Thread About Private Equity

[bad_bunny]

I wanted to post a thread where we could discuss actual experiences with private equity. Currently, 11% of all dermatology practices are PE-owned. There is a general distaste among dermatologists for the spurt of PE acquisitions.

Can anyone describe personal (or someone they know) experiences with private equity hiring? What were the pay and hours like? What was the ratio of PA/NP to MD? What was the workflow like? Both positive and negative experiences are appreciated.

For those interested, here is an article that summarizes the current state of dermatology PE acquisitions (from an investment bank):

https://f134c572-dc0a-484d-96df-2e35ac0f7260.usrfiles.com/ugd/f134c5_caa810389227428dad5f675672ab23f9.pdf

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[MOHS_01]

PE is not inherently evil. Well, maybe it is.... but it's not significantly different than working for any other large corporate entity. What you need to understand, going in, is that you have accepted an employed position wherein you constitute a high line item cost. You are a replaceable cog in machine, and if a cheaper cog comes along, your worth just diminished and you should expect yourself to be replaced. They may not micromanage how you practice to avoid the blowback that comes from it, but you're not any more valued than your replacement cost. That's business -- and you need to understand how you are viewed (an overpaid, high cost employee).

 

[doctalaughs]

PE (unlike other big employers) shifts wealth to a huge extent from the young new doctors to the few old ones that “sold the practice.” They also shift money to the PE investors.

Universities and other large group employees also take money from their doctors/workers, but mostly do it in a more even way.

The ones that are really robbed by PE are the young docs that join. If you are close to retirement than it can be a good deal to sell.

Of course, as PE and large groups become more and more of the market, you may have no other choice. It’s all about what other options there are. If there are no other choices, or it’s too burdensome/costly for small independent practices to operate (which is what PE would like)— then that salary is then “fair.”

 

[Solodyn]

Curious about how you manage to get this valuable information (the PDF). I am sure it is not something that is publicized.

I am under the impression you are one of the new guys. Normally, I would advise you to never join PE and start your own practice. But with Covid-19, you are stuck. I know some new derm practices by new grads that were set up during the last 6 months that went out of business. At least us old guys get PPP to help with the payroll. The new guys don't have the past payroll data to even apply for that loan! Until the pandemic is over, opening a new practice is not a good idea.

On the other hand, PE firms won't pay for a board-certified derm if they can pay a PA. Everyone is on the percentage of the collection now. They are shifting all the risks to the providers.

My sincere recommendation would be finding one fo us old guys who are trying to slow down and join the practice for a reasonable flat salary. The days of 500K a year is probably not realistic PE or non-PE. Hopefully, you can negotiate some path to partnership with the mid-to-late career solo derm. I am sure some of them right now rather have a new provider to see some of their patients so they don't have to be exposed to the disease with their old lungs. In addition, PEs are not buying practices anyways at the extravagant price. Hopefully, when COVID is over, PEs are starting to buy again, you would at least have some partnership stake in the process.

 

[namethatsmell]

I'm a non-derm physician but have worked two different jobs with different PE-owned groups. I know many other docs who work or have worked for PE groups in various other fields.

I cannot cite a single instance where I've experienced or heard of PE making things "better" for the docs seeing patients.

Their goal is to increase profits (their profits) year over year and then hopefully sell to bigger fish. That's it. You see yourself as a care taker for patients, but they see you as their money printing machine. And there's only so many ways PE can increase revenue...they can have you see more patients in a day, cut your pay, have you "collaborate" with more midlevels, offer new Dx and Rx options (which you'll need to rubber stamp so they can get paid), or they can acquire new practices and scale up. You'd think the last one doesn't impact you but it actually can. I once worked at a very busy PE-owned clinic that suddenly had 1/2 of the support staff taken away on zero notice to start up a new clinic 40 minutes away...you can guess how much fun that was for everybody.

So to echo folks above, if there's any reasonable job option other than a PE group you should probably take it.

 

[MOHS_01]

Hypothetical.

Let's say that I recognize the benefits of centralization and consolidation as well as the inefficiencies that are inherent with the redundancies of small practice, all truths. Let's say that I want to squeeze whatever efficiencies I can out of the system, be it contracting for more favorable rates from both payers and vendors, easiest accomplished by establishing a managed services corporation (MSO). Sounds expensive, right? It is. Say I seek alternative financing to enable, scale, and empower this venture, understanding that efficiency is the most viable path forward.

Am I a bad guy for enabling your life to be better?

Actually, this is not hypothetical at all. Ponder before knee jerking.

 

[Skindoc83]

Let me put it this way, a lot of PE practices switched their docs from a combination of salary and collections to all collections. This violates their contracts. But PE has such deep that docs can’t afford to sue them for obvious breach of contract. The only reason to work for PE is if you want to work in a saturated market (I.e. NYC), you want to do sub specialized derm in a competitive market (mohs or dermpath), or you own a private practice and are Looking to retire. I don’t agree with the third option because these docs are often unreasonable with regards to what they think their practice is worth and don’t comprehend that their practice is not worth much more than the physical assets. They can’t sell their patient load, only their chairs, desks, and supplies.

 

[Skindoc83]

Hypothetical.

Let's say that I recognize the benefits of centralization and consolidation as well as the inefficiencies that are inherent with the redundancies of small practice, all truths. Let's say that I want to squeeze whatever efficiencies I can out of the system, be it contracting for more favorable rates from both payers and vendors, easiest accomplished by establishing a managed services corporation (MSO). Sounds expensive, right? It is. Say I seek alternative financing to enable, scale, and empower this venture, understanding that efficiency is the most viable path forward.

Am I a bad guy for enabling your life to be better?

Actually, this is not hypothetical at all. Ponder before knee jerking.

This is the argument that they present but the percentage that they take far exceeds the financial benefits of slightly higher reimbursement rates and slightly cheaper supplies IMO

 

[namethatsmell]

Let's say that I recognize the benefits of centralization and consolidation as well as the inefficiencies that are inherent with the redundancies of small practice, all truths. Let's say that I want to squeeze whatever efficiencies I can out of the system, be it contracting for more favorable rates from both payers and vendors, easiest accomplished by establishing a managed services corporation (MSO). Sounds expensive, right? It is. Say I seek alternative financing to enable, scale, and empower this venture, understanding that efficiency is the most viable path forward.

Wow, there’s a lot to unpack here.

Much of what you’re describing ("squeeze whatever efficiencies I can out of the system") is well within the wheelhouse of a consultancy firm for hire, paying an MSO for their service (if they offer a service that will actually provide more value to you than what you provide them), bringing a business person in house...or a combination of these.

It's true that companies will pay a decent chunk of change for the above options, but at the end of the day many reckon it'd be nice to not have to implement every recommendation that's made by "admin" and actually retain control over their own business and work life.

I'm very familiar with a large multi-specialty group that did exactly this. Rather than allowing themselves to be bought out by PE, they instead hired a healthcare consultant to help them through restructuring their practice when they merged with another group. I heard from a buddy who works there that the group only implemented about 60% of the consultant's recommendations and ignored others including a proposed cut to physician time off allowance. These docs did end up recognizing that they could benefit from having a pure business person for their practice...so they hired a full-time MBA. The MBA helps market the practice, handles HR stuff, and serves as an advisor to the physician owners of the practice. While their docs are allowed to buy into partnership after 3 years there, the MBA is not given the opportunity for equity. And why would they be? The MBA is their employee and is incapable of ever delivering the product (medicine) and so, while intelligent, will never be able to fully understand the implications that business decisions have on patient care and physician satisfaction.

Am I a bad guy for enabling your life to be better?

This statement is built on two false premises. First, your character has not been in question -- I bet you're a nice guy. Second, nothing you've stated shows that, at the end of the day, PE owning physician practices makes physicians' lives better. I've now seen many instances where physicians can make the lives of PE investors better. However, outside of the initial payday for the docs that sell to PE, I've yet to see the opposite occur where PE makes physicians' lives better on the regular day to day. That said, if PE has a way to allow me to legitimately take better care of patients while making more money for the same amount of work, stress, and time off that I currently have then I'm all ears.

Ponder before knee jerking.

This is an excellent example of gaslighting. Might as well add that "the beatings will continue until morale improves."

 

[PikminOC]

I'm a non-derm physician but have worked two different jobs with different PE-owned groups. I know many other docs who work or have worked for PE groups in various other fields.

I cannot cite a single instance where I've experienced or heard of PE making things "better" for the docs seeing patients.

Their goal is to increase profits (their profits) year over year and then hopefully sell to bigger fish. That's it. You see yourself as a care taker for patients, but they see you as their money printing machine. And there's only so many ways PE can increase revenue...they can have you see more patients in a day, cut your pay, have you "collaborate" with more midlevels, offer new Dx and Rx options (which you'll need to rubber stamp so they can get paid), or they can acquire new practices and scale up. You'd think the last one doesn't impact you but it actually can. I once worked at a very busy PE-owned clinic that suddenly had 1/2 of the support staff taken away on zero notice to start up a new clinic 40 minutes away...you can guess how much fun that was for everybody.

So to echo folks above, if there's any reasonable job option other than a PE group you should probably take it.

No different from a hospital system

 

[DoctwoB]

Hypothetical.

Let's say that I recognize the benefits of centralization and consolidation as well as the inefficiencies that are inherent with the redundancies of small practice, all truths. Let's say that I want to squeeze whatever efficiencies I can out of the system, be it contracting for more favorable rates from both payers and vendors, easiest accomplished by establishing a managed services corporation (MSO). Sounds expensive, right? It is. Say I seek alternative financing to enable, scale, and empower this venture, understanding that efficiency is the most viable path forward.

Am I a bad guy for enabling your life to be better?

Actually, this is not hypothetical at all. Ponder before knee jerking.

Agree with the reply above, their are HUGE differences between PE buyout and what you describe. I'll not go down into the details, but the overarching difference is that in one case you are performing these tasks to benefit YOUR group, which is run by the physicians for the physicians and the patients. You are also planning to do this for the long term and want to build a functional and sustainable practice. In the other you are an employee working to achieve these things for the benefit of your PE group, which has to both generate a return in the short term (despite the buyout they paid) and has no plans to hold for the long term, which will affect what is done and how physicians and employees are treated.

I don't fault individuals for taking the money in a buyout, especially those who have built a practice, are near end career and want to recieve value for it. But given any alternative I would not work as a PE employee unless paid a significant premium.

 

[PikminOC]

PE has infiltrated dentistry. Lots of corporate dental practices. Can check their forums for more info

 

[MOHS_01]

Ummm -- that was all hypothetical, fellas. I'm solo private practice, have been approached by numerous PE and non-PE megagroups for acquisition, was never right for me -- neither the numbers nor the operations. That said, you would all do well to understand that the PE backed marketplace is not monolithic in nature; they vary in structure and form. It is also important to note that they don't enjoy monopoly over predatory practices when it comes to physician contracting; global house of medicine speaking, many more physicians haven been (and are) screwed over by their local hospital systems acquiring their practices than the relatively small player PE -- and they all use similar antics and tactics.

The real problems are structural in nature; we have a legal system that not only enables this BS, it empowers, runs interference for, and even encourages it. Secondly, derm subspecialty services suffer from dependence and exposure, making us terribly vulnerable to "disruptive" changes -- no different than our friends in rads and anesthesia and path who preceded us on this path; if we do not own and control our entire referral stream -- and good monies are generated off of our services -- and we have an excess in providers of our services (quite true, btw, and has been for over a decade), you can bet that someone will take it from us. To quote John Dutton: "It's the one constant in life... if you build something worth having, someone is going to try to take it."



They play the game by the rules our elected and their appointees crafted to benefit these monied interests -- all at our expense. We need to fight smarter.

 

[MOHS_01]

Wow, there’s a lot to unpack here.

Much of what you’re describing ("squeeze whatever efficiencies I can out of the system") is well within the wheelhouse of a consultancy firm for hire, paying an MSO for their service (if they offer a service that will actually provide more value to you than what you provide them), bringing a business person in house...or a combination of these.

It's true that companies will pay a decent chunk of change for the above options, but at the end of the day many reckon it'd be nice to not have to implement every recommendation that's made by "admin" and actually retain control over their own business and work life.

I'm very familiar with a large multi-specialty group that did exactly this. Rather than allowing themselves to be bought out by PE, they instead hired a healthcare consultant to help them through restructuring their practice when they merged with another group. I heard from a buddy who works there that the group only implemented about 60% of the consultant's recommendations and ignored others including a proposed cut to physician time off allowance. These docs did end up recognizing that they could benefit from having a pure business person for their practice...so they hired a full-time MBA. The MBA helps market the practice, handles HR stuff, and serves as an advisor to the physician owners of the practice. While their docs are allowed to buy into partnership after 3 years there, the MBA is not given the opportunity for equity. And why would they be? The MBA is their employee and is incapable of ever delivering the product (medicine) and so, while intelligent, will never be able to fully understand the implications that business decisions have on patient care and physician satisfaction.



This statement is built on two false premises. First, your character has not been in question -- I bet you're a nice guy. Second, nothing you've stated shows that, at the end of the day, PE owning physician practices makes physicians' lives better. I've now seen many instances where physicians can make the lives of PE investors better. However, outside of the initial payday for the docs that sell to PE, I've yet to see the opposite occur where PE makes physicians' lives better on the regular day to day. That said, if PE has a way to allow me to legitimately take better care of patients while making more money for the same amount of work, stress, and time off that I currently have then I'm all ears.



This is an excellent example of gaslighting. Might as well add that "the beatings will continue until morale improves."

FWIW, I was alluding to the creation of a construct that would provide all of the touted benefits of PE while allowing local physician ownership and control Doing everything in house become a matter of scale for efficiency, and is simply not reasonable for the historical dermatology landscape that has few docs per location / practice. It would require some form of disruptive consolidation to make the numbers work, landing you right back in the pickle that made it ripe for PE backed consolidation to begin with.

 

[namethatsmell]

FWIW, I was alluding to the creation of a construct that would provide all of the touted benefits of PE while allowing local physician ownership and control

Fair enough. As I said before, if such a thing came about in a way that didn't screw physicians and patients, I'd be interested to learn more.

They play the game by the rules our elected and their appointees crafted to benefit these monied interests -- all at our expense. We need to fight smarter.

Totally agree. And the Stark laws have gone way too far.

 

[MOHS_01]

Fair enough. As I said before, if such a thing came about in a way that didn't screw physicians and patients, I'd be interested to learn more.

....

Are patients screwed when you negotiate more favorable reimbursement rates?

 

[namethatsmell]

Are patients screwed when you negotiate more favorable reimbursement rates?

Patients get screwed when PE practices decide to view job roles that provide real value to patients--but when viewed under a very narrow lens by a bean counter appear close to budget neutral or perhaps even run a bit in the red--as expendable and eliminate them.

Patients get screwed when PE practices underpay staff to the point you cannot hire somebody with a normal IQ for a position and so things like registration paperwork, appointments, billing, and prescriptions get routinely messed up.

Patients get screwed when PE practices companies work their doctors to the bone to the point that burnout sets in, the amount of actual face time with their doctor gets cut, and patients begin to see a merry-go-round of PAs/NPs instead of their actual physician.

I could go on, but do you notice what all of these things have in common? They turn a short term profit at the expense of the long term outlook for the patients and doctors involved. And PE doesn't care. They're just looking to sell to bigger fish down the line and need to show graphs with improving $$$ trajectories during their period of ownership to get the biggest ROI.

Our work is hard and we should absolutely be paid fairly for what we do. But I value my time (and having meaningful control over my work environment) more than chasing after every last penny. If my time at work sucks then I'd rather not be there. And if my patients are all miserable to interact with because of the above examples (which the worker bee docs often don't control at a PE practice) then my time at work will probably be miserable too.

 

[MOHS_01]

You’re naive if you believe PE has a monopoly on any of those things.... welcome to medicine as it has existed for the past decade or two at least. This is starting to sound more like personal embitterment than a reasoned discussion - and this is coming from someone who is not a fan of the whole PE / corporate construct and fundamentally prefers the cottage industry that has been / continues to be regulated out of existence. I practice what I preach but do not go through life with blinders on or on a personal crusade of vengeance.

And you didn’t answer the question.

 

[Solodyn]

PE is not going to increase enough profit margin through supply buying contracts or negotiate better payments. That is what they say to the investors. You can't negotiate with government insurance, and that is a large chunk of dermatology.

What I am seeing PE doing is that they have deep pockets to control any region of the market through setting up practices in areas that are near saturation or already saturated. They can afford to have clinics that are not profitable just to saturate the market. It doesn't hurt that the minimally supervised PAs helps staff these clinics to reduce overhead. It doesn't affect old guys like me as much, but it certainly will destroy the option of any new derm to set up in the area. As a matter of fact, PE buys old guys like me to further control the market so any new derm wants to come in town, they don't have the option of setting up their own practice or buying out my existing practice. Being an employee is their only option.

When PE groups do come to my region, I will resent the fact that they have the financial backing to set up these "scorch earth" clinics to drive down my patient load, procedure volume, and insurance mix. It's like how Walmart wipes out of Mom and Pop shops.

Of course, this is kind of damage is not unique to PE groups. Insurance companies can set up their own clinics to captivate their own cover lives. They can even partner with PE groups for preferred rates and further damage my practice. As we all know, in the world of 3rd party payers, there is very little goodwill exists in individual private practices. Patients will mostly go where the insurance will cover the payment.

What pisses me off the most is actually when Academic/Public University starts a derm program and creates many resident clinics staffs across the city with PAs and residents to saturate the demand. There is nothing wrong with opening the clinics in itself. What makes me mad is that these state university medical centers essentially are subsidized by the state. They use my tax dollars to create these clinics to undercut my practice with cheap labor. These University clinics don't go out of business with the state funding as their safety net. I certainly don't enjoy that luxury and I find that grossly wrong.

 

[MOHS_01]

PE is not going to increase enough profit margin through supply buying contracts or negotiate better payments. That is what they say to the investors. You can't negotiate with government insurance, and that is a large chunk of dermatology.

What I am seeing PE doing is that they have deep pockets to control any region of the market through setting up practices in areas that are near saturation or already saturated. They can afford to have clinics that are not profitable just to saturate the market. It doesn't hurt that the minimally supervised PAs helps staff these clinics to reduce overhead. It doesn't affect old guys like me as much, but it certainly will destroy the option of any new derm to set up in the area. As a matter of fact, PE buys old guys like me to further control the market so any new derm wants to come in town, they don't have the option of setting up their own practice or buying out my existing practice. Being employees are their only option.

When PE groups come into my region, I do resent the fact that they have the financial backing to set up these "scorch earth" clinics to drive down my patient load, procedure volume, and insurance mix. It's like how Walmart wipes out of Mom and Pop shops.

Of course, this is kind of damage is not unique to PE groups. Insurance companies can set up their own clinics to captivate their own cover lives. They can even partner with PE groups for preferred rates and further damage my practice. As we all know, in the world of 3rd party payers, there is very little goodwill exists in individual private practices. Patients will mostly go where the insurance will cover the payment.

What pisses me off the most is actually when Academic/Public University starts a derm program and creates many resident clinics staffs across the city with PAs and residents to saturate the demand. There is nothing wrong with opening the clinics in itself. What makes me mad is that these state university medical centers essentially are subsidized by the state. They use my tax dollars to create these clinics to undercut my practice with cheap labor. These University clinics don't go out of business with the state funding as their safety net. I certainly don't enjoy that luxury and I find that grossly wrong.

Absolutely - they take monies taken from you to further disadvantage you - and it can reproducibly be shown to be the care time and again anywhere academic health systems exist.

 

[smartparts]

I've heard that PE lobbies to keep derm reimbursement high (or pays the AAD to) and possibly to minimize mid-level supervision. Is there any truth to this? I haven't seen anything definitive in the media but it seems plausible since these both have implications for their bottom line. Seems like a doubled-edged sword but it might be why things like the 25 modifier have been preserved.

 

[dermie1985]

I've heard that PE lobbies to keep derm reimbursement high (or pays the AAD to) and possibly to minimize mid-level supervision. Is there any truth to this? I haven't seen anything definitive in the media but it seems plausible since these both have implications for their bottom line. Seems like a doubled-edged sword but it might be why things like the 25 modifier have been preserved.

Well...billing is based on E&M codes (not-specific to Derm) and procedure codes (in which individual insurance companies and Medicare decide on reimbursement rates....). I'm sure any derm lobby (PE or not) advocates for policies that promote financial benefit to dermatology as a specialty. The AMA and the AAD political lobbying were definitely involved in the 25 modifier code issue.

 

[doctalaughs]

Only difference between PE and university/hospital/large corporate derm practices is that PE has the express aim of cashing out to double/triple their investors wallets in a relatively short time-horizon. The other entities usually do want some sort of long-term reputation for quality care and not as desperate to cut every corner to show year-over-year profit ratio increases.

This, in my mind, makes PE the very, very bottom of the barrel (not arguing that the proliferation/attempted monopoly with other large entities isn’t also bad in some ways).

Here’s a pretty good picture of practice environments when you balance all the pros and cons:

Private >>> non-profit multi spec (ie Kaiser like) > govt (VA) > profit multi-spec = university >>>>>> PE.

note- I would have rated university 2nd right after private 15 years ago, but now they act basically the exact same as multi-spec for profit companies (including the CEO making 50 mill/yr), and also pay their doctors worse while using the “academic” name as an advertising ploy.

 

[bad_bunny]

Thanks for the great discussion so far, everyone. Question for the initiated who understand billing and running a practice much better than I do... Why haven't dermatologists been completely replaced by PA's in PE, and why are PE practices still hiring new derm grads? As of now, it's pretty easy for a new grad to get a 350-400k offer in most areas for a 4-4.5 day work week.

From what I understand, PE switches their new hires from salaried to % collections after a few years. If a PA is not incident billing under a supervising physician, they still can bill at 85% under their own NPI . If PE is paying you based on collections, why in the world are they not only hiring PA's? I'm sure the economics don't work out for paying a dermatologist 3-4x a PA salary when PA's can bill at 85%? I can't imagine that dermatologists can physically see that many more patients in a day.

Thanks again for all of the knowledge from the older, wiser derms.

 

[namethatsmell]

You’re naive if you believe PE has a monopoly on any of those things.... welcome to medicine as it has existed for the past decade or two at least. This is starting to sound more like personal embitterment than a reasoned discussion - and this is coming from someone who is not a fan of the whole PE / corporate construct and fundamentally prefers the cottage industry that has been / continues to be regulated out of existence. I practice what I preach but do not go through life with blinders on or on a personal crusade of vengeance.

And you didn’t answer the question.

The question reeks of trolling/baiting. And, frankly, in the context of the thread your question seems based on the false premise that: PE allowing their docs to get better reimbursement from insurers = the docs themselves taking home more pay for the same amount of work. As many others have said, in the real world it doesn't work this way. Or, at least, nobody on here has seemed to experience this phenomenon you describe. What were you hoping to achieve from asking this question? For what it's worth, the answer to your question is of course no.

You say you don't work for PE...yet earlier in this thread you seem to defend various aspects of how PE operates. Do you have a particular agenda here? I and others replied with differing experiences and opinions. You don't have to like them and it's certainly your right to ignore first-hand experiences of PE burning through practices that were decent places to work before they got there...but I'm not sure why you would. And, in response, you lob ad hominem shells my way...is this what you mean by have a "reasoned" discussion? Or do you rely on gaslighting to achieve that?

And I have "blinders" on? Well, I've worked for private doc-owned groups, PE groups, and both non-profit and for-profit systems. So please continue to condescend and tell me more about my simple, narrow perspective on various practice setups.

And a "crusade?" Haha man...in case you haven't noticed this is a thread about PE. Not a thread about the other types of setups. Do not confuse a "crusade" for me simply addressing the topic of the thread. In my humble opinion, PE is not some uniquely evil employment set-up in medicine...every type of setup where a doc is not an owner puts the doc at risk of being taken advantage of. In my experience though, PE and for-profit/publicly traded employers, in broad strokes, probably represent the worst balance of pay : physician satisfaction.

 

[Skindoc83]

Thanks for the great discussion so far, everyone. Question for the initiated who understand billing and running a practice much better than I do... Why haven't dermatologists been completely replaced by PA's in PE, and why are PE practices still hiring new derm grads? As of now, it's pretty easy for a new grad to get a 350-400k offer in most areas for a 4-4.5 day work week.

From what I understand, PE switches their new hires from salaried to % collections after a few years. If a PA is not incident billing under a supervising physician, they still can bill at 85% under their own NPI . If PE is paying you based on collections, why in the world are they not only hiring PA's? I'm sure the economics don't work out for paying a dermatologist 3-4x a PA salary when PA's can bill at 85%? I can't imagine that dermatologists can physically see that many more patients in a day.

Thanks again for all of the knowledge from the older, wiser derms.

PE often Offers high salaries for the first 6-12 months of employment then switches to collections. its not uncommon once switching to collections for income to drastically drop since many of these jobs are in saturated markets. This results in docs Either quitting or grudgingly staying on because they have settled in the area and don’t want to uproot. As for why they don’t replace all docs with mid levels many patients still want to see physicians and other groups have gone this way with disastrous results. I believe Derm One or Family Derm in NJ used to employ solely mid levels and foreign trained, non derm MDs with a “passion for derm.” Last I heard they were embroiled in all sorts of fraudulent billing charges and were going bankrupt

 

[end stage fibro]

i’m a hospitalist but am familiar with PE in the hospital setting. bloomberg actually had a great article on it recently:

Life and Debt at a Private Equity Hospital — Bloomberg Businessweek

lmk if paywall

PE is only their to eviscerate the practice then sell the charred remains to someone else, netting a nice profit and leaving THE PRACTICE with unsustainable debt. can’t imagine it being any better in the derm world.

 

[doctalaughs]

Thanks for the great discussion so far, everyone. Question for the initiated who understand billing and running a practice much better than I do... Why haven't dermatologists been completely replaced by PA's in PE, and why are PE practices still hiring new derm grads? As of now, it's pretty easy for a new grad to get a 350-400k offer in most areas for a 4-4.5 day work week.

From what I understand, PE switches their new hires from salaried to % collections after a few years. If a PA is not incident billing under a supervising physician, they still can bill at 85% under their own NPI . If PE is paying you based on collections, why in the world are they not only hiring PA's? I'm sure the economics don't work out for paying a dermatologist 3-4x a PA salary when PA's can bill at 85%? I can't imagine that dermatologists can physically see that many more patients in a day.

Thanks again for all of the knowledge from the older, wiser derms.

Two reasons.

1) derm is a patient facing-specialty and many patients are keenly aware of the differences between the physician and the midlevel. If they had all (or mostly midlevels) these PE practices would lose most of their patients.

2) midlevels - like in most other areas of medicine - get in over-their-heads quickly in dermatology. They do need supervision to be safe (if you can even argue they are ever safe) and this is the “experienced” ones. The new ones know basically zero and take a long time. Although some new dermatologists are “forced” into PE now, if you think they can supervise and train 10 midlevels per doc, it can’t be done.

 

[MOHS_01]

The question reeks of trolling/baiting. And, frankly, in the context of the thread your question seems based on the false premise that: PE allowing their docs to get better reimbursement from insurers = the docs themselves taking home more pay for the same amount of work. As many others have said, in the real world it doesn't work this way. Or, at least, nobody on here has seemed to experience this phenomenon you describe. What were you hoping to achieve from asking this question? For what it's worth, the answer to your question is of course no.

You say you don't work for PE...yet earlier in this thread you seem to defend various aspects of how PE operates. Do you have a particular agenda here? I and others replied with differing experiences and opinions. You don't have to like them and it's certainly your right to ignore first-hand experiences of PE burning through practices that were decent places to work before they got there...but I'm not sure why you would. And, in response, you lob ad hominem shells my way...is this what you mean by have a "reasoned" discussion? Or do you rely on gaslighting to achieve that?

And I have "blinders" on? Well, I've worked for private doc-owned groups, PE groups, and both non-profit and for-profit systems. So please continue to condescend and tell me more about my simple, narrow perspective on various practice setups.

And a "crusade?" Haha man...in case you haven't noticed this is a thread about PE. Not a thread about the other types of setups. Do not confuse a "crusade" for me simply addressing the topic of the thread. In my humble opinion, PE is not some uniquely evil employment set-up in medicine...every type of setup where a doc is not an owner puts the doc at risk of being taken advantage of. In my experience though, PE and for-profit/publicly traded employers, in broad strokes, probably represent the worst balance of pay : physician satisfaction.

Not trolling. Not sure about baiting -- asking someone to realize that the world is not nearly as black and white, cut and dry as some package and sell it could be construed that way I guess.... The question was not that difficult to answer...

I don't work for PE;have been solo practice for 14 of the 15 years I've been out from training -- one year a failed experiment with a multispecialty organization who broke their promises and took my money.

Simple fact of the matter is that there must exist some benefit, some advantage for the PE model to persist -- and that is what I aim to determine.. and ultimately try to leverage to run them out of the arena. The general gist of it being great for the retiring owner is understandable, the early market entrant predatory model is understandable, the increased operational efficiencies due to size and scale is understandable, the improved fee schedules due to targeted expansion and existing contracting is understandable, but a persistent culture of underpaying and overworking their providers is not -- for that would not be sustainable and would represent a short lived problem.

You've been burned by a PE acquisition -- that much is obvious. You have seen no ad hominem attack, though. An assessment of the reasons underlying a poor argument is not an ad hominem -- an ad hominem would be a discounting of your argument based solely upon an attack upon the person -- which has not been done. You pointed out problems that you've seen with a PE arrangement; these problems are common to all physician employment arrangements between two disparate power, knowledge, or wealth entities, regardless of financial backing. Local health systems, hospitals, universities, corporations, etc all employ the same tactics -- and will similarly threaten to bankrupt you through the legal process irrespective of right, wrong, or expecte outcome.

Feel free to continue gnashing your teeth, though. I sincerely wish you the best... it's hard enough out there as it is, should not let a willful bias make that life any more difficult than it needs to be.

 

[MOHS_01]

The question reeks of trolling/baiting. And, frankly, in the context of the thread your question seems based on the false premise that: PE allowing their docs to get better reimbursement from insurers = the docs themselves taking home more pay for the same amount of work. As many others have said, in the real world it doesn't work this way. Or, at least, nobody on here has seemed to experience this phenomenon you describe. What were you hoping to achieve from asking this question? For what it's worth, the answer to your question is of course no.

You say you don't work for PE...yet earlier in this thread you seem to defend various aspects of how PE operates. Do you have a particular agenda here? I and others replied with differing experiences and opinions. You don't have to like them and it's certainly your right to ignore first-hand experiences of PE burning through practices that were decent places to work before they got there...but I'm not sure why you would. And, in response, you lob ad hominem shells my way...is this what you mean by have a "reasoned" discussion? Or do you rely on gaslighting to achieve that?

And I have "blinders" on? Well, I've worked for private doc-owned groups, PE groups, and both non-profit and for-profit systems. So please continue to condescend and tell me more about my simple, narrow perspective on various practice setups.

And a "crusade?" Haha man...in case you haven't noticed this is a thread about PE. Not a thread about the other types of setups. Do not confuse a "crusade" for me simply addressing the topic of the thread. In my humble opinion, PE is not some uniquely evil employment set-up in medicine...every type of setup where a doc is not an owner puts the doc at risk of being taken advantage of. In my experience though, PE and for-profit/publicly traded employers, in broad strokes, probably represent the worst balance of pay : physician satisfaction.

...and are you derm or EM?

 

[namethatsmell]

Not trolling. Not sure about baiting -- asking someone to realize that the world is not nearly as black and white, cut and dry as some package and sell it could be construed that way I guess.... The question was not that difficult to answer...

I don't work for PE;have been solo practice for 14 of the 15 years I've been out from training -- one year a failed experiment with a multispecialty organization who broke their promises and took my money.

Simple fact of the matter is that there must exist some benefit, some advantage for the PE model to persist -- and that is what I aim to determine.. and ultimately try to leverage to run them out of the arena. The general gist of it being great for the retiring owner is understandable, the early market entrant predatory model is understandable, the increased operational efficiencies due to size and scale is understandable, the improved fee schedules due to targeted expansion and existing contracting is understandable, but a persistent culture of underpaying and overworking their providers is not -- for that would not be sustainable and would represent a short lived problem.

You've been burned by a PE acquisition -- that much is obvious. You have seen no ad hominem attack, though. An assessment of the reasons underlying a poor argument is not an ad hominem -- an ad hominem would be a discounting of your argument based solely upon an attack upon the person -- which has not been done. You pointed out problems that you've seen with a PE arrangement; these problems are common to all physician employment arrangements between two disparate power, knowledge, or wealth entities, regardless of financial backing. Local health systems, hospitals, universities, corporations, etc all employ the same tactics -- and will similarly threaten to bankrupt you through the legal process irrespective of right, wrong, or expecte outcome.

Feel free to continue gnashing your teeth, though. I sincerely wish you the best... it's hard enough out there as it is, should not let a willful bias make that life any more difficult than it needs to be.

I'm glad you've been able to work for yourself and you ditched the multispecialty group who took advantage of you. To answer your last question --as I've said, I'm not in derm. I've worked for PE in the ED and have other non-EM training and have worked for PE out of the ED.

You say you're not taking an ad hominem tact...though I'm not sure you grasp what that means. Rather than going after my argument and give me actual examples of setups where PE allows docs and patients to be happier, you instead suggest I "ponder before knee jerking," that I have "blinders on," that I'm on a "crusade," and now additionally that I can't help but "gnash my teeth" and just can't seem to find a way to control my "willful bias." So tell me, how do these assertions go after the substance of what I'm saying? Because from where I sit, they instead seem to try to go after my character and intellect as a way to undermine the validity of my experiences.

You're correct I've been burned by PE. I said this in my first post. Yet, despite what you feel your telepathic powers seem to tell you about me, I actually don't spend my days wandering through the streets cursing PE's name to the wind. At both PE jobs my fellow docs and I noticed over time that many things changed for the worse, asked ownership to make adjustments, and when they didn't most of us left. There was 0 drama in my exits and I landed well on my feet both times. I still keep in touch with one of the PE admins I used to work for as he's a good networking source. I have no special vendetta nor do I pretend to have some special cross to bear regarding PE. But what I won't do is minimize or sugarcoat my PE experiences on a thread about PE. If you feel I'm too blunt, well I'm sorry for that. If this thread were about working for a publically-traded system I wouldn't sugarcoat that either.

Ironically, I have to move for family reasons soon and one of the jobs I'm considering is at a small but growing PE-owned group. They talk a good game about having a number of mechanisms in place to keep doc scutwork low without overworking folks and to keep care smooth and safe. They also say that I'd "potentially" have a chance to buy in for a small % of ground-floor company ownership before the current 1st PE cycle ends and they sell to bigger fish--which is of course a meaningless offer unless it's etched into a contract (which is something I hope all docs understand no matter who their prospective employer is). It's not currently one of my first choices but it's not my last choice either (a small doc-owned practice is claiming that spot) and after a couple of tele-interviews with them I'll at least do a site visit. But they'd better have something magical to offer or the other jobs turn out to be crap as my eyes are now wide open. If I knew I was going to be in the same location for awhile I'd probably pull the trigger and try to open my own practice.

Anyway, I agree with many of the non-pro PE things you've said and to be honest our discussion on this seems to be becoming meaningless in any pragmatic sense so I'll sign off unless there's a reason to chime in. And it's not been my intent to sidetrack this thread -- sorry OP!

 

[MOHS_01]

I'm glad you've been able to work for yourself and you ditched the multispecialty group who took advantage of you. To answer your last question --as I've said, I'm not in derm. I've worked for PE in the ED and have other non-EM training and have worked for PE out of the ED.

You say you're not taking an ad hominem tact...though I'm not sure you grasp what that means. Rather than going after my argument and give me actual examples of setups where PE allows docs and patients to be happier, you instead suggest I "ponder before knee jerking," that I have "blinders on," that I'm on a "crusade," and now additionally that I can't help but "gnash my teeth" and just can't seem to find a way to control my "willful bias." So tell me, how do these assertions go after the substance of what I'm saying? Because from where I sit, they instead seem to try to go after my character and intellect as a way to undermine the validity of my experiences.

You're correct I've been burned by PE. I said this in my first post. Yet, despite what you feel your telepathic powers seem to tell you about me, I actually don't spend my days wandering through the streets cursing PE's name to the wind. At both PE jobs my fellow docs and I noticed over time that many things changed for the worse, asked ownership to make adjustments, and when they didn't most of us left. There was 0 drama in my exits and I landed well on my feet both times. I still keep in touch with one of the PE admins I used to work for as he's a good networking source. I have no special vendetta nor do I pretend to have some special cross to bear regarding PE. But what I won't do is minimize or sugarcoat my PE experiences on a thread about PE. If you feel I'm too blunt, well I'm sorry for that. If this thread were about working for a publically-traded system I wouldn't sugarcoat that either.

Ironically, I have to move for family reasons soon and one of the jobs I'm considering is at a small but growing PE-owned group. They talk a good game about having a number of mechanisms in place to keep doc scutwork low without overworking folks and to keep care smooth and safe. They also say that I'd "potentially" have a chance to buy in for a small % of ground-floor company ownership before the current 1st PE cycle ends and they sell to bigger fish--which is of course a meaningless offer unless it's etched into a contract (which is something I hope all docs understand no matter who their prospective employer is). It's not currently one of my first choices but it's not my last choice either (a small doc-owned practice is claiming that spot) and after a couple of tele-interviews with them I'll at least do a site visit. But they'd better have something magical to offer or the other jobs turn out to be crap as my eyes are now wide open. If I knew I was going to be in the same location for awhile I'd probably pull the trigger and try to open my own practice.

Anyway, I agree with many of the non-pro PE things you've said and to be honest our discussion on this seems to be becoming meaningless in any pragmatic sense so I'll sign off unless there's a reason to chime in. And it's not been my intent to sidetrack this thread -- sorry OP!

One thing that you need to realize is that derm and EM are very, very different worlds - in a fundamental way - and these differences make the issue of predatory practices and the world of PE mean two very different things. As an EM doc, you are a very captivE population - you cannot just start your own thing or join another person down the street, you are quite finitely delimited in job settings and locations. It’s the same story as anesthesia, path, and rads; you are not public facing, self directed entities, and this condition makes you uniquely vulnerable to targeting.

That’s not the dermatologist’s world; as such, many of the abuses otherwise intended for the docs are naturally curtailed in our world.

What I’m saying is PE does not mean to dermatology what it means to EM; no one is saying that it ideal or even good, but if we are to have a functioning marketplace of ideas, choice is a requisite and experimentation is necessary. Some, sadly, are not afforded much of either in the captive specialties.

I'm not sure what kind of evidence one could present other than the anecdotal. I know people who were burned by PE, did not agree with the new management, etc -- but I similarly know many more who have been happy with the change, earn more while working fewer hours, etc. Some were drowning in the day to day, regulation and HR and insurance reimbursement struggles and are relieved to be free of that. It's also worth pointing out that PE in derm is not a one size fits all phenomenon; the differing groups have differing buyouts, targets, and operations, so what one may hate another may love... hence the importance of choice.

 

[namethatsmell]

There are many variations of PE and PE's interface with derm will certainly be different than EM (or rads or path etc). No question there and some valid points.

For what it's worth, my non-EM work is a front-facing field where people come to see a "specialist," likely similar to people who come to see a dermatologist. In this work the PE changes were perhaps less crazy than in EM, but still a huge PITA and bad for patient care. In my time there a sizable amount of the docs and midlevels left.

I do hope the average derm's experience with PE is better than the experiences I (and several friends in front-facing fields) have had. If you choose to engage with them I'd negotiate hard, ask for more than you think you deserve and see what happens, and get everything you want in the contract or otherwise assume it won't happen. As a group, docs don't do this nearly enough or really stand up for ourselves when negotiating.

But let's not kid ourselves: the first goal of PE is to meet/exceed their targeted ROI. As you say, anecdotes are about all we've got so I wouldn't discount mine even though they're from non-derm fields. Take them as cautionary tales as some things unfortunately will apply to derm. We all like to feel our specialities are somehow special and while I would expect PE to be more crass with EM/anesthesia/rads and interact more gently with outpatient fields like derm...at the end of the day to PE (as well as HCA, Tenet, many non-profit systems, predatory doc-owned groups etc) we are all simply RVU+facility/ancillary fee-generating widget-makers.

 

[namethatsmell]

A recent article posted in another physician group about PE+derm. While not an end-all be-all piece, could be food for thought for the OP:

How Private Equity Is Ruining American Health Care

Investors have been buying up doctor’s offices, cutting costs, and, critics say, putting pressure on physicians in ways that hurt patients. The pandemic could make things even worse.

www.bloomberg.com

 

[Slack3r]

No shortage of slime ball dermatologists, sadly.

 

[doctalaughs]

No shortage of slime ball dermatologists, sadly.

If that’s the way you are judging, seems to me that derm is one of the last specialties to fall to PE, assuming greed is fueling the fire.

So speak for yourself (whatever specialty you are coming from).

 

[Skindoc83]

Its no secret in the derm world to steer clear of Morganroth

 

[MOHS_01]

Sometimes it takes a while for things to get on the radar. Sometimes identifying a potentially problematic development can head off tragedy... but, sometimes small, well intentioned fires turn into raging infernos.


https://www.healthcare-economist.com/2020/08/30/the-growing-influence-of-private-equity-in-medicine/

Once it starts making policy makers nervous -- or provides them ammunition to use against us as a group -- what changes will be proposed? To be continued....

 

[MohsHopeful]

The incoming president of the AAD (Mark D. Kaufmann, MD) is the new Chief Medical Officer of Advanced Dermatology & Cosmetic Surgery. Many of the AAD Board of Directors are involved with private equity. I don't see it going anywhere soon.

 

[asmallchild]

The incoming president of the AAD (Mark D. Kaufmann, MD) is the new Chief Medical Officer of Advanced Dermatology & Cosmetic Surgery. Many of the AAD Board of Directors are involved with private equity. I don't see it going anywhere soon.

There is a petition to remove him from office: Sign the Petition

I agree I don't see PE "going away" anytime soon.

It would be interesting to be a fly on the wall to see if/how PE groups have factored in the large decrease in the Medicare conversion factor (particularly if they are running biopsy/Mohs mills) and whether or not they regret their large investment...

 

[ddcg]

This seems relevant...

Petition Seeks to Oust AAD President-Elect

The petition objects to the fact that Dr Kaufmann took a position as CMO of Advanced Dermatology and Cosmetic Surgery, the nation's largest private equity-backed dermatology group, after being elected.

www.medscape.com

 

[reno911]

This seems relevant...

Petition Seeks to Oust AAD President-Elect

The petition objects to the fact that Dr Kaufmann took a position as CMO of Advanced Dermatology and Cosmetic Surgery, the nation's largest private equity-backed dermatology group, after being elected.

www.medscape.com

It is and it was posted here a few days ago. Actually, it's the post immediately before yours.