdated and proven unsuccessful private practice model". Many groups did not merge with large AMCs bc of the obvious weaknesses of their business model for the majority of this country. Many hospitals are currently choosing to sign with PP groups over AMCs which is not bc they are outdated or unsuccessful but bc the AMC movement served as a catalyst for them to evolve into something better than what an AMC can offer.
     
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  18. GravelRider

    GravelRider SDN Lifetime Donor Lifetime Donor Gold Donor 2+ Year Member

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    What is this mysterious "something better?"
     
  19. Airlife91

    Airlife91 7+ Year Member

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    What about USAP? They seem to "partner" with groups to provide a national/corporate backing, but let's the group continue its current model to some degree. At least that's how it looks on the surface. Any thoughts?
     
  20. amyl

    amyl ASA Member 10+ Year Member

    a local hospital just went with a local non usap group over unhappiness with parts of usap. but i don't think this is going to work long term as many of their anes are not qualified for the cases they just signed up to cover... but that is gossip -- not my knowledge.
    yes for now usap seems to be doing a good job of negotiating better reimbursement... paying for their cut and then some. the divisions function independently now but i don't think that is the long term plan. per the gossip, the long term plan is to stop partnerships etc and everyone be employees.
    im not sure what will happen.... most people in usap think that no other anes groups will be around in 5 years.... those outside usap think usap will implode in 2019.... its all gossip and conjecture.... who knows.
     
  21. facted

    facted ASA Member 7+ Year Member

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    I can guarantee there will be other anesthesia groups in 5 years. Mark your calendar to revisit this thread. Hahahaha.
     
  22. mostwanted

    mostwanted Senior Member 10+ Year Member

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    The partnerships the USAP is offering is that real parternship though? They charge a buy in to get some shares. "Real" partners already took their multi-million dollar share of the pie, when they sold usap the groups.
     
  23. C4C

    C4C

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    I was with a group that got purchased by USAP in Denver. After USAP bought us, they bought the other group in town, and then used their monopolistic power to raise rates on the insurance companies.

    That sounds anti-competitive to me, and only a matter of time until the insurance companies file suit. Even if somehow you convince me it is legal (or just winkingly ignored by the insurance cos), it is unsustainable from an economic point of view. Walmart didn't run corner grocers out of business by raising the price on their customer...but AMCs are touting consolidation strictly for their power to raise prices.

    But that wasn't the reason I left. I left because USAP thrust Anesthesia Assistants on us.

    What is the mysterious "something better?" It's replacing anesthesiologists with lower-cost providers, CRNAs and AAs. Cheaper labor = more profits to skim. That's good for the capitalists behind the venture. I get that. But I refuse to believe that it's better for patients, better for hospitals, or better for the profession of anesthesiology.
     
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  24. GravelRider

    GravelRider SDN Lifetime Donor Lifetime Donor Gold Donor 2+ Year Member

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    Insurance companies aren't some victim or innocent bystander in this whole mess of a healthcare system. The insurance industry is also consolidating. In fact, insurance consolidation and regional insurance monopolies are probably a big reason behind the spread of AMCs in the first place.

    Corporate consolidation is rampant in our economy at the moment and continues to stifle innovation.
     
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  25. C4C

    C4C

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    No, I don't think insurance companies are the victim. They are merely another layer of inefficiency in a terribly inefficient system where both consumers and providers are shielded from the costs of the good being offered.

    I do honestly wonder how many physicians would agree to such a merger--in the absence of insurance companies--if the suits pitched consolidation like this: "Sign up with us, and you can do the very same job you've been doing, but you'll be able to stick it to your patients an extra 25%." I hope not too many. Say what you want about "sellout" shop owners who now work for Wal-Mart or Home Depot: those corporate behemoths purchase in bulk and pass the savings on to the consumer. The ma and pa operator can't possibly hope to compete. AMC consolidations are a different animal altogether.

    I'm struggling to think of another example where the market approves of consolidation for the express purpose of raising prices. (Some might argue cable companies, but even some of their proposed mergers failed to gain regulatory approval.)
     
  26. cchoukal

    cchoukal Senior Member SDN Moderator 10+ Year Member

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  27. Impromptu

    Impromptu ASA Member 7+ Year Member

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    I was recently told that AMCs pulled out of 7 Chicago area hospitals over the last 6 months. They were not receiving a large enough profit margin. Perhaps in part due to Illinois's financial mess and low reimbursement which may take upwards of 2 years without interest to get to the group. There is also a definite decline in case volume in Illinois. Yet somehow, costs of insurance and health care expenditures go up double digits every year. Kevin MD had an article (which I have not verified) that said there are about 7 administrators per doctor in US healthcare these days. This probably depends on how you define an administrator, but on looser criteria seems accurate. This could be another cost to healthcare.

    I think another HUGE reason for the lack of profits is the spread of and subsequent abuse of surgery centers by surgeons. There are too many locations to perform surgeries and not enough patients or cases to keep someone consistently busy. Even 80% efficient would result in nice profits. And yet the surgery centers and the hospitals want to have a certain number of lines available every day, even if those ORs sit empty, just in case they have a busy day. Availability at any time the surgeon wants is one way to keep surgeons happy. "Hi, I would like to add on a Medicaid case today after my surgery center is done and those people are home. I do not know what time, but please be ready for whenever I arrive."
     
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  28. sbmed100

    sbmed100 New Member 10+ Year Member

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    The AMC takeover activity of anesthesiology groups in the Tri State region (NY/NJ/CT) has recently slowed dramatically. This is probably due to the fact that most groups that could sell have already sold. Then there are the ones that tried to sell and were blocked because their hospital system is telling them they can't sell and will eventually become employees of the hospital system. I know of several deals that were killed because of this. Hospitals are getting wise to groups selling. There are a few groups that are only lightly affiliated with their hospital systems that may still have the opportunity to sell. At least with an AMC you generally get a buy out...with getting employed by the hospital system you may get some sort of salary guarantees for a short period of time followed by an RVU system but it's not even close.
     
  29. Notorious T.E.E.

    Notorious T.E.E.

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    I wondered this too. It seems more like a salary reduction for 2-3 years before compensation parity with the other AMC employees rather than a partnership.
     
  30. Pharmado

    Pharmado PharmaDo 5+ Year Member

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    I talked with one AMC in a nice area of Tennessee who offered me "pay equalization" after 4 years of poor salaries. I thought "pay equalization" was an interesting way to clarify what they were offering. The 4 year buy in was about 600-800k off the "equalization" by my estimation, and probably 200k+/year they were getting on top of those who had reached this pseudo-partnership. The equal pay was determined by what the contract would be at the time, currently low to mid 400's. They were the only game in town, otherwise I can't imagine anyone working there.
     
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  31. CaliCatheter

    CaliCatheter 2+ Year Member

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    If we assume the AMC model is failing for all parties involved, then the logical transition for hospitals is direct employment model.

    Are you guys aware of any hospitals directly employing anesthesiologist? Except Kaiser on west coast
     
  32. Notorious T.E.E.

    Notorious T.E.E.

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    Yes. Asheville comes to mind first, but I can think of numerous other smaller ones in my area.
     
  33. facted

    facted ASA Member 7+ Year Member

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    Northshore LIJ is trying this with one of their surgery centers but I heard they were having a ton of trouble recruiting. I'm sure there are tons of hospitals aiming to bring anesthesia in house.

    I recently switched jobs in this area and I kinda bet on this slow-down. My rationale was that as the insurance market has become a mess and VERY uncertain, there's gotta be a slowdown in acquisitions since it's almost impossible to value things these days if you don't know what the market looks like 5 years from now (or even next year, really). Whatever the reason, I'm glad the pace has slowed.
     
  34. anbuitachi

    anbuitachi ASA Member 7+ Year Member

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    Why are so many places having trouble recruiting. Is it that difficult to raise salaries?
     
  35. dr doze

    dr doze To be able to forget means to sanity Lifetime Donor 10+ Year Member

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    Once an employer develops a bad reputation, it is hard to rehabilitate it. Now providing an average package when you had the longstanding reputation of providing a sh!tty package or environment often doesn't justify the investment of time and effort of moving or switching jobs. Outside of a locum gig, a new job is a huge investment of time, emotion, and sweat in getting to know a whole new group of surgeons, CRNAs, other anesthesiologists, working hard to build up a reputation, learning local customs and ins and outs of a practice and hospital(s). Doing this for an employer who has a crappy reputation or unstable situation often isn't justified for an average package.
     
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  36. Man o War

    Man o War 2+ Year Member

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    We are all onto them.
    I know of one AMC site where the director was recruiting docs by telling them he was intentionally running one FTE short, and each quarter that salary would be divided among the rest of the docs. They never saw a single bonus, but all had to work more to cover that FTE's call and shifts.
    The shady AMCs move money around, but the net is the same to the company. That's why I say get everything in writing to compensate you for any hours or calls beyond the agreed upon amount.
     
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  37. nimbus

    nimbus Member 10+ Year Member

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    FindLaw's New York Supreme Court case and opinions.

    NSLIJ anesthesiologist income $653k in 1997. The job is worth at least that much now. How much are they offering? It's a question of fairness. Nobody likes to get ripped off.
     
  38. facted

    facted ASA Member 7+ Year Member

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    The job you are describing is probably at NS or LIJ which are NAPA. What I'm describing is the hospital opening their own surgery center, not employing napa, and trying to hire themselves. It's not pretty.
     
  39. timgasman

    timgasman

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    Most of the AMCs that are being thrown out are being replaced by direct HIRE of anesthesiologist. Using NAPA as an example, their largest contract was Northwell Hospital System but they are losing this contract as Northwell starts its own anesthesia group, who will be JUST employees, some former employees of NAPA! So, we are replacing AMCs with direct hire from hospital, and no middle man.
     
  40. nimbus

    nimbus Member 10+ Year Member

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    It was NSLIJ pre-NAPA.
     
  41. facted

    facted ASA Member 7+ Year Member

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    NAPA was founded at NSLIJ in 1986. Militana worked at NS for NAPA.
     
  42. nimbus

    nimbus Member 10+ Year Member

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    They were North Shore Anesthesia Associates til 2001. I was a med student in NYC in the late 80s and early 90s. There was an attempt to displace them then and lots of turmoil.
     
    Last edited: Oct 11, 2017 at 11:32 PM
  43. anbuitachi

    anbuitachi ASA Member 7+ Year Member

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    well, that salary is worth 1m now. it's like we got a 50% paycut in 20 years instead of inflation adjusted raises =)
     
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  44. caligas

    caligas ASA Member 5+ Year Member

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    How do you not get rich making $650k in 1997 dollars?

    I know, bad investments, Porsches, ex wives.....
     
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