What are the strengths of private practice medicine – and what happens when a doctor sells a practice to a private equity company? I met a doctor in an online group and we struck up a conversation. Her views were so interesting that I asked her to join me in a series of conversations for ClearHealthCosts. She is a D.O. (Doctor of Osteopathic Medicine) in private practice who also has a leadership role in obstetrics and gynecology at a Midwestern hospital system. She spoke on condition that we not use her name. Here is our sixth and last conversation, lightly edited for length and clarity. Links to the first five are at the bottom of this post.
Jeanne Pinder
You’ve said data supports the idea that people get better care from private practice physicians. Can you tell me more about that?
Dr. X
The data supports that we order less testing and unnecessary surgery. In the back of my mind, I’m not thinking about RVU’s [Relative Value Units used in billing]; I’m thinking about what’s best for the patient. I really don’t have to think about much else. I can focus on what’s good for the patient, and I know that I’m going to make money. My livelihood is not dependent on what kind of tests I order. I just do my job, which I’ve done for 30 years. I’ve made decent money, worked hard, and I get compensated, so I don’t worry about that.
I can’t say that’s true for everyone, but I think it makes my decision-making much easier because nobody’s looking at my metrics. Nobody’s checking to see if I’m performing enough procedures. My performance evaluations come from my patients — if they come back and are satisfied with their care.
JP
So people who are not in private practice, like hospital practice or a commercial a more commercial one, they are subject to regular evaluations?
Dr. X
Absolutely, yes.
Generating enough revenue
JP
So in a hospital practice, for example, somebody would be receiving regular report cards – or get called into the principal’s office for not ordering enough tests?
Dr. X
I don’t know if they actually get called in for not ordering enough tests, but they do get called in for not generating enough revenue. I think it’s kind of assumed that it’s because they’re not ordering enough tests or not generating enough RVU’s to support the salary they’re getting. They get production incentives, and if they aren’t making their numbers….
I know someone who was recently told she wasn’t making her numbers because they hired three more people when they probably should have hired just one. The workload didn’t automatically triple. She’s been there for maybe two years. These other people have been there less than that, so now she’s seeing fewer patients, and as a result, they’re cutting her salary.
JP
Well, on the flip side, then, the production incentive would be, if you ordered enough MRI’s, you would get a bump in your paycheck?
Dr. X
I don’t know.
Keeping patients in house
JP
Also, there are incentives for referring inside of the hospital, not referring somebody out. Is that? Is that correct?
Dr. X
Yeah, I don’t know if it’s incentives, but I think you get dinged if you don’t do it. I don’t think you get rewarded if you do it, because it’s assumed that you will keep it in house. But I know that you get dinged if you send people out.
JP
So dinged would be like a note to file or something?
Dr. X
Yeah, maybe you wouldn’t be eligible for a higher tier of compensation?
JP
Is it both hospital and private equity? So does this makes a doctor practice differently?
Dr. X
It definitely makes them refer differently. You’re much less likely to refer to a doctor that you really like if she’s out of network. Because you might get called out on that.
More surgeries, more money
JP
So it makes you practice differently in other ways too, maybe prescribing medications that are in the hospital standard of care, or separate from referrals, actual treatment, right?
Dr. X
Oh, yeah. Oh, big time.
When somebody has postmenopausal bleeding or irregular, or dysfunctional uterine bleeding, typically what you would do is do an endometrial biopsy, an in-office procedure — put a little catheter into the uterus and remove some tissue. One physician, the bane of my existence — this person, in order to generate more revenue, does all of those in the operating room under general anesthesia. And he does a hysteroscopy. Sometimes that is a better option, where you look in and then, and then you do a dilation and curettage.
So he will typically have, you know, 10 or 12 of these procedures scheduled in a month. Or in a week. I don’t do 10 or 12 of those in a year. It’s terrible. So fast forward, he also generates more revenue relative to the other people in his practice. Then everybody in their practice, the administration looks at them, and goes, “Why can’t you bill as much as Dr. X?” Well, because he’s doing unnecessary surgery. But now that’s the new norm, that’s the new “where you should be.” It’s unconscionable.
And people don’t know any better. They don’t know that there’s another option. He surely doesn’t discuss it with them. He says, “You need this.” A 25-year-old who had irregular bleeding on birth control? You don’t even need to do an endometrial biopsy on that. But he’s making money because their production is based on their RVU’s.
Treatment norms
JP
Are there other similar places where a patient might find herself being overtreated or wrongly treated by somebody who’s behind the scenes making decisions because of financial incentives?
Dr. X
I have the perspective of looking at how things were 30 years ago and what we had in our armamentarium of what we could use versus today. One thing that’s quite stark is that we now have so many more ways to treat conditions like dysfunctional bleeding and postmenopausal bleeding. Thirty years ago, I was probably doing three hysterectomies a month – very much indicated at the time. Now, I don’t think I do three hysterectomies in six months.
I don’t perform many surgeries anymore because there are so many other ways to make a patient’s life good — so she’s not bleeding irregularly, and help her get to the finish line of menopause with her uterus still inside her.
Honestly, I hate to say it, but when I see someone doing a lot of surgeries, I wonder if they couldn’t have done something else. I mean, I love doing surgery; it’s my jam. But there’s so many other things that I can do, and it’s the right thing — you do the least amount to achieve this desired effect. And when people aren’t doing that, it makes me question, did she really need a hysterectomy Or, could you have put an IUD in? Or could you have done an endometrial ablation?
JP
I had never really thought about that.
Dr. X
I will tell this to patients sometimes too. I equate it to when I go to get my car fixed. I have the nice guy, Dominic, who fixes my car. I totally trust him, because I don’t know a thing about cars. I can’t imagine if people who aren’t in the medical field, or don’t have somebody that they trust, that’s in the medical field that can help them navigate things. You don’t know what to believe.
‘Difficult situation’
JP
You said that you knew somebody who had sold a physician-owned practice to private equity. Did they then tell you about how it feels to have sold to private equity?
Dr. X
Well, it’s a very difficult situation right now. Actually we had talked to these people too, because we just wanted to see what they had to offer. And their offer was very much like, “You can run your practice the way you want. We’re not going to meddle in this at all. We’ll do your billing for you.” So they’ll take that off the table.
I can’t remember how much it was going to cost to buy into this, essentially, but then you have to give them X amount of your profit.
So these people have been with this private equity group for, I think, six months, and the last four months they haven’t gotten a paycheck.
It makes perfect sense, like you as a physician, you’re hearing what you want to hear — like, you have autonomy. We like our autonomy. You’re going to take the business stuff away from us? Oh, we like that too. But nothing’s free, and they’re taking 15% off the top, and your margins before the buyout were not really generous.
That money has to come from somewhere. You’re not seeing more patients, right? I mean, I mean, you have to. And I think what they do is they bank on the physician coming to the conclusion that, maybe I don’t need all these people working for me. I don’t need to have three people at the front desk, when one person can do it, albeit not as well.
But, yeah, no pay for four months.
JP
That’s unbelievable. So, so, how long can this last? I mean, is there a point at which this becomes no longer feasible?
Dr. X
Yeah, I don’t know.
How it works
JP
Did the people who sold get a chunk of money that is in their bank accounts waiting for them to maybe take early retirement at 55?
Dr. X
I don’t think so, because I think the way this private equity stuff works is that they have you buy into it.
I have to ask my office manager, because she was at this lunch too. It was maybe a couple of years ago. I think you had to pay to become kind of partners in this group. It was a different way of doing it versus the typical way, they give you X amount of money, and then basically have to guarantee that you’re going to work for them for two years at the level that you’ve been working, averaged over two or three years.
Yeah, so I’m pretty sure they didn’t get any money, but I’m not entirely sure.
JP
It sounds like a managed services organization, M.S.O., where they take the staffing, the taxes, the all of the bothery business stuff, and say, “all you have to do is practice medicine. We’ll take care of the rest of it.”
Dr. X
You know, I wonder if that’s what it is.
JP
Because it seems crazy to me that somebody would pay to take part in an arrangement like this, and then two months later, they’re not getting paid at all. Some of the private equity organizations have different models, and some of the MSO’s have actually been quite helpful in certain disciplines for businesses where people just were not doing the business piece of medicine they were doing or not doing it well. Do you know anybody else who sold to private equity?
‘Horrible’
Dr. X
My internal medicine doctor went from private practice to private equity a long time ago.
JP
And how has that worked out for her?
Dr. X
Horrible. Her partner left to do concierge medicine because, as she said, her kid doing an internship in finance was making more money than she was over the summer. And she’s working like a dog. Her overhead is excessive because the private equity group is building new offices all over the area and have layers and layers of management and administration. She takes home 20% of what she makes as a result.
JP
And she had a private practice that she sold how many years ago?
Dr. X
Ten years ago, probably.
And then they get them in and keep them there, because they’re shareholders at this point. They can’t leave as easily.
I mean, this other person is leaving, but she went outside of the restricted geographic noncompete radius in order to do concierge medicine, which, you know, in and of itself, kind of has problems.
‘Nobody’s happy’
JP
Do you know anybody else who sold to private equity?
Dr. X
I know a friend who’s an infectious disease doc who did, a neurologist — a ton of people.
JP
And their experiences have been?
Dr. X
Nobody’s happy. Outside of the big group that got bought out. I think they’re happy. Typically what happens is that the senior partners get a big chunk of money, and they’re happy initially, until they have to ride out their contract.
One time, a friend of mine who — this was when hospitals were just starting to buy practices — and he sold his practice, and he had to work for two years, and he was ready for retirement. I’ve never seen somebody work so hard at working as little as possible.
It was kind of humorous, because this is a guy who had had a hugely successful practice. He’s just absolutely loved in the community. And boy, did he dial it down in a big way.
JP
Okay, so we’re at a half hour. This could be the end of our time together. Is there anything that you want to say – final thoughts, that you want to leave people with?
Dr. X
We see the struggles that people have to get to get good-quality health care. And we really hope for change. Honestly, things like your organization bringing light to this, is going to hopefully make a difference. Talking to your legislators about the pain points of getting just good, normal, quality care that we expect, in a developed country.
It should be a human right. Hopefully, things will change. Because we all deserve better.
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.Here are other parts of the series:
What patients don’t know: Dr. X talks (Part 1 )
TikTok childbirth and less personal access to doctors: Dr. X talks (Part 2)
More women gynos, but women’s health issues are getting worse: Dr. X talks (Part 3)
Behind the scenes at your doctor’s office: Dr. X talks (Part 4)
