Hitting a Nerve

It’s not an assembly line


A lot of businesses benefit from being in private equity funds.

Health care isn’t one of them, and a recent report found that private equity buyouts of medical practices resulted in higher consumer prices.

This really shouldn’t surprise anyone. Such funds may offer glittering phrases like “improved technology” and “greater efficiency” but the bottom line is that they’re run by – and for – the shareholders. The majority of them aren’t going to be medical people or realize that you can’t run a medical practice like it’s a clothing retailer or electronic car manufacturer.

Dr. Allan M. Block, a neurologist in Scottsdale, Ariz.

Dr. Allan M. Block

I’m not saying medicine isn’t a business – it is. I depend on my little practice to support three families, so keeping it in the black is important. But it also needs to run well to do that. Measures to increase revenue, like cutting my staff down (there are only two of them) or overbooking patients would seriously impact me effectively doing my part, which is playing doctor.

You can predict pretty accurately how long it will take to put a motor and bumper assembly on a specific model of car, but you can’t do that in medicine because people aren’t standardized. Even if you control variables such as same sex, age, and diagnosis, personalities vary widely, as do treatment decisions, questions they’ll have, and the “oh, another thing” factor.

That doesn’t happen at a bottling plant.

In the business model of health care, you’re hoping revenue will pay overhead and a reasonable salary for everyone. But when you add a private equity firm in, the shareholders also expect to be paid. Which means either revenue has to go up significantly, or costs have to be cut (layoffs, short staffing, reduced benefits, etc.), or a combination of both.

Regardless of which option is chosen, it isn’t good for the medical staff or the patients. Increasing the number of people seen in a given amount of time per doctor may be good for the shareholders, but it’s not good for the doctor or the person being cared for. Think of Lucy and Ethyl at the chocolate factory.

Even in an auto factory, if you speed up the rate of cars going through the assembly line, sooner or later mistakes will be made. Humans can’t keep up, and even robots will make errors if things aren’t aligned correctly, or are a few seconds ahead or behind the program. This is why they (hopefully) have quality control, to try and catch those things before they’re on the road.

Of course, cars are more easily fixable. When the mistake is found you repair or replace the part. You can’t do that as easily in people, and when serious mistakes happen it’s the doctor who’s held at fault – not the shareholders who pressured him or her to see patients faster and with less support.

Unfortunately, this is the way the current trend is going. The more people who are involved in the practice of medicine, in person or behind the scenes, the smaller each slice of the pie gets.

That’s not good for the patient, who’s the person at the center of it all and the reason why we’re here.

Dr. Block has a solo neurology practice in Scottsdale, Ariz.

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