Your practice was bought out by private equity: Now what?


After her emergency medicine group was acquired by a staffing firm backed by a large private equity (PE) firm, Michelle Wiener, MD, said the workflow changes came swiftly.

“Our staffing has been greatly reduced,” the Detroit physician said. “At this point, we have no say in anything. We have no say in the scheduling. We aren’t allowed to see what is billed under our name. The morale has really gone down.”

Dr. Wiener, who practices at Ascension St. John Hospital, said she and fellow physicians have repeatedly brought their concerns to TeamHealth, which in 2015 took over St. John Emergency Services PC. TeamHealth is owned by PE giant Blackstone.

“It’s very frustrating,” Dr. Wiener said. “We’re taking it from all sides.”

Blackstone and Ascension St. John did not respond to this news organization’s request for comment.

TeamHealth would not respond directly to questions about the Ascension St. John Hospital physicians or their concerns.

Spokesman Josh Hopson provided only a general statement: “TeamHealth is committed to making sure that clinicians have the resources and support needed to provide first-class care to patients, particularly with regard to staffing and compensation. TeamHealth has and will always put patient care first, and that is not impacted by its ownership model.”

Acquisitions of medical practices and hospitals by PE firms are rapidly growing, with more than 1,400 PE deals in health care in 2021 totaling upwards of $208 billion, according to PitchBook Data Inc., a Seattle-based firm that tracks mergers and acquisitions.

Some physicians praise the partnerships as an opportunity to improve technology and efficiency, whereas others decry them as raising patient costs and lowering the quality of care. A recent UC Berkeley study found that PE ownership of medical practices was linked to consumer price increases for 8 of 10 specialties, most notably oncology and gastroenterology.

What should you expect after PE acquisition?

Since his practice partnered with a PE firm in 2020, Milwaukee-based otolaryngologist Madan Kandula, MD, said he has found the changes positive. The practice has grown and improved operations in finance, accounting, compliance, and information technology, said Dr. Kandula, founder and CEO of Advent, an ENT practice with 15 clinics in four Midwestern states.

Dr. Kandula said his group already had a sound business practice, and that the goal of partnering with a PE firm wasn’t to change day-to-day operations but to propel the organization forward.

“From patient load to visit time to how we staff our clinics, there has been no change,” he said. “My private equity firm does not, [and] cannot, impose their will on our clinical decisions.”

Experts say the impact of PE acquisitions on individual physicians often depends on where a doctor ranks in the organization, what stage they are in their career, and how much control they had over the deal.

“It’s the older physicians who are usually selling the practice and getting the big payout,” said Anjali Dooley, a St. Louis–based health law attorney who counsels physicians about PE deals. “The younger doctors are usually not part of the deal, as they may still be employees. They don’t have any negotiating power. Hopefully, there is some transparency, but sometimes there is not, and they are blindsided by the deal.”

When it comes to workload, most PE-owned groups are put on a production-based model, such as a wRVU-based model, said Roger Strode, a Chicago-based health law attorney who focuses on health care mergers and acquisitions. Most already operate under such a model, but there might be some changes after a buyout.

Staffing may also change, added Ms. Dooley. The PE firms may want to add partners or companies already in their portfolios to create efficiencies, causing training or workflow changes.

In a hospital buyout, changes may depend on whether a department is a significant revenue generator for the hospital, Ms. Dooley noted.

PE firms frequently favor higher revenue–generating specialties, such as neurosurgery, cardiology, orthopedics, gastroenterology, and plastic surgery. They closely scrutinize departments said that make less money, such as the emergency department or primary care, Ms. Dooley said. Physicians or teams that don’t fit the firm’s cost-efficiency plans may be terminated or replaced.

On the other hand, Mr. Strode said physicians may see improved electronic health records and collections.

“Some of your overall overhead costs may be reduced, because they’re better at it,” Mr. Strode said. “When you’ve got more scale, the cost per patient, the cost per hour, the cost per procedure, goes down, and the cost that’s applied against your production will go down. As [practices grow], they have more bargaining power with payers and you can potentially get better rates. At least, that’s the promise.”

Analysts note that PE health care acquisitions show no signs of slowing and that it pays for physicians to know what to expect and how to cope if their practice or hospital is acquired. Whether physicians have some control over a buyout or are blindsided by the transition, it’s critical to know what to consider, how workloads might change, and your options for settling in or settling up.

The PE industry has about $2 trillion lined up for potential investments in 2023, said Ms. Dooley.

“PE firms are looking at health care to expend some of this dry powder,” Ms. Dooley continued. “If done correctly, PE firms that are aware of health care regulations, compliance, and patient care issues can ... remove redundant services and improve ... efficiencies, but the bad is when that doesn’t happen, and the quality of care goes down or there are patient safety risks.”


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