I've seen this a couple of places. Is derm really hurting?
The problem is if it’s hurting, it isn’t widely apparent until it is too late. Like with EM, at first saturated areas were hit hard but everyone thought “well that’s just how desirable places always are”, then at a certain threshold percent, the job market collapses dramatically as we saw over the last 3 years.
see:
https://www.bloomberg .com/news/features/2020-05-20/private-equity-is-ruining-health-care-covid-is-making-it-worse
When individual doctors sell, they generally receive $2 million to $7 million each, with 30% to 40% of that paid in equity in the group. After the acquisition, doctors get a lower salary and are asked to help recruit other doctors to sell their practices or to join as employees.
At first, doctors are generally thrilled by all of this.
Doctors who join a private equity-backed group generally sign contracts that state they’ll never have to compromise their medical judgment, but some say that management began to intervene there, too. Dermatologists at most of the companies say they were pushed to see as many as twice the number of patients a day, which made them feel rushed and unable to provide the same quality of care. Others were forced to discuss their cases with managers or medical directors, who asked the doctors to explain why they weren’t sending more patients for surgery.
At Advanced Dermatology, several doctors say they were asked to claim that physician assistants, or PAs, were under their supervision when they weren’t seeing patients in the same building, or even the same town.Because PAs are paid less than dermatologists, this allowed the company to keep costs low while growing the business. In a statement, Eric Hunt, Advanced’s general counsel and chief compliance officer says that having PAs on staff enables the company to “provide access to quality dermatological care to more patients.”
Advanced Dermatology also started giving even more authority to PAs, according to doctors and staff. Without enough oversight some were missing deadly skin cancers, they say. Others were doing too many biopsies and cutting out much larger areas of skin than necessary, leaving patients with big scars. Doctors who complained about the bad behavior say they saw PAs moved to other locations rather than fired or given more supervision.
Many doctors may ultimately come to regret cashing out, but it’s hard to get out once you’re in. As part of an acquisition, the private equity groups typically require doctors to sign yearslong contracts, with noncompete clauses that prevent them from working in the surrounding area.
And:
www.practiceupdate.com
“Currently, about 10% of dermatology practices in the United States are controlled by private equity. In 2009 there were 229 dermatology practices bought by private equity. In 2019, there were 747. “They are bragging that in 5 years they are going to own 80% of dermatology in the United States,” said Dr. Grant-Kels.
Private equity firms may let go of more seasoned physicians in the practice, replacing them with younger physicians, who will work for less, as well as physician extenders such as nurse practitioners and physicians’ assistants. A single physician may oversee as many as 5 to 10 physician extenders, who often see new patients or perform complex diagnoses and procedures that are beyond their scope of training. The private equity firm may also mandate more expensive treatment options, even if it goes against the patient’s best interests. “Any primary skin cancer on the face has to be sent for Mohs, even if you think you can excise it,” said Dr. Grant-Kels.
“They offer a young dermatologist a pretty good salary to start, and then they ‘normalize’ those salaries and lower them,” she continued. “They make them sign a noncompete [agreement]. … You owe your soul to them because the noncompetes can be very wide and very unreasonable. And although you could fight them if you go to court, that's very expensive to do it. Most young people don't have the funding to do that.”
There are wider consequences. Private equity firms are starting their own residencies and then hiring their own residents. “Residents are paid an unlivable wage and are [therefore] required to borrow from the private equity practice. When they graduate, they immediately have to pay it back or work for the private equity firm,” said Dr. Grant-Kels. “It’s a form of indentured servitude.” Specialists are hired away from academic medical centers, making it more difficult to train new dermatologists in academic settings.
