Physicians are weighing the best pitch


Private equity groups continue to invest in specialties like radiology, anesthesia, emergency, dermatology and ophthalmology. The more doctors they add, the lower the operating costs.

“Where private equity roll-ups start to look attractive again is when they can bring cash to the table to fund some of those big expenses related to administration and electronic medical records,” Jennifer Breuer, a partner at Feagre Drinker Biddle & Reath, previously told Modern Healthcare.

On one hand, it is appealing for a private equity firm to invest and provide additional resources, said Dr. Peter Angood, CEO of the American Association for Physician Leadership.

“On the other hand, the productivity pressures are pretty damn high,” he said. “If physicians are worn out, getting a little time and personal choice back could be more valuable than more money.”

There has been some resistance to the private equity model from state medical associations, Scheffler said. “I suspect some doctors, rather than get bought out by a private equity firm, will ask why they couldn’t group together some small practices and replicate the model to make some money for themselves,” he said.

Meanwhile, for-profit primary-care companies also are growing rapidly, often with the backing of private equity, venture capital and insurers.

VillageMD is one of which that aims to use wraparound, team-based primary care to improve patient outcomes and the overall patient experience while reducing costs. UnitedHealth Group’s Optum, Humana and other insurers have also invested heavily in coordinated primary-care groups.

Paul Martino, co-founder and chief strategy officer of VillageMD, described it as a multipayer, physician-led business model. When the company employs or affiliates with doctors, it keeps them in the community they serve with their full patient panel, he said.

“Unlike our competitors who hang a shingle and recruit a resident to a new community, we find doctors who are well known in their community. Doctors don’t like when someone comes in and recruits their patients,” he said. “Last I checked, doctors don’t want to be employed by a payer only looking for their members—we’re not asking them to lose a subset of patients.”

VillageMD often welcomes doctors who are wary about taking on risk on their own, Martino said. It often takes on physicians who were tired of hospitals’ focus on their specialty groups rather than clinical models, he said.

“We are looking for physician leaders who believe value-based care is here to stay,” Martino said. “We’re not looking for 63-year-old doctors who want to gin up fee for service and retire.”

Many of the for-profit primary-care practices use capitated payment models, the Medicare Shared Savings Program and other risk-based arrangements. Atrium, Rissmiller said, can match those incentives and back them with a well-known system that has a full continuum of care.

Optum, the provider division of UnitedHealth Group, leads the market with its 56,000 employed doctors. It is on pace to grow by more than 10,000 physicians over the next year.

“We continue to evolve and employ doctors who are really actually quite attracted to our model of value-based primary care,” OptumHealth CEO Dr. Wyatt Decker said on a recent earnings call. “We eliminate much of the clerical burden in our physicians’ and advanced practitioners’ practice.

“Why has the system around us created an environment where the most highly paid member of the team typically is doing data entry for two hours a day per hour of patient care? It’s an absolutely absurd business model and doctors hate it,” he continued. “So there’s just an enormous opportunity for us to get this right.”

Humana has been building out its primary-care offerings for commercially insured seniors. It has 171 CenterWell and Conviva facilities and plans to double the number of CenterWell locations from 2020 to 2022.

“It’s good to see that primary-care physicians have more choices than solely selling their practices to a large integrated delivery network,” Humana’s Buckingham said. “There is a resurgence around the role a primary-care physician plays in helping slow down disease progression and helping people take control of their own health.”

Buckingham emphasized its integrated model that offers seamless handoffs as patients move through the system. Doctors also have the opportunity to earn more money based on clinical outcomes and patient satisfaction, she said.

“We include social workers, behavioral health specialists, dispensing and clinical pharmacists who can all help manage what patients’ acute or chronic needs are,” Buckingham said. “Our primary-care doctors can spend time with a care coach to understand the lifestyle changes required or social workers to help them address social determinants of need.”

When it comes to recruiting physicians and asking them to narrow their patient panel, Buckingham said they work closely with the doctors to make sure their pre-65-year-old patients have a good landing spot.

“There is usually a transition period of 60, 90 or 120 days to make sure the patients are transitioned appropriately,” she said.

As the large insurers build out their primary-care teams, some startup insurance companies are wading into home health and virtual care.

The Federal Trade Commission has committed to cracking down on mergers across industries and increasing competition in one-sided markets. Federal regulators have been eying vertical consolidation, with a focus on physician consolidation across healthcare.

The agency voted in June to prioritize investigations into healthcare, tech and digital platforms over the next decade and authorized the use of subpoenas to obtain information.

In January, the FTC asked six health insurers for claims data as they study the impact of physician consolidation.

Regulators hope a revamped merger retrospective program can determine whether the agency’s threshold for bringing an enforcement action in a merger case has been too permissive.

“There is a concern at medical societies that there is a disappearance of the practice of medicine, particularly in small groups,” Berkeley’s Scheffler said. “All the small groups are getting bigger, and affiliation will continue to be a massive trend.”



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