Private Equity / CMG Value Add

[thegenius]

What do PE / CMGs argue is their value add for ER physicians? Why would I, an ER pit physician who sees patients day in and day out, takes on all the medico-legal risk of seeing patients, want to work for a CMG? What is their pitch to me?
- can't be higher pay...as they don't pay as much
- can't be legal protection - they offer more-or-less the same legal protection
- can't be "buying stock in the organization", most if not all are private
- being a partner? - most don't even have this ... and the few that do it's a BS ponzi-scheme.

When we were under TH, they took 9.5% OFF-THE-TOP for their profit. So if our group brought in 10M a year, they would take $950,000 right off the top for their profit. Then they would take another 15%-20% to pay for practice mgmt, scheduling, billing & coding, malpractice insurance, and whatever else.

Now we had a ****ty deal...and I'm glad we are no longer under them, I can't imagine it costing more than 15% to run an ER group. Maybe if you knew what you were doing it would be 10%.

So what do CMGs argue is their value add to PHYSICIANS? Not the hospital...that is obvious.

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[NYEMMED]

For physicians? Nothing.

That’s why they are picking up contracts for entire systems, or entire regions/cities.
They do that to ensure docs will work for them. If they are the only gig in town, and you can’t move, you have no choice

 

[BoardingDoc]

What do PE / CMGs argue is their value add for ER physicians? Why would I, an ER pit physician who sees patients day in and day out, takes on all the medico-legal risk of seeing patients, want to work for a CMG? What is their pitch to me?
- can't be higher pay...as they don't pay as much
- can't be legal protection - they offer more-or-less the same legal protection
- can't be "buying stock in the organization", most if not all are private
- being a partner? - most don't even have this ... and the few that do it's a BS ponzi-scheme.

When we were under TH, they took 9.5% OFF-THE-TOP for their profit. So if our group brought in 10M a year, they would take $950,000 right off the top for their profit. Then they would take another 15%-20% to pay for practice mgmt, scheduling, billing & coding, malpractice insurance, and whatever else.

Now we had a ****ty deal...and I'm glad we are no longer under them, I can't imagine it costing more than 15% to run an ER group. Maybe if you knew what you were doing it would be 10%.

So what do CMGs argue is their value add to PHYSICIANS? Not the hospital...that is obvious.

Aside from the obvious answer of "they don't need to explain their value to you if they're the only job available in town," the practical answer to your question is that most docs are not interested in running the business side of things. The CMG does that for you, but they charge you a pretty penny for the service (and incidentally get to keep you under their thumb in the process).

Yes, you can absolutely keep overhead down below what you described. Without getting into my group's specific numbers, our practice management/scheduling/billing etc costs are certainly below the range you quoted and the "profit" tax you described does not exist and that cash goes directly to the docs.

 

[emergentmd]

Their added value is to be able to control Docs and Shepard the little mice to the whims of the hospital CEOs.
They give CEOs kickbacks in some form
They take over poor performing sites or hospitalist stipend groups for nothing.

Hospital CEOs just care about maximizing profit and lower Physician complaints. CMGs do this perfectly for them.


We had a fully democratic SDG, highly functional. Taken over/bought out b/c we didn't want to run the money losing hospitalist group but CMG happy to do it. They do benefit from being more aggressive with charge master/collections so Im sure they made the hospitalist group profitable. Plus they can force NPs on both groups.

True story : Hospital put out yearly doc reviews of admins. They stunk it up and had terrible reviews = CEO's bonus on the line. Big hoopla, forced meetings were set up with all the hospital based specialties EM included. Lots of meetings, asked for improvement, etc. Went on for about 6 months and not much headwinds. Next time yearly reviews came, we were told to just give them 10s and move on.

 

[turkeyjerky]

I’m pretty sure OPs post is rhetorical, right? I’m sure they are well aware there’s no added benefit. Maybe one could say that it makes it slightly easier to move and keep the same employer, but that’s of dubious benefit and probably doesn’t exist in reality (maybe a practical benefit for vituity?). Historically, there probably were actual benefits w/ regard to recruitment and coverage of shifts w/ travel teams (although that would have been easily rectified by groups just offering a non-malignant partnership tract) but that’s gone away with the change in market conditions (sdgs have no problem recruiting currently and honestly this might be a big argument to hospital admins for not giving the contract away).

 

[Lawpy]

Relevant:

 

[DoctwoB]

In theory, a big CMG can command much higher private insurance reimbursement then a local SDG. In an ideal world, a SDG could be bought by a CMG that would leave them along except for billing, make more money from private insurers, skim some money off the top, and still have more (or at least equivalent) money going to the SDG docs then before.

In practice that higher reimbursement often comes with much higher cost structure/corporate bloat which eliminates that benefit. So now patients/insurers are charged more, but the money goes into the ether with docs making less, and somehow the CMG still losing money (or at least not making nearly enough to justify their investment)

 

[CliveStaples]

In theory, the economies of scale are such that they provide value by decreasing the cost of billing/coding (by having their own billing and coding) and decreasing the cost of malpractice insurance (by self insuring), so they could offer a more competitive rate to physicians to attract them, which was true in many markets, but much fewer than before.

However, in a market where they no longer need to offer competitive rates to attract physicians (due to an increase in physician supply, decrease in physician demand, or local market monopoly) then they will view the physician as nothing more than the cost of billing/coding and malpractice insurance - an expense to be reduced.

 

[EctopicFetus]

In theory, a big CMG can command much higher private insurance reimbursement then a local SDG. In an ideal world, a SDG could be bought by a CMG that would leave them along except for billing, make more money from private insurers, skim some money off the top, and still have more (or at least equivalent) money going to the SDG docs then before.

In practice that higher reimbursement often comes with much higher cost structure/corporate bloat which eliminates that benefit. So now patients/insurers are charged more, but the money goes into the ether with docs making less, and somehow the CMG still losing money (or at least not making nearly enough to justify their investment)

Old thinking right. If you are an SDG and had crap contracts why not just cancel them and get the QPA which would be the CMG contract in your city (most of the time).

In the end if you are a SDG and don't make at a minimum of 30% above your CMG colleagues your group is crappily run.