Private Equity, Sprawling AMC health Systems - Walls closing in on Physicians?

[terribletwos]

I was talking to a family friend who was saying that they could not recruit specialists to their group so had to sell their practice to private equity.

Seeing also the hyper-concentration of large healthcare groups. For example in my area, UPenn and Jefferson have bought almost all the hospitals in the Delaware valley and dominate the market. Contracts typically have aggressive noncompete clauses like 20-25 miles crossing state lines. The contracts may look good to first blush for a fellow, but 3 years later pay either stagnates or the RVU thresholds increase on renegotiation. Don't like it? Pull your kids out of school and go to a rural area and rinse and repeat. And you go far enough you start to see the creep of sprawling health systems from the other side of Pennsylvania in terms of UPMC.

I'm not holding my breath for any US administration to undo restrictive covenants, as I am sure the hospital lobby will shoot it down, at least for "non-profit" organizations. At this point there's no difference in behavior between a #1 US News academic nonprofit healthcare system like this and Prime Healthcare - they are both equally profit seeking in my view.

Then you have APPs being hired more and more for new jobs, ratio of APP to MD seems at times 10::1. I see Optum (which previously was a benefits company, now creeping into healthcare) and CVS Health opening up "primary care" practices and only advertising for positions for APPs.

Are the walls closing in? Are we seeing the death of medicine as we know it? What's the antidote? None of us learned real business skills in medical school - we wouldn't know how to hang a shingle if we wanted to.

Pharmaceutical industry is a way out of this cycle but not very rewarding and trading one set of headaches for another.

Beyond just b****ing about it - which can only be so therapeutic - curious to see what solutions or ways to break this cycle might be. Maybe there is a start up that will take a small fee to help reduce barriers and fast-track us to re-create private practices for MDs/DOs who want to get out of the false choice between mega-health system vs. Private equity. But then you have this problem like my family friend who is 65 and doesn't want to take call anymore, and with our MD/DO workforce shortage there is no one to take the baton, so dial up your private equity friends. Also to hang a shingle is so much more challenging now than in the 70s or 80sin this hyper-regulated environment, one small misstep and you will end up on DOJ's website as perpetuating healthcare fraud. In some ways internal medicine lends itself best to fee only primary care. Vs. specialties like hem/onc where the cost of entry is too high).

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[bronx43]

Welcome to medicine for the last 2-3 decades. Nothing about what you said is new or unexpected.

I would actually argue that the tides are turning against large healthcare corporations as they’ve gobbled up all that they can gobble up and the secular trends in place are strongly NOT in their favor. PE acquisitions are starting to fail (look at EM). Cost of capital up significantly as well so PE can’t just raise 10 figures at the drop of a hat anymore.
The large systems seem powerful but they have insane overheads that will destabilize them if the oversized profits don’t keep rolling in.
Look up articles on google about huge hospital systems losing billions of dollars. My own hospital employer is not far from financial ruin and we are actually one of the stronger systems in the part of the state.
Bigger swaths of the population is getting on Medicare due to demographics. Labor costs are skyrocketing while reimbursement is stagnant.
And the recession hasn’t even hit yet.


Does this mean it’ll be cakewalk for physicians in the ensuing decades? No. I suspect major changes in the healthcare landscape into fragmentation, bankruptcies, and eventually independent practices coming back. We aren’t there yet, but the writing is on the wall.

 

[DrMetal]

This is why I converted to neat whiskey, it's just easier.

 

[NewYorkDoctors]

lso to hang a shingle is so much more challenging now than in the 70s or 80sin this hyper-regulated environment, one small misstep and you will end up on DOJ's website as perpetuating healthcare fraud. In some ways internal medicine lends itself best to fee only primary care.

The key is to be part of a large independent practice association. This group helps independent physicians go through all the regulations and negotiate the best rates. After that you're on your own. You just pay membership fee (which is nominal in the grand scheme of things).

Think of an IPA for a large group of private practice physicians as a large entity like a hospital corporation but each individual practice belongs to each individual physician (your own Professional Corporation).

I agree that it would be impossible for a physician who is totally on his/her own to open up shop these days. None of the insurances (except straight Medicaid or Medicare) can be billed for unless you negotiate with them. Straight Medicaid and Medicare you can fill out the respective forms and wait on it. But the other managed / commercial / private insurance companies all need negotiation to join them to bill their insurance. Unless you are part of a large IPA (to gain collective bargaining power), you will be ignored or be given the worst reimbursement rates.

This model might be the only way for a private practice physician to "fight back" against the big corporate systems. Ultimately it's always been about power in numbers no matter how you slice it

 

[DrMetal]

This is all capitalism---which I'm still a fan of, others forms of governance have clearly failed, history has demonstrated that---at work.

We see this (conglomeration, marginalization of professionals, etc) happen in several other industries. We shouldn't be shocked that is happening in our profession.

What I don't like is how hard we make it to become a physician and remain a practicing one. If we could shave a year off undergrad and medical school (6 years vs 8), reduce the cost of it all, consolidate training, avoid un-necessary fellowships/BC/MOC, maybe we can enter the work force in our late 20s (instead of late 30s, after PGY9+). Younger, happier, and debtless physicians would have a much more meaningful impact.

No, but instead, we're doing the opposite. Medical school is getting more expensive, we're creating more fellowships (obesity, pain, pick your flavor), more BC/MOC. And then you wonder why the medical industrial complex is finding ways to circumnavigate around us.

 

[bronx43]

This is all capitalism---which I'm still a fan of, others forms of governance have clearly failed, history has demonstrated that---at work.

We see this (conglomeration, marginalization of professionals, etc) happen in several other industries. We shouldn't be shocked that is happening in our profession.

What I don't like is how hard we make it to become a physician and remain a practicing one. If we could shave a year off undergrad and medical school (6 years vs 8), reduce the cost of it all, consolidate training, avoid un-necessary fellowships/BC/MOC, maybe we can enter the work force in our late 20s (instead of late 30s, after PGY9+). Younger, happier, and debtless physicians would have a much more meaningful impact.

No, but instead, we're doing the opposite. Medical school is getting more expensive, we're creating more fellowships (obesity, pain, pick your flavor), more BC/MOC. And then you wonder why the medical industrial complex is finding ways to circumnavigate around us.

It’s not just corporatization of medicine. It’s also corporatization of medical education. Without flocks of student loan debt serfs and licensure prisoners, how are the fat cat administrators of undergrads, medical schools, licensure bodies going to get their $400k salary while producing j**k s***?

 

[Fpg1245]

This is all capitalism---which I'm still a fan of, others forms of governance have clearly failed, history has demonstrated that---at work.

We see this (conglomeration, marginalization of professionals, etc) happen in several other industries. We shouldn't be shocked that is happening in our profession.

What I don't like is how hard we make it to become a physician and remain a practicing one. If we could shave a year off undergrad and medical school (6 years vs 8), reduce the cost of it all, consolidate training, avoid un-necessary fellowships/BC/MOC, maybe we can enter the work force in our late 20s (instead of late 30s, after PGY9+). Younger, happier, and debtless physicians would have a much more meaningful impact.

No, but instead, we're doing the opposite. Medical school is getting more expensive, we're creating more fellowships (obesity, pain, pick your flavor), more BC/MOC. And then you wonder why the medical industrial complex is finding ways to circumnavigate around us.

Its more of a symptom of a sick profession and if prices are a signal (maybe?) its time the young consider other avenues.
Capitalism has nothing but contempt for expertise - its expensive, has its own ideas, and can challenge the nonexperts in charge. Their gods are the CEOs and managers seeking to make a profit and need a docile cheap labor force to do so.

 

[dgdg]

I tried for a year to find and sign on to an IPA for my solo practice. The IPAs just have not penetrated in our region unfortunately.

 

[Splenda88]

I wonder who the government will go after when the populace start raising hell about healthcare cost...

My guess is big pharma and physicians will be first on the chopping block

 

[Fpg1245]

I wonder who the government will go after when the populace start raising hell about healthcare cost...

My guess is big pharma and physicians will be first ob chopping block

Big pharma and the Hospital criminal orgs will point to "increased provider costs" which is just code for doctors.

 

[bronx43]

I wonder who the government will go after when the populace start raising hell about healthcare cost...

My guess is big pharma and physicians will be first ob chopping block

Medicare can cut all physician service fees to 0 and there would be a negligible reduction in healthcare costs with a 100% reduction in healthcare services rendered.
Heads will have to roll but I doubt it’ll be ours. We will take a haircut (maybe even buzz cut) but our necks will stay off the chopping block.

 

[TooMuchResearch]

Big pharma and the Hospital criminal orgs will point to "increased provider costs" which is just code for doctors.

I've seen some ED visit itemized bills. My % of the bill for a level 5 coded visit with imaging, labs, ECG, etc is less than 10% of the total.

 

[Fpg1245]

I've seen some ED visit itemized bills. My % of the bill for a level 5 coded visit with imaging, labs, ECG, etc is less than 10% of the total.

Doctors like you need to shut up and take less - Paid shill

 

[TooMuchResearch]

The charge to use the CT scanner, not counting the bill from the radiologist, is more than what gets billed as physician charges.

 

[VA Hopeful Dr]

The charge to use the CT scanner, not counting the bill from the radiologist, is more than what gets billed as physician charges.

That's why physician reimbursement runs between 8-12% of Medicare costs.

Heck, the lab tests I order on my diabetic patients cost about double what my fee is for the appointment.

 

[NewYorkDoctors]

iSpot Data Reveals Just How Much Pharma Brands Are Spending on TV Advertising

Mounjaro and Ozempic, diabetes drugs being touted by Hollywood and TikTok for powerful off-label weight loss capabilities, are two of the newest top-spending brands

www.adweek.com

n March, prescription pharmaceutical brands spent an estimated $403.4 million on national TV advertising, according to recently released data from iSpot.tv, the real-time TV measurement company. That’s almost twice as much as the second top-spending category for the month, automakers (est. $216.1 million), and a 16% increase from prescription pharma’s February outlay.

The subcategory of medication for psoriasis, skin & nails led the charge with an estimated $95.8 million on TV advertising. Across all pharma categories, AbbVie’s JAK inhibitor drug Rinvoq led the ranking of the top ten individual brands by estimated TV ad spend (est. $32.4 million), followed by Skyrizi, another drug from AbbVie, with $30.5 million. Paxlovid, Pfizer’s COVID-19 antiviral that received FDA committee support for full approval in mid-March, took third place with $30 million in estimated TV ad spend for the month, up from $16.3 million in February when national ads for it hit TV screens for the first time.

Spending on Consumer Advertising for Top-Selling Prescription Drugs in U.S. Favors Those With Low Added Benefit | Johns Hopkins Bloomberg School of Public Health

Analysis found that more than two-thirds of top-selling prescription drugs in U.S.—one of two countries that allows direct marketing to consumers—were rated as having low added benefit compared to other drugs in 2020.

publichealth.jhu.edu

A new study led by researchers at the Johns Hopkins Bloomberg School of Public Health found that the share of promotional spending allocated to consumer advertising was on average 14.3 percentage points higher for drugs with low added benefit compared to drugs with high added benefit.

The analysis also revealed that the majority—68 percent or 92 of the 135 drugs included in the analysis—of the top-selling prescription drugs sold in 2020 were rated as offering low added benefit. The U.S. does not currently assess prescription drugs for comparative effectiveness. The researchers based their rating categories on France and Canada’s ratings of the same prescription drugs sold in the U.S., some under different brand names.

While this is not quite on topic, you can bet the administrators are trying to get a piece of this pie (if not already receiving it).

Basically if you're not on board with the administrators, then you are not invited to the table.

This is why every doctor should flee the hospital system as soon as feasible (unless you are a super specialist or surgeon/proceduralist who needs to be in the tertiary care center)

 

[Drrrrrr. Celty]

I've always been curious. But has anyone actually challenged the legally of non-competes? I was thinking about it and realistically I don't think there are any grounds for it. No other area of practice is so threatened by the notion of people taking their own patients and running with them.

 

[bronx43]

I've always been curious. But has anyone actually challenged the legally of non-competes? I was thinking about it and realistically I don't think there are any grounds for it. No other area of practice is so threatened by the notion of people taking their own patients and running with them.

It’s a scare tactic. Just the thought of having to spend money to hire lawyers to go to court is enough for 99.99% of docs not to break their non compete clause.

 

[collegestud2013]

I've always been curious. But has anyone actually challenged the legally of non-competes? I was thinking about it and realistically I don't think there are any grounds for it. No other area of practice is so threatened by the notion of people taking their own patients and running with them.

Yes there are quite some cases out there, and sometimes the physicians have prevailed and in other cases the employer has. Enforceability will depend a lot on state specific-laws. For example, in a few states like California, it's well known that non-competes are non-enforceable across the board. Some states specifically exclude physicians. Others will enforce them if it's considered a "reasonable" non-compete and that still seems to be a majority of states. Some will only enforce it if damages can be proven (which would make it hard to enforce it for shift-based specialties like hospitalists, EM, intensivist, radiology that don't have a patient panel).

There's also currently a push by the FTC to ban non-competes at the federal level, but non-competes are legally controversial at the moment. There's obviously already resistance and legal challenges, notably from groups representing corporate business interest....

 

[dozitgetchahi]

Yes there are quite some cases out there, and sometimes the physicians have prevailed and in other cases the employer has. Enforceability will depend a lot on state specific-laws. For example, in a few states like California, it's well known that non-competes are non-enforceable across the board. Some states specifically exclude physicians. Others will enforce them if it's considered a "reasonable" non-compete and that still seems to be a majority of states. Some will only enforce it if damages can be proven (which would make it hard to enforce it for shift-based specialties like hospitalists, EM, intensivist, radiology that don't have a patient panel).

There's also currently a push by the FTC to ban non-competes at the federal level, but non-competes are legally controversial at the moment. There's obviously already resistance and legal challenges, notably from groups representing corporate business interest....

The problem with the FTC noncompete ban is that it doesn’t appear that the FTC’s jurisdiction extends to nonprofits (although there is some controversy about this):

https://www.jdsupra.com/legalnews/exception-to-the-ftc-s-proposed-ban-on-6906488/#:~:text=Accordingly%2C%20these%20industries%20are%20exempt,to%20the%20FTC's%20regulatory%20authority.

 

[CatFactorial]

Even if the FTC bans noncompetes, it will be challenged and defeated in the Supreme Court based on major questions doctrine, which (likely) sank the loan forgiveness

 

[terribletwos]

Corporate Giants Buy Up Primary Care Practices at Rapid Pace

Large health insurers and other companies are especially keen on doctors’ groups that care for patients in private Medicare plans.

www.nytimes.com

 

[DrMetal]

Corporate Giants Buy Up Primary Care Practices at Rapid Pace

Large health insurers and other companies are especially keen on doctors’ groups that care for patients in private Medicare plans.

www.nytimes.com

Damn NY Times! Can't read the article, don't have a log in.

I don't have to read it, we've seen this story many times. There's no stopping this crazy train.