Equity Investment in Physician Practices: What's All This Brouhaha?

There have been two waves of equity-based investment in physician practices. Both used a combination of public and private sources but in different mixes. The first investment wave, in the 1990s, was led by public equity and physician practice management companies, with less involvement by private equity (PE). The second investment wave followed the Affordable Care Act and was led by PE firms. It has generated concerns of wasteful spending, less cost-effective care, and initiatives harmful to patient welfare. This article compares the two waves and asks if they are parallel in important ways. It describes the similarities in the players, driving forces, acquisition dynamics, spurs to consolidation, types of equity involved, models to organize physicians, and levels of market penetration achieved. The article then tackles three unresolved issues: Does PE investment differ from other investment vehicles in concerning ways? Does PE possess capabilities that other investment vehicles lack and confer competitive advantage? Does physician practice investment offer opportunities for supernormal profits? It then discusses ongoing trends that may disrupt PE and curtail its practice investment. It concludes that past may be prologue, that is, what happened during the 1990s may well repeat, suggesting the PE threat is overblown.

Federal Out-of-Network Balance Billing Legislation: Context and Implications for Radiology Practices.

Out-of-network (OON) balance billing, commonly known as surprise billing but better described as a surprise gap in health insurance coverage, occurs when an individual with private health insurance (vs a public insurer such as Medicare) is administered unanticipated care from a physician who is not in their health plan's network. Such unexpected OON care may result in substantial out-of-pocket costs for patients. Although ending surprise billing is patient centric, patient protective, and noncontroversial, passing federal legislation was challenging given its ability to disrupt insurer-physician good-faith negotiations and thus impact in-network rates. Like past proposals, the recently passed No Surprises Act takes patients out of the middle of insurer-physician OON reimbursement disputes, limiting patients' expense to standard in-network cost-sharing amounts. The new law, based on arbitration, attempts to protect good-faith negotiations between physicians and insurance companies and encourages network contracting. Radiology practices, even those that are fully in network or that never practiced surprise billing, could nonetheless be affected. Ongoing rulemaking processes will have meaningful roles in determining how the law is made operational. Physician and stakeholder advocacy has been and will continue to be crucial to the ongoing evolution of this process. © RSNA, 2021.

Private Equity and Urology: An Emerging Model for Independent Practice.

Independent urology practices are under increasing competitive pressure in a changing marketplace. By providing access to capital and business management expertise, private equity can help practices consolidate and scale to unlock new growth opportunities, navigate an increasingly complex regulatory environment, and institute best practice across a network, while retaining physician ownership and an opportunity for equity appreciation. This article examines the role of private equity in urology and the potential benefits of private equity investment. It also looks at what firms look for in investment partners, how to prepare for private equity investment, and how private equity investments are structured.

Finance 101 for Physicians.

Although physicians enjoy extensive educational backgrounds, financial planning typically is not a significant component of the curricula they have completed. As a result, many physicians could benefit from greater financial acumen, and their preparation for retirement might be lacking in light of their relatively high-income levels. This article by a private wealth advisor with 29 years of industry experience provides physicians with the basic building blocks to understand and manage their finances. It focuses on 3 pillars of financial planning: (1) protecting themselves, their families, and their assets; (2) reducing their taxes; and (3) growing their wealth.

Role and Growth of Independent Medicare-Billing Otolaryngologic Advanced Practice Providers.

OBJECTIVE: To evaluate the role and growth of independently billing otolaryngology (ORL) advanced practice providers (APPs) within a Medicare population. STUDY DESIGN: Retrospective cross-sectional study. SETTING: Medicare Provider Utilization and Payment Data: Physician and Other Supplier Data Files, 2012-2017. METHODS: This retrospective review included data and analysis of independent Medicare-billing ORL APPs. Total sums and medians were gathered for Medicare reimbursements, services performed, number of patients, and unique Current Procedural Terminology (CPT) codes used, along with geographic and sex distributions. RESULTS: There has been near-linear growth in number of ORL APPs (13.7% to 18.4% growth per year), with a 115.4% growth from 2012 to 2017. Similarly, total Medicare-allowed reimbursement (2012: $15,568,850; 2017: $35,548,446.8), total number of services performed (2012: 313,676; 2017: 693,693.7), and total number of Medicare fee-for-service (FFS) patients (2012: 108,667; 2017: 238,506) increased. Medians of per APP number of unique CPT codes used, Medicare-allowed reimbursement, number of services performed, and number of Medicare FFS patients have remained constant. There were consistently more female APPs than male APPs (female APP proportion range: 71.3%-76.7%). Compared to ORL physicians, there was a significantly greater proportion of APPs practicing in a rural setting as opposed to urban settings (2017: APP proportion 13.6% vs ORL proportion 8.4%; P < .001). CONCLUSION: Although their scope of practice has remained constant, independently billing ORL APPs are rapidly increasing in number, which has led to increased Medicare reimbursements, services, and patients. ORL APPs tend to be female and are used more heavily in regions with fewer ORL physicians.

The financial evolution of endovascular aneurysm repair delivery in contemporary practice.

OBJECTIVE: The fiscal impact of endovascular repair (EVR) of aortic aneurysms and the requisite device costs have previously highlighted the tenuous long-term financial sustainability among Medicare beneficiaries. The Centers for Medicare & Medicaid Services have since reclassified EVR remuneration paradigms with new Medicare Severity Diagnosis-Related Groups (MS-DRGs) intended to better address the procedure's cost profile. The impact of this change remains unknown. The purpose of this analysis was to compare EVR-specific costs and revenue among Medicare beneficiaries both before and after this change. METHODS: All infrarenal EVRs performed in fiscal years (FYs) 2014 and 2015, before the MS-DRG change, and those performed in FYs 2017 and 2018, after the MS-DRG change, were identified using the DRG codes 238 (n = 108) and 269 (n = 84), respectively. We then identified those who were treated according to the instructions for use guidelines with a single manufacturer's device and billed to Medicare (n = 23 in FY14-15; n = 22 in FY17-18). From these cohorts, we determined total procedure technical costs, technical revenue, and net technical margin in conjunction with the hospital finance department. Results were then compared between these two groups. RESULTS: The two cohorts demonstrated similar demographic profiles (FY14-15 vs FY17-18 cohort: age, 78 years vs 74 years; median length of stay, 1.0 day vs 1.0 day). Mean total technical costs were slightly higher in the FY17-18 group ($24,511 in FY14-15 vs $26,445 in FY17-18). Graft implants continued to account for a significant portion of the total cost, with the device cost accounting for 56% of the total procedure costs in both cohorts. Net revenue was greater in the FY17-18 group by $5800 ($30,698 in FY14-15 vs $36,498 in FY17-18), resulting in an increased overall margin in the FY17-18 group compared with the FY14-15 group ($6188 in FY14-15 vs $10,053 in FY17-18). CONCLUSIONS: Device costs remain the single greatest cost driver associated with EVR delivery. DRG reclassification of EVR to address total procedure and implant costs appears to better address the requisite associated procedure costs and may thereby better support long-term fiscal sustainability of this procedure for hospitals and health systems alike.

Implications of the severe acute respiratory syndrome associated with the novel coronavirus-2 on vascular surgery practices.

BACKGROUND: We sought to understand the effects of coronavirus disease-2019 (COVID-19) on vascular surgery practices as related to the Vascular Activity Condition (VASCON) scale. METHODS: All members of the Vascular and Endovascular Surgery Society were surveyed on the effects of COVID-19 in their practices, educational programs, and self-reported grading of their surgical acuity level using the VASCON scale. RESULTS: Total response rate was 28% (206/731). Most respondents (99.5%) reported an effect of COVID-19 on their practice, and most were VASCON3 or lower level. Most reported a decrease in clinic referrals, inpatient/emergency room consults, and case volume (P < .00001). Twelve percent of respondents have been deployed to provide critical care and 11% medical care for COVID-19 patients. More than one-quarter (28%) face decreased compensation or salary. The majority of respondents feel vascular education is affected; however, most feel graduates will finish with the necessary experiences. There were significant differences in answers in lower VASCON levels respondents, with this group demonstrating a statistically significant decreased operative volume, vascular surgery referrals, and increased hospital and procedure limitations. CONCLUSIONS: Nearly all vascular surgeons studied are affected by the COVID-19 pandemic with decreased clinical and operative volume, educational opportunities for trainees, and compensation issues. The VASCON level may be helpful in determining surgical readiness.

Financing Buprenorphine Treatment in Primary Care: A Microsimulation Model.

PURPOSE: We sought to determine the financial impact to primary care practices of alternative strategies for offering buprenorphine-based treatment for opioid use disorder. METHODS: We interviewed 20 practice managers and identified 4 approaches to delivering buprenorphine-based treatment via primary care practice that differed in physician and nurse responsibilities. We used a microsimulation model to estimate how practice variations in patient type, payer, revenue, and cost across primary care practices nationwide would affect cost and revenue implications for each approach for the following types of practices: federally qualified health centers (FQHCs), non-FQHCs in urban high-poverty areas, non-FQHCs in rural high-poverty areas, and practices outside of high-poverty areas. RESULTS: The 4 approaches to buprenorphine-based treatment included physician-led visits with nurse-led logistical support; nurse-led visits with physician oversight; shared visits; and solo prescribing by physician alone. Net practice revenues would be expected to increase after introduction of any of the 4 approaches by $18,000 to $70,000 per full-time physician in the first year across practice type. Yet physician-led visits and shared medical appointments, both of which relied on nurse care managers, consistently produced the greatest net revenues ($29,000-$70,000 per physician in the first year). To ensure positive net revenues with any approach, providers would need to maintain at least 9 patients in treatment, with a no-show rate of <34%. CONCLUSIONS: Using a simulation model, we estimate that many types of primary care practices could financially sustain buprenorphine-based treatment if demand and no-show rate requirements are met, but a nurse care manager-based approach might be the most sustainable.

The financial and employment effects of coronavirus disease 2019 on physicians in the United States.

Although the coronavirus disease 2019 (COVID-19) pandemic has created havoc with the U.S healthcare system and physicians, the financial and contractual implications for physicians are now beginning to come to the forefront. Financial assistance from the federal government has mainly been received by hospitals, which have borne the brunt of the COVID-19 illness. Some physician groups have, or are, receiving assistance through a few programs, although the accelerated and advance payments have been suspended. Employed surgeons are now being furloughed, terminated, or persuaded to agree to a significant cut in pay, forego bonuses, or take leave without pay as healthcare systems and some physician groups have started to experience the consequences of halting elective procedures. Newly hired surgeons might be forced in a few cases to agree to delays in starting their employment, new amendments, changes in employment status, and other terms for fear of losing their employment. In the present report, we have explained some agreement terminology and options available to allow physicians to understand the terms of their employment agreement and make their decisions after consulting with an expert healthcare attorney.

Medical students' perspectives on earning opportunities of self-employed physicians - realistic and relevant for the process of career choice?

BACKGROUND: Several studies report a substantial impact of financial considerations on the process of specialty choice and the willingness to establish one's own practice. In Germany, reliable information on self-employed physicians' earning opportunities is basically available, but not easily accessible and understandable for medical students. Misperceptions might contribute to recruitment problems in some fields, particularly in general practice. In order to identify a possible need for action, we investigated current German medical students' level of information regarding future earnings, and whether net earnings of general practitioners and other physicians working self-employed are estimated realistically. Additionally, we explored students' self-assessments regarding the extent of the impact of expected earnings on their personal career choice process. METHODS: We conducted a cross-sectional questionnaire survey among fourth year (of six) medical students at one medical school (Leipzig). The participants estimated the net earnings of different physicians working self-employed. These estimations were compared with actual earnings data derived from a large German practice panel. RESULTS: Response rate was 73.6% (231/314). The participants' mean age was 24.9 years and 59.1% were women. On a 10-point scale ranging from 1 = 'no influence' to 10='very big influence', 92.6% of the participants described at least some (≥2) influence of earning expectations on their career choice process, and 66.2% stated this influence to be 5 or higher. Every fourth student (26.4%) would rather or definitely reject a certain specialty because of expected low earning opportunities. While 60.4% had already thought about future earnings, only 26.8% had obtained concrete information. Compared with the data derived from the practice panel, the participants substantially underestimated the earning opportunities in self-employed settings, including general practice (median: 4500 vs. 6417€). However, depending on the single estimations, between 87.7 and 95.6% of the students stated they were 'rather uncertain' or 'very uncertain' regarding their estimations. CONCLUSIONS: Despite confirming a relevant impact of financial considerations on career choice, German fourth year medical students are not well informed about earning opportunities in self-employed settings. Providing easily understandable information could enhance transparency and might help students to consider financial issues of career choice on a realistic basis.

The Surprise Insurance Gap: History, Context, and Proposed Solutions.

Affordability of care is a major concern for many in the United States. Part of the affordability of care issue is unanticipated medical bills. A 2018 poll found that unexpected medical costs were the public's greatest affordability concern, ahead of prescription drug costs and even food or rent or mortgage. An important cause of unexpected medical bills is the surprise insurance network gap. The term "surprise billing" is commonly used to describe this problem of unanticipated out-of-network (OON) care, though this is a misnomer because it is actually a "surprise insurance gap." This gap can have significant consequences for patients and families. Hospital-based specialties like radiology have been implicated in the issue. Part of solving this problem includes determining an appropriate reimbursement for physicians who provide unanticipated OON care to patients. The two most commonly proposed methods to determine insurance company reimbursement to providers for OON services are use of a benchmark value and alternative dispute resolution. There is risk in trying to "price set" with a benchmark value. Establishing a predetermined value for services to mitigate against unexpected bills could have unintended and significant consequences, including disrupting good-faith negotiations between insurance companies and providers and impacting access to care. The data indicate that an alternative dispute resolution process can protect patients, lower the frequency of unexpected OON bills, and reduce costs.

Prior authorization as a utilization management tool for elective superficial venous procedures results in high administrative cost and low efficacy in reducing utilization.

OBJECTIVE: Prior authorization (PA) is a process used by payers for safety and cost savings purposes, but it has received criticism for being time-consuming and costly because of administrative burden. Our study evaluated efficacy of PA applied to in-office lower extremity superficial venous procedures. METHODS: All in-office lower extremity venous procedures scheduled to be performed at our institution in 2017 were included in the study. Variables of interest were type of procedure, initial PA status (approved or denied), rationale for the decision, and final status after appeal. Cost analysis was performed using Centers for Medicare and Medicaid Services allowable rates to approximate billing and reimbursement data (proprietary) as well as calculated using industry averages. RESULTS: For 2017, of 1959 procedures scheduled, 57.9% (n = 1134) required PA. Of these, only 6.1% (n = 69) received initial PA denial, and nearly 40% of the denials (n = 27) were overturned after appeal. Of the 42 denials that were upheld, 15 resulted in cancellations; the remainder were performed by patient self-pay (n = 11) or by the provider pro bono (n = 16). Overturned denials were a result of either submission of incomplete clinical data on initial PA request or insufficient documentation of clinical necessity. When Centers for Medicare and Medicaid Services allowable rates were applied for cost analysis, the denials resulted in <$60,000 payer savings. Administrative expenses totaled >$110,000 when industry standards were applied, which far exceeds any calculated payer savings using the same methods. The 15 denials resulting in procedure cancellations (1.3% of all PAs) could be considered a net savings to the health care system but only approximated a mere $30,000. CONCLUSIONS: Our study demonstrates that PA is not a cost-effective measure for utilization management of outpatient superficial venous procedures when surgeon practices are already well aligned with insurance guidelines. For these physicians and physician groups, the administrative cost associated with the PA process exceeds the savings seen by the insurance companies.