Part 2. Private Equity buying medical groups — What’s the deal?
Ep 42 is part 2 (Ep 41 is part 1) of the episode talking about private equity buying medical groups.
There is an increasing amount of private equity purchasing/partnering of medical practices in the US. We are seeing in in a variety of fields such as radiology, anesthesiology, emergency medicine, dermatology, just to name a few. I wanted to explore why this is happening.
My guest on this episode is Kurt Schoppe, MD a radiologist in Dallas, TX. Kurt is part of the American College of Radiology Economics committee and has experience in the private equity world.
On this episode we talk about:
What is private equity?
Why would they be interested in medical practices?
- Fragmentation of medical practices leads to market opportunities.
- They are good at logistics, operations and can increase efficiencies to improve returns.
- They can have access to capital to make discount purchases.
- They see healthcare as a more predictable way to make money.
Why would a practice want to sell to these firms?
- FOMO (Fear of Missing Out) Other groups have done so we probably should also.
- Thinking that your group doesn’t have the expertise to handle a changing healthcare reimbursement model
- Money right now (particularly for senior partners)
What are they looking for when deciding to buy a practice?
What does this mean for medicine as a profession?
What does this mean for younger physicians?
Here is the article Dr. Schoppe referenced about corporate veterinary practices. https://www.bloomberg.com/news/features/2017-01-05/when-big-business-happens-to-your-pet
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Steven Podnos MD CFPNovember 1, 2018 at 12:45 pm
Tremendous episodes on the issue of private equity and medicine. There is very little on the topic available elsewhere. I suspect this will end poorly if fees contract in the future, much like the physician management public companies crashed and burned early in my medical career (MedPartners,Phymatrix, etc).
Robert McNamara, MD, MAAEMSeptember 23, 2019 at 6:54 pm
The future is being sold by senior physicians. The point made that the whole PE model depends on the trainees working just as hard or harder for less money is spot on. Additionally, in EM the establishment of legitimacy by having a major presence at meetings and having prominent PE friendly docs as the face of the company is well entrenched. The largest specialty society’s current and many of the recent Presidents are physician executives with these firms. The younger generation needs to step up and advocate for a different future.