Some more insight into Lifestance....

[calvnandhobbs68]

LifeStance: A Private Equity-Backed Mental Health Rollup Headed For A Breakdown – Hindenburg Research

hindenburgresearch.com

Very interesting and eye opening report on Lifestance, huge player who bought up a ton of practices across the US and is looking less and less profitable. As shown in the report, insiders dumping stock like crazy over time and haven't bought any significant amounts since the IPO. Classic PE move.

Don't agree with everything in this including them saying Zoloft is a "dangerous" drug and getting all crazy about the fact that the PHQ-9 was developed by Pfizer but otherwise...yeah stay far away from these guys.

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[comp1]

I very much dislike the PHQ-9, but it has very little to do with Pfizer. I just think it's exactly as helpful as asking if the patient has been feeling depressed initially and then feeling more or less depressed since the last appointment after that. It's also not exactly gross malpractice to ask about someone's interest in medications 15 minutes into an intake, depending on what the patient reported. Do they expect to not be asked about medications from a psychiatrist until the third or fourth session? That said, I really hope private equity pulls out of all of this. It does not bring anything good, to them or us.

 

[Celexa]

Hindenburg are short sellers so they're incentivized to give everything the most dramatic spin. The entire purpose of them putting out a report like this are to trigger the circumstances in which they make $$$$ from their short position. The histrionics in the report around zoloft and the phq are pretty funny and also meaningless.

That being said there appears to be plenty of objective data in the report which backs up their position in terms of the company's overall poor health.

The most eye popping part to me is that their compensation plan caused some people to go into debt to the company ? I don't understand what could possibly cause someone to be so desperate for a job as to agree to that. Maybe the company kidnapped their dog?

 

[Candidate2017]

That said, I really hope private equity pulls out of all of this. It does not bring anything good, to them or us.

The gigantic infusion of cash helped older PP docs sell worthless practices, gave employed docs a bargaining chip against other employers. For young docs who chose to work for them, they've gotten income, invaluable experience, and the priceless knowledge it's best to open one's own PP. For patients, undoubtedly they've gained an appreciation of corp med and midlevel practice vs. psychiatry. Or at least gotten their stims or benzo of choice.

More infusion of cash is always helpful. But none of these private investors will succeed in outpatient psychiatry on a mass corporate scale becaucse that is not psychiatry, and because psychiatry for the masses is just asylum psychiatry, which is mostly nonexistent. Every non-psychiatrist thinks they can do psychiatry and make a buck from low hanging fruit. The reality is psychiatry is Afghanistan for private equity. It seems like a backwards, primitive place with vast untapped resources, with numerous infighting tribes ripe to be conquered. In reality it turns out to be a quagmire for investors to hemorrhage cash.

The most eye popping part to me is that their compensation plan caused some people to go into debt to the company ? I don't understand what could possibly cause someone to be so desperate for a job as to agree to that.

The same kind of reasoning that makes people think they can practice therapy and psychiatry with a social work degree or a midlevel degree.

 

[calvinhobbes]

Thanks for posting this. Truly a terrible place to work at.

 

[dl2dp2]

The gigantic infusion of cash helped older PP docs sell worthless practices, gave employed docs a bargaining chip against other employers. For young docs who chose to work for them, they've gotten income, invaluable experience, and the priceless knowledge it's best to open one's own PP. For patients, undoubtedly they've gained an appreciation of corp med and midlevel practice vs. psychiatry. Or at least gotten their stims or benzo of choice.

More infusion of cash is always helpful. But none of these private investors will succeed in outpatient psychiatry on a mass corporate scale becaucse that is not psychiatry, and because psychiatry for the masses is just asylum psychiatry, which is mostly nonexistent. Every non-psychiatrist thinks they can do psychiatry and make a buck from low hanging fruit. The reality is psychiatry is Afghanistan for private equity. It seems like a backwards, primitive place with vast untapped resources, with numerous infighting tribes ripe to be conquered. In reality it turns out to be a quagmire for investors to hemorrhage cash.

This seems prevailing. So far few companies have been able to retain MD-psychiatrists, and the demand for NPs just is not quite there and their productivity seems to reach ceiling faster. Talkiatry seems to be the most successful, but even they are starting to tank on reputation.

There's something oddly curious about the fact that 50% of MD psychiatrists don't take insurance, and this number has not changed much since at LEAST the late 90s. This tells me that the industry of outpatient psychiatrists grew up on dealing with chronically bad reimbursement rates by all means necessaray. I think that fact alone tells me that PE penetration of this segment will be limited. I also don't see any major advantage of PE takeover of large outpatient group practices with 5+ MDs taking insurance. Unlike in specialties like EM or derm. The logistics of such a practice are fairly straightforward with no economy of scale or large capital expenditure, and there's no supply side juice (read: overtraining of physicians) to squeeze.

Now this might change as some southern states are starting to overtrain psychiatrists by getting FMGs to take a dramatic increase of corporate/non-Medicare dollar residency spots. If I was to advise PEs in this segment I would do more investigations on that, but it seems that established MD-owned regional groups are very secure and not under PE pressure.

The other thing I'm seeing is that the academic/community groups that are being run are VERY inefficient, so it's unlikely that they can even handle the rise of cases in the 2010s. Maybe that's me but I've noticed how the best psychiatry-businessmen/women are all out gallivanting doing their private thing and secretly raking in $$$$ and talking quietly in private.

 

[smalltownpsych]

Administrative overhead in private practice can add up pretty quickly and places like this end up with half the people generating income aka licensed healthcare professionals and the other half planning company potlucks.

 

[calvnandhobbs68]

There's something oddly curious about the fact that 50% of MD psychiatrists don't take insurance, and this number has not changed much since at LEAST the late 90s. This tells me that the industry of outpatient psychiatrists grew up on dealing with chronically bad reimbursement rates by all means necessaray. I think that fact alone tells me that PE penetration of this segment will be limited. I also don't see any major advantage of PE takeover of large outpatient group practices with 5+ MDs taking insurance. Unlike in specialties like EM or derm. The logistics of such a practice are fairly straightforward with no economy of scale or large capital expenditure, and there's no supply side juice (read: overtraining of physicians) to squeeze.

Absolutely. I mean Walmart and Amazon are starting to exit their healthcare positions as well right now which tells you something if some of the biggest companies in the world can't throw enough money at these problems to make it profitable for them. Remember when Walmart was going to destroy regular primary care? They're closing all their clinics now.

The PE stuff is just egregious though because it's the classic PE crap...acquire and resell in a few years to take your profit or have an IPO and sell off your stock before people realize what a turd you've made.

The MBAs start realizing there's no economy of scale to exploit....you can't make 1 doctor do the job of 3 doctors, you just have to hire 3 doctors. There are also only so many ways to generate revenue and guess what you generally need to be paying one of these expensive people to generate that revenue in a regulated industry.

 

[calvnandhobbs68]

The most eye popping part to me is that their compensation plan caused some people to go into debt to the company ? I don't understand what could possibly cause someone to be so desperate for a job as to agree to that. Maybe the company kidnapped their dog?

Yeah so that was also super weird to me because i had actually interviewed with them way back when and it didn't look like this was the setup at all (what they said was a base of 250K first year + 50K sign on bonus the first year I think, then switch to straight productivity which looked like complete crap lol). Never even got to the point where I looked at an actual contract because I already had a bad taste from them. But in that report they give the language in the actual contract and it's shady AF.

They basically say they can adjust going forward for "overpayments or underpayments" so it sounds like they were paying as if someone was collecting full time during the productivity period for a while, they realized they hadn't actually collected all that money and told the psychiatrist he then "owed" them that money back to the tune of like 100K. They also called the base salary an "advance on compensation" that has to be "repaid to the company in full". I can't even....see Page 5 and 6.

Private Presentation

22.11.04.Exhibit 2.Employment Agreement.Ryder v LifeStance.pdf - Download as a PDF or view online for free

www.slideshare.net

 

[Stagg737]

Yeah so that was also super weird to me because i had actually interviewed with them way back when and it didn't look like this was the setup at all (what they said was a base of 250K first year + 50K sign on bonus the first year I think, then switch to straight productivity which looked like complete crap lol). Never even got to the point where I looked at an actual contract because I already had a bad taste from them. But in that report they give the language in the actual contract and it's shady AF.

They basically say they can adjust going forward for "overpayments or underpayments" so it sounds like they were paying as if someone was collecting full time during the productivity period for a while, they realized they hadn't actually collected all that money and told the psychiatrist he then "owed" them that money back to the tune of like 100K. They also called the base salary an "advance on compensation" that has to be "repaid to the company in full". I can't even....see Page 5 and 6.

Wow, that's one of the worst contracts I've seen. Even my contract in academia which is fairly restrictive doesn't come close to this.

So you get paid 60% of what the compensation schedule for that geographic area is for services provided, but they may not be able to have an exact number and make an estimate which you then might have to repay in the next pay check if their estimate is wrong.

The debt part is actually fairly straight forward and as you describe. Per the contract you get paid $16,666/mo for the first 12 months (aka $200k/yr) as an "advance" for work done, but if you don't do enough work after 12 months to hit that mark you owe them the difference from future paychecks. If you start making >$16,666 per month before 12 months (ie month 4), that's when they'll start deducting from your paychecks to make up previously "owed" money on the "advances". If you quit, then you owe them for any work they "advanced" immediately and if you don't pay back within 30 days it starts collecting interest at 1% per month.

Also, their time off policy is ridiculous. 3 weeks PTO + 8 holidays, but you must work 40 hours per week and if you work less than that they deduct it from your total time off. Bananas...

 

[Merovinge]

What's wild is that I know some docs who work for them and I think the appeal is just clicking the Easy button. You have a virtually guaranteed job with most of the ancillary work taken care of for you and a panel that is largely generated for you. That said in my market it takes minimal work to create a much better job, but I do see people continuing to click that Easy button.

 

[nexus73]

I suspect for some being able to do telehealth from home or anywhere in the country helps them justify accepting substandard comp and contact terms. Wouldn’t be worth it to me.