Roger Strode’s Post

This is a problem. And increasingly providers recognize the rising conflict between these trends and the purpose of the profession. Luckily, many are focused on developing a better system, including many physician groups we’re meeting this week at the #APGSpringCon24. The remaining physician-owned practices across the country need to know there is a better solution than a PE sale to succession planning and growth. An #ESOP transaction unlocks the capital necessary to pay retiring physicians for their equity, provides a path to operating tax-free, and sustains a COMPLETELY physician-led practice, independent of private equity and payor influence.

Private equity has a role, but too often, it's exploiting healthcare. The WSJ highlights how these firms inflate costs, impacting patients and providers alike. In anesthesia, we witness this daily. We must champion investments that prioritize patient care over profit margins. It's time for leadership that demands ethical practices and safeguards our profession from those looking to make a quick buck. https://lnkd.in/e_akBuWV #Leadership #Anesthesia #Healthcare #PrivateEquity #EthicalInvesting

If you think your healthcare continues to get more expensive-you are obviously correct.This WSJ article outlines some of the issues.This is a three part story and I will comment on what we here at Veracity are doing to create positive solutions for some of the problems created by the vertical integration in healthcare.

Powerful article from the WSJ: https://lnkd.in/gr6ckxQR "Such so-called rent-seeking behavior is a unique feature of the American healthcare system. Nowhere else in the world do so many healthcare dollars encounter so few mechanisms to limit profiteering. The U.S. commercial market relies on negotiations between insurers and medical providers to deliver the best possible quality and price for patients. Increasingly, though, it is becoming less competitive by design." I believe that employers need to navigate the waters of healthcare like they would shark-infested-waters in a rowboat. You can be frustrated about the sharks, but the most important thing to do is keep you and your employees safe. ✳️Are you auditing/reviewing the work of your ASO? ✳️Have you put in place direct primary care that can remove expensive inpatient costs? ✳️Do you have an independent PBM that does not use spread? ✳️Are you paying your broker directly, with a signed commitment that they make no other money than yours -OR- do you check on everything they do, knowing that that are deeply influenced by BUCA carrier dollars? None of us can despair and give up on healthcare--it is too important. We have to work together to fix the business of healthcare, and we will. Until then, be safe out there, and don't put your hands in the water. #brokenhealthcare #employeebenefits

I just read this article published today in the WSJ. It raises more questions and points than the author addresses. First of all pricing for goods and services are typically set by the market so in this case CMS and commercial payors establish the lions share of acceptable reimbursement. As a practical manner supply and demand drive pricing. Historically consolidation in most any industry helps gain economies of scale while improving access and quality. A significant point not addressed here is that demand v supply imbalance is very much at work while putting the blame on PE or other acquirers of medical practices misses the mark by a mile. There is no question that healthcare spend is out of control and many markets go underserved. In all likelyhood capital, management expertise and capacity will come into play. Guess who has the capital, PE amongst other large capitalists. If you want change and expect better stop pointing blame and casting aspersions. By the way it doesn’t help matters on the supply and capacity side if more providers are retiring or exiting the system. America it’s time for you to decide how you want it, in this case it’s a really tough pill to swallow but it has side affects that you can eventually get over!

You Can Thank Private Equity for That Enormous Doctor’s Bill This article touches on two of my favorite topics, our broken healthcare system and private equity. I warned of this in my article critiquing Private Equity published in the Journal of Structured Finance in March 2020: "PE sponsors have a dominant presence across a range of critical industries, from health to defence to tech companies to manufactured housing to social care. Should PE-owned companies collapse or be forced to shrink, there is likely to be a far greater increase in defaults and broader systemic impact across critical industries." Not mentioned in this article, there are examples of PE owned hospitals billing hospital surcharges to patients of their affiliated non-hospital clinics, even where the patient had no hospital related services. Key Takeaways (I previously posted about the Steward hospital case): "A 2016 sale-leaseback agreement with the hospital landlord Medical Properties Trust allowed Cerberus to receive hundreds of millions of dollars in dividends and helped Steward expand through acquisitions. The strategy allowed Steward to grow but left it with diminished financial resources, arguably paving the path to one of the biggest hospital bankruptcies in decades." "But what happens if one firm quietly buys out several anesthesiologists in the same city and then hikes the price of the procedure?" #privateequity #healthcare #healthinsurance https://lnkd.in/dBxPskVd

So far 2024 has been a challenging year for national Health Solutions/Managed Care companies, with increasing medical cost pressures on Medicare and Medicaid programs, compounded by the complexities of redetermination. A #WSJ new article delves into the significant impacts of the shift in physician ownership to hospitals and corporate entities, as well as the substantial investments by private equity. These changes have sparked important questions about their effects on patient care and healthcare costs, drawing the attention of lawmakers. #Healthcare #Medicare #Medicaid #HealthcareCosts #PrivateEquity #PatientCare

The involvement of private equity firms in healthcare has raised concerns about the hidden costs that impact patients and providers. A recent Wall Street Journal article sheds light on the repercussions of prioritizing profit over patient care. From increased healthcare costs to the erosion of trust and quality, the consequences are profound. Private equity's short-term focus on financial gains can compromise long-term care quality and operational efficiency. Vulnerable populations, in particular, bear the brunt of these challenges, facing cost-cutting measures and decreased care quality. In this complex landscape, advocating for patient-centered care is crucial. Collaboration among policymakers, healthcare leaders, and communities is essential to ensure transparency, accountability, and sustainable solutions. Let's work towards a healthcare system that prioritizes everyone's needs, especially the most vulnerable. Grateful for the insights of colleagues like Tisha Titus, MD, MPH, and Brian Koehn in our shared mission to uphold healthcare quality and equity. Read more about this critical issue:

David Wainer's May 30 WSJ article "You Can Thank Private Equity for That Enormous Doctor’s Bill" is a must-read that brings up many important points to consider. Among them..... https://lnkd.in/gBqmFPJU 1. Bigger often doesn't equal better as it relates to health systems. Excessive consolidation drives up the cost of care by creating more market power for pricing. An open and competitive market would result in substantial price reductions similar to those seen in other industries where competition is fierce. 2. "Rent-seeking" behavior in the industry is real. Government leaders and self-funded companies that pay for care should first recognize that healthcare is local. Market competition among providers of care has to be measured one metropolitan statistical area (MSA) at a time, not across states or regions. 3. Leaders of health systems should spend their time making care more affordable and accessible, not on enhancing pricing power through consolidation within an MSA. The latter makes care less affordable and less accessible, hurting patients and the business community. 4. Private Equity (PE) acquisition of physician practices may or may not lead to price increases but too often fail to achieve meaningful practice efficiency. They do little to lower the price and cost of care. The impact on providers can be devastating. For physicians, the sale of a practice you love might be economically advantageous if you are ready to retire and are looking for a financial boost at the end of your career, but can be bad for doctors with years of practice remaining. They will likely take a pay cut somewhere down the road and are typically stuck working for a PE firm instead of themselves under strict non-compete terms that will force their families to move if they ever want out of the deal. While the structural challenges of the healthcare industry are real and significant, there is reason for hope. Opportunities abound to improve quality and reduce the cost of care. It takes a servant-leader approach focused on (1) making it easier for physicians and providers to practice great medicine and (2) making it easier for patients to access great care. We help health systems achieve great results using the Kada Health Operating System.

Interesting read from the WSJ on Private Equity's influence on healthcare costs. The article explores the parallels between the consolidation of medical practices, shedding light on the impact on end buyers. On the other hand, having firsthand experience with privately-held companies backed by PE investment, I've witnessed how such setups can positively benefit clients, employees, and shareholders. Thoughts? #Healthcare #PrivateEquity #WSJ