Practice Management Companies Research Articles

Assessing Private Equity Involvement in Ophthalmology: Parallels with the Past, Concerns for the Future

PurposeTo discuss the history and current state of private equity in ophthalmology and explore potential implications for ophthalmology practices, physicians, and patients. DesignPerspective. MethodsReview of selected articles in ophthalmology and non-ophthalmology medical literature and commentary based on the authors’ experiences. ResultsInvestment in ophthalmology appeals to private equity firms because of high procedural volumes, fragmented private practices, opportunities for real estate ownership, and an aging population in need of eye care. As a result, acquisition of private practices by large private equity companies has swelled since 2015. Metropolitan areas and practices that possess ambulatory surgical centers or a high proportion of retina surgeons receive the greatest investment. However, little objective data exists regarding the benefits of this trend. Initial research suggests that private equity ownership may negatively impact patient care through greater costs, shorter appointments, and fewer Medicare/Medicaid patients seen. Skeptics of private equity also highlight concerns that include financial risk falling primarily on the acquired practice itself, a short-term business approach that rewards profit maximization, and the erosion of physician autonomy. Furthermore, young ophthalmologists express reservations about working for private equity firms. 78% of trainees indicated they would not consider employment by a private equity owned practice and 81.4% of vitreoretinal fellows voiced concerns about autonomy and job security. Proposed legislation aimed at limiting private equity acquisitions is currently under review at the statewide level, adding additional uncertainty to the future of private equity involvement in ophthalmology. ConclusionAlthough investment by private equity offers potential financial rewards and operational improvements for practices, it also raises significant concerns reminiscent of those experienced by physician practice management companies in the 1990s. Nonanecdotal data is needed to assess the benefits and future of private equity involvement in ophthalmology.

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.

The Impact of Management on Clinical Performance: Evidence from Physician Practice Management Companies

Mergers and acquisitions in healthcare are increasingly leading to changes in firm management. This paper studies how a change in firm management impacts clinical performance using data on an understudied phenomenon: medical practice acquisitions by physician practice management companies (PPMCs). PPMCs market themselves as offloading the administrative burden of running a medical practice without compromising physician autonomy over clinical decisions. However, a PPMC’s management strategy and practices, such as performance monitoring and financial incentives, could influence physician behavior. For example, some PPMCs advertise increasing revenue through better financial management, whereas others also advertise improving quality through better clinical management. In this paper, I collect data on three large PPMCs that manage the practices of more than 40% of obstetricians and gynecologists (Ob-Gyns) in Florida between 2006 and 2014. An Ob-Gyn’s main clinical decision in childbirth involves a tradeoff between financial and clinical outcomes: cesarean sections (C-sections) are often more highly reimbursed than vaginal births but pose risks to maternal and infant health when not medically necessary. Using difference-in-differences methods, I find heterogeneous effects on C-sections depending on a PPMC’s publicized management strategy. Physicians acquired by PPMCs that focus on financial management increase the use of C-sections, resulting in less clinically appropriate care and worse patient outcomes. The opposite result is found when PPMCs focus on clinical management. I provide qualitative and quantitative evidence that differences in firm management are the most likely driver of changes in C-sections. This paper informs how the corporatization of medicine can alter clinical performance outcomes. This paper was accepted by Stefan Scholtes, healthcare management. Funding: This project was supported by grants from the Agency for Healthcare Research (AHRQ), the National Science Foundation (NSF), and Wharton’s Mack Institute for Innovation [Mack Institute Research Fellowship]. The analysis was conducted using data from the State of Florida’s Agency for Healthcare Administration (AHCA). The content is solely the responsibility of the author and does not necessarily represent the official views of AHRQ, NSF, Mack Institute, or AHCA. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2022.4571 .

Private equity in ophthalmology: differences between present versus past.

The purpose of this review is to examine the differences between the current private equity model in ophthalmology practices and the failed physician practice management companies (PPMC) of the 1990s. Over the past 5 years, there has been an accelerating expansion of private equity into ophthalmology. In 2022, there are approximately 1400 ophthalmologists affiliated with one of over 30 private equity-controlled entities and further growth appears likely. This contrasts with the PPMC era that had only a few hundred ophthalmologists across a handful of companies and collapsed within 5 years. The reasons for the failure of PPMC model included inadequate capitalization, limited experience managing ophthalmology practices, failure to grow acquired ophthalmology practices, and misperceptions about the future of healthcare. Current private equity entities are characterized by substantial capital, longer term business plans predicated on individual practice growth, increasing market share, physician controlled clinical care, and integration of physicians into administration and governance. The current private equity model in ophthalmology continues to expand and presents a reasonable model for ophthalmologists considering a change in practice structure. Although distinctly different from the PPMC model, longer follow-up is required to determine the ultimate impact of private equity upon ophthalmology.

Proportion, Type, and Characteristics of Physician Entrepreneurship in Massachusetts

Although there have been signs of increasing interest in entrepreneurship among physicians as well as claims of a paucity of entrepreneurial activity in health care in general, there is little systematic evidence of the extent, type, and characteristics of entrepreneurship by physicians. Physician involvement in entrepreneurship may result in more innovative and financially successful health care companies. To evaluate the proportion and characteristics of physicians who founded new businesses and the types of businesses that they started. This cross-sectional study was conducted by matching all 33 770 physicians holding a Massachusetts medical license in 2017 with the Massachusetts new business registration records from 1960 to 2017 to identify companies founded by physicians. Data were analyzed from September 2017 to December 2019. The number of physician-founded companies in Massachusetts and the types of businesses as characterized by the stated purpose at the time of founding. Among the 33 770 physicians holding a Massachusetts license in 2017, 13 839 (41.0%) were women and 8029 (23.8%) were international medical graduates; the median year of graduation from medical school was 1994 (interquartile range, 1983-2004). A total of 6494 (19.2%) physicians had founded at least 1 new business, and 831 of the 2448 physicians (33.9%) who graduated from medical school between 1974 and 1978 had founded a business. A total of 9501 companies were founded, of which 6267 (66.0%) were clinical practice, real estate, or practice management companies; 703 companies (7.4%) were in the public interest, including advocacy, public health, and philanthropy; 533 (5.6%) were biotechnology, health care information technology, or medical device companies; and 1759 (18.5%) were other business pursuits. For physician entrepreneurs, the mean (SD) time from medical school graduation to company founding was 20.2 (9.8) years. Regression analysis suggested that female physicians founded companies at lower rates than male physicians (odds ratio [OR], 0.529; 95% CI, 0.494-0.567) and that there was an association between attending a top-10 medical school by National Institutes of Health research funding and starting a clinical practice (OR, 0.687; 95% CI, 0.616-0.766) or biotechnology company (OR, 4.326; 95% CI, 2.951-6.344). The findings of this cross-sectional study suggest that physicians may be substantially involved in entrepreneurship, although there may be disparities by sex. Facilitation of physician entrepreneurship by policy makers, educators, and institutions may enhance medical innovation and public health.

Drug Diversion in the Anesthesia Profession: How Can Anesthesia Patient Safety Foundation Help Everyone Be Safe? Report of a Meeting Sponsored by the Anesthesia Patient Safety Foundation.

Diversion in the workplace can adversely impact the safety of healthcare professionals and patients. The Anesthesia Patient Safety Foundation (APSF) believes that substance use disorder, diversion in the workplace, and their potential adverse effects on patient safety need to be addressed through open discussion, education, research, policy, and possible other interventions. To make progress in this area, the APSF convened a conference entitled "Drug Diversion in the Anesthesia Profession: How Can APSF Help Everyone Be Safe?" in Phoenix, Arizona, on September 7, 2017 (Supplemental Digital Content, Document, http://links.lww.com/AA/C616). It was comoderated by the authors.

Use of quality measurement across US dental delivery systems: a qualitative analysis.

Dentistry is increasingly challenged by payers and the public to demonstrate quality measurement (QM) activities that substantiate value. Unknown is how various components of the US oral health-care financing and delivery systems have adopted QM. The objective of this study is to explore QM activities by US dental delivery, management, financing, and related organizations. Using a structured interview guide based on a novel conceptual framework that incorporates factors influencing QM intention, adoption, and implementation, 19 key informant interviews were conducted. Informants represented safety net delivery programs (health center, nonprofit mobile, hospital-based, Veterans Administration, and tribal dental programs), private delivery organizations (private practice, closed panel HMO, and for-profit mobile dental programs), training programs that deliver care (dental and dental therapy programs), management organizations (private and Medicaid group practice management companies), care financing organizations (Medicaid managed care plan, state Medicaid program, dental benefits companies), and dental quality organizations (institute and dental professional organization). Interviews were transcribed and analyzed qualitatively. Informants report wide variation in the intensity of QM efforts with organizational leadership cited as most influential. Motivation to adopt QM efforts is more often internal than imposed. Data management and information technology both facilitate and limit QM activities. QM activities are associated with operational improvements including use of guidelines and refinements of mission. Organizational type and size appear to influence QM programs. The current status of QM is highly variable across dental organizations because organizational leadership, needs, and requirements vary according to mission and structure.

ИССЛЕДОВАНИЕ КАЧЕСТВА ОБСЛУЖИВАНИЯ ПОТРЕБИТЕЛЕЙ УСЛУГ: ПРОБЛЕМЫ И МЕТОДОЛОГИЯ

The article presents data from a study of the market of cellular communication of the Samara region and assess the quality of customer service by mobile operators for the period 2010-2012. Providing quality customer service is one of the major factors of competitiveness, enterprise services rendered. In a market economy, the problem of quality of service is the most important factor in improving the standard of living, economic, social and environmental security. The main problem in providing quality customer service system is that the formal criteria and evaluation methods used in the production sphere, do not apply to service businesses due to immateriality as a process of production and sales of services, and the service itself. The findings of the study conclusions and generalizations can be used in practice management companies providing public services provider. DOI: http://dx.doi.org/10.12731/2218-7405-2013-9-85

Have We Learnt From History?

Have We Learnt From History?

Constructing a patient education system: A performance technology project

The purpose of the patient education system described here was to distribute patient education material to and within medical practices managed by a small medical practice management company. The belief was that patient education opportunities improved health care outcomes and increased patient participation in health care decisions and compliance with health care plans. This tool reinforced medical practices' commitment to having patients participate actively in their treatment, differentiated them from other practices, and contributed to the generation of new patients.

A somewhat unorthodox explanation for the rise and fall of physician practice management companies

The purpose of this article is to present an alternative theory to why publicly-traded physician practice management companies in the US were popular and successful for a limited number of years and then essentially self-destructed. The short history of publicly-traded practice management companies suggests that they had limited value and utility in the US healthcare industry. It is the premise of the paper that the sudden appearance these for-profit companies upset the natural order within the healthcare industry and created a disequilibria which ultimately resulted in their demise. While Gaia theory is most commonly applied to the natural sciences, it has been applied to a number of interdisciplinary issues. Physicians gravitated to these for-profit companies either out of fear of encroaching managed care or out a desire to sell their practice to the highest bidder. Physician practice management companies, on the other hand, saw a way to entice stockholders to invest in a growth industry. The paper suggests that the physician practice management companies added little new value to the health care industry and applies Gaia theory as a possible explanation for this phenomena. Gaia theory was first postulated in 1979 to address the evolution of the material environment and corresponding organisms as a tightly coupled system which attempt to manipulate the environment for the purpose of creating biologically favorable conditions. The paper is one of the first to suggest that the laws of nature, as understood from the perspective of Gaia theory, may have applicability to the US health care industry.

Transitioning from Aggressive Acquirer to Efficient Operator

While much has been written about maximizing shareholder value through the acquisition process, relatively little has been written about quickly transitioning a company from an aggressive acquirer to an efficient operator of assets it9s already acquired. This article describes certain triggering events that make such a transition necessary and illustrates that the transition can be effective when acquirers-turned-operators 1) analyze fast and proceed quickly, 2) establish efficient infrastructure, and 3) cultivate the right team to initiate cultural change. It also portrays the promise of renewed growth strategies, but in the future based on efficient operating models. These concepts are illustrated through the case example of InterDent, in 2002 the nation9s largest dental practice management company, and at the time in the midst of such a transition.

Is It Time For A Government-Run Health Care System?

Over the past forty years, national health policy has moved through successive eras that have differed markedly in reform initiatives. The 1960s and 1970s saw government policies that focused on hospital and physician supply and a regulatory national health planning system; the 1980s brought a national system of Medicare hospital and physician payment regulations; and the 1990s brought an emphasis on managed care and markets. Critical Condition, by Donald Barlett and James Steele, Pulitzer Prize–winning investigative reporters, makes a strong case that much is wrong with our health system, despite (and, in part, because of) “Washington’s blind obsession with market-based health care.” For the most part, their recounting of failures will be familiar to the health policy community: the world’s highest health care spending but often poor health outcomes (for example, in longevity and infant mortality); more than forty-four million uninsured people; loss of insurance coverage with job loss; communities having to organize bake sales to help pay a child’s medical bills; egregious hospital overcharging and bill collection practices; overpriced prescription drugs (protected by government import restrictions); large-scale fraud by drug companies; emergency department closings and ambulance diversions; drive-through deliveries; medical errors as a leading cause of death; the revolving door of Washington health policy influentials departing for lucrative lobbying jobs; and health-sector spending of $734 million in 1997–2000 to lobby Congress and the executive branch. From this general indictment, Barlett and Steele move on to deal with the role of Wall Street and investors (HealthSouth, HMOs, Columbia/HCA, Tenet, physician practice management companies), MedPartners’ failure, new business bureaucracies (with their voice mail and call centers—some outsourced to India), and the Madison Avenue influence (direct-to-consumer advertising, fen-phen, and other drugs). The authors are particularly good at combining descriptions of national problems with personal case studies that show how innocent people are victimized. However, their indictments of governmental pro-business policies could even be stronger. For example, they could have added a chapter on the 1997 Medicare+Choice initiative, which saw more than two million elderly people dumped by their Medicare HMOs, and another chapter on the unsuccessful fight to give patients a right to sue managed care companies. The recent Medicare prescription drug legislation will offer more opportunity for investigative journalists. Although Critical Condition works well to make the authors’ points, it is not a full assessment of the benefits and costs of health care markets. For example, the move to managed care and market-negotiated hospital and physician payments (from traditional open-ended B o o k R e v i e w s

Taking stock: assessing the present-planning the future 'you don't need a weatherman to know which way the wind blows'.

In the past, the dual nature of orthodontics has presented practitioners with unique artistic challenges and scientific opportunities. As a result, orthodontists today are enjoying the 'Platinum Age of Productivity.' However, a disturbing trend that promotes neither art nor science has emerged. Health care reform in the United States has transformed health care from a service to a commodity. Some orthodontists and orthodontic practice management companies have capitalized on this change in thinking and are aggressively promoting orthodontic treatment as a product. This paper examines the impact of this paradigm shift on the future of orthodontics. Particular attention is paid to the interaction of three themes: first, orthodontics as a product, secondly, the current misconception that there is a shortage of orthodontic practitioners in the United States, and thirdly, the difficulty in defining 'excellence' in specialty training in orthodontics. In the near future, the collision of these three concepts will result in an orthodontic 'Perfect Storm'. The ability of our specialty to survive and thrive will be proportional to our professional behavior during these difficult times...caveat emptor.

Understanding the Difference between Strategic Value and Fair Market Value in Consolidating Industries

Views Icon Views Article contents Figures & tables Video Audio Supplementary Data Share Icon Share Facebook Twitter LinkedIn Email Tools Icon Tools Get Permissions Cite Icon Cite Search Site Citation Mark O. Dietrich; Understanding the Difference between Strategic Value and Fair Market Value in Consolidating Industries. Business Valuation Review 1 June 2002; 21 (2): 77–82. doi: https://doi.org/10.5791/0882-2875-21.2.77 Download citation file: Ris (Zotero) Reference Manager EasyBib Bookends Mendeley Papers EndNote RefWorks BibTex toolbar search Search nav search search input Search input auto suggest Search

Your first employment agreement: What every surgery resident should know

As an attorney at Chambliss, Bahner, & Stophel, P.C., Mark Cunningham has worked closely with leading physician groups in the East Tennessee and North Georgia areas and has advised them on health care issues that frequently confront physician practices. He also represents individual physicians, physician practice management companies, home health agencies, hospices, and faculty practice plans. He is widely experienced with legal issues affecting physicians, including physician employment matters, fraud and abuse, compliance, antitrust, and licensure. As laws vary from state to state, the views expressed below are not intended to be taken as legal advice or relied on in lieu of contacting an attorney. If you have any specific questions regarding the issues discussed below or other legal matters involving health care practices, Mark has made himself available to readers. Please e-mail him at the address below with your queries.

Legal considerations in group practices and physician management.

Physicians are restructuring their practices in response to competition, managed care, and federal and state laws and regulations restricting their practice of medicine. Many physicians have formed group practices with the hope of selling this practice in the future. For physicians to profit from ancillary services, the group practice must meet federal and state requirements. If physicians choose to sell the group practice to a physician practice management company, careful review and negotiation of the purchase agreements are necessary to prevent complications if the arrangement is unsuccessful.

The Business Of Health In A Free-Wheeling Democracy

From the Editor-In-Chief Health AffairsVol. 19, No. 1 The Business Of Health In A Free-Wheeling DemocracyJohn K. Iglehart AffiliationsFounding EditorPUBLISHED:January/February 2000Free Accesshttps://doi.org/10.1377/hlthaff.19.1.6AboutSectionsView PDFPermissions ShareShare onFacebookTwitterLinked InRedditEmail ToolsAdd to favoritesDownload CitationsTrack CitationsPermissionsDownload Exhibits TOPICSThe nation's health care enterprise now represents one-seventh of the U.S. economy—$1.1 trillion in 1998 (as reported on page 124)—and thus pressures have intensified on institutions and individuals to grab a greater share of this annual cash flow. This pursuit occurs daily in thousands of ways as stakeholders vie for market share, higher profits, and sheer survival. In the process, they are held to multiple forms of accountability, imposed by the courts, the private marketplace, medical professionalism, and federal and state governments. Most times the frantic search for cash is legal, reflecting our brand of capitalism, but sometimes it is not.In this issue we highlight some of the recent actions that reflect this maelstrom of activity and, in the process, essentially assert that no organization or set of individuals has a monopoly on truth, integrity, or structuring the incentives just right. Lawton Burns and his colleagues write of a not-for-profit academic institution that failed in a spectacular fashion (the sorry saga is the longest paper we have ever published). Next, Uwe Reinhardt discusses the role of Wall Street analysts in the rise and fall of physician practice management companies, and James Robinson reports on the role of capital in health care ownership conversions. These papers emerged from a Wall Street seminar held last spring at Salomon Smith Barney that was sponsored by the California Health-Care Foundation (CHCF) and Health Affairs. The CHCF and the Robert Wood Johnson Foundation have provided support to Robinson and to Health Affairs to explore more thoroughly the many dimensions of the business of health care. The issue also includes an important paper by Jonathan Gruber and Larry Levitt that simulates the impact of using federal tax credits to expand insurance coverage. Loading Comments... Please enable JavaScript to view the comments powered by Disqus. DetailsExhibitsReferencesRelated Article Metrics History Published online 1 January 2000 InformationCopyright © by Project HOPE: The People-to-People Health Foundation, Inc.PDF download

Physician practice management organizations: their prospects and performance.

As physician organizations adapt their incentives, processes, and structures to accommodate the demands of an increasingly competitive and performance-sensitive external environment, the development of more effective administrative and managerial mechanisms becomes critical to success. The emergence of physician practice management companies (PPMCs) represents a potentially positive step for physician practices seeking increased economies of scale through consolidation, as well as enhanced access to financial capital. However, economic and finance theory, coupled with some empirical "arithmetic" regarding the financial and operational performance of leading publicly traded PPMCs, suggest caution in one's forecasts of the future prospects for these evolving corporate forms.

Psychiatric provider practice management companies: adding value to behavioral health care?

tients or organizing to form managed care delivery systems. The latter choice involves consolidation and development of the capability to manage risk contracts, allowing clinicians to reclaim clinical control. To meet this challenge, a new class of behavioral health care organizations has emerged: the psychiatric provider practice management company. Like the physician practice management companies on which they are modeled, psychiatric provider practice management companies are adopting a wide range of strategies to allow behavioral health clinicians to control a larger share of the premium dollar. To understand psychiatric provider