Physician groups crave capital but worry about future sale
Skip to main content
MDHC_Logotype_white
Subscribe
  • My Account
  • Login
  • Subscribe
  • News
    • This Week's News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • People
    • Regional News
    • Digital Edition
    • Billing, antitrust exemption changes upend negotiations between insurers and providers
      Few nursing home residents have received second COVID-19 vaccine dose
      Fresenius building renal genomic registry to inform precision care for kidney disease
      clinic_2.jpg
      Cleveland Clinic project expected to create 1,000 R&D jobs, lands state tax credits
    • Few nursing home residents have received second COVID-19 vaccine dose
      The missing piece in our fight against COVID-19: primary care
      Google to convert office space for COVID-19 vax clinics
      The Check Up: Dr. Joseph Kerschner
      The Check Up: Dr. Joseph Kerschner of the Medical College of Wisconsin
    • Ascension’s St. Mary’s Hospital Surgery Center at Towne Centre and Allegheny Health Network’s Bethel Park surgery center
      Hospitals see opportunity, risk in ambulatory surgery centers
      Health suffers as rural hospitals close
      Medicare ACO participants fell in 2021
      Louisiana gets reports vaccine providers are discriminating
    • Billing, antitrust exemption changes upend negotiations between insurers and providers
      MAIN-Health Bill_iStock_i.jpg
      Insurance-tech firm MultiPlan makes $155M buy after blank-check deal
      Last-minute COVID costs cut into UnitedHealthcare's $396 million operating income
      CMS approves rule forcing insurers to ease prior authorization
    • It's a secret: California keeps key virus data from public
      lacewell_linda_supertinendent_dept_of_financial_services_8.47.jpg
      New York state investigates drug price spikes during pandemic
      Health experts blame rapid expansion for vaccine shortages
      HHS freezes rule targeting community health centers' drug discounts
    • KPMG says deal activity will stay high in '21: 10 takeaways
      By the Numbers: 20 largest healthcare investment banks in 2020
      Providers await new HHS coronavirus grant reporting deadline
      Operation Warp Speed Dr. Moncef Slaoui, Pfizer Group President Angela Hwang, Moderna CEO Stephane Bancel, CVS Health Executive Vice President Karen Lynch and McKesson CEO Brian Tyler participate in a panel discussion on the COVID-19 vaccine.
      Hospitals, drug companies strive to stand out virtually at JPM
    • Google to convert office space for COVID-19 vax clinics
      Dr. Karen DeSalvo
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next four years
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next 4 years - Transcript
      A man in a room with servers.
      Momentum grows to outsource hospital tech functions in 2021
    • China pushes conspiracy theories on COVID origin, vaccines
      50% of Americans make resolutions. Fewer than 27% keep them over time.
      Data Points: Sticking with your resolutions
      An older man wearing a mask receiving a vaccine.
      Want more diversity in clinical trials? Start with the researchers
      Avocado
      Avocado a day keeps the doctor away
    • WEb_i.jpg
      Q&A: Dr. Cliff Megerian, University Hospitals' soon-to-be CEO
      ZentyWeb_i.jpg
      Tom Zenty is leaving a legacy of transformational growth at University Hospitals
      Cerner names Erceg as new CFO
      Elizabeth Richter will serve as acting CMS administrator
    • Midwest
    • Northeast
    • South
    • West
  • Insights
    • ACA 10 Years After
    • Best Practices
    • InDepth Special Reports
    • Innovations
    • The Affordable Care Act after 10 years
    • New care model helps primary-care practices treat obesity
      doctor with patient
      COVID-19 treatment protocol developed in the field helps patients recover
      Rachel Wyatt
      Project to curb pressure injuries in hospitals shows promise
      Yale New Haven's COVID-19 nurse-staffing model has long-term benefits
    • Dr. James Hildreth
      How medical education can help fight racism
      Modern Healthcare InDepth: Breaking the bias that impedes better healthcare
      Videos: Healthcare industry executives describe their encounters with racism
      Michellene Davis
      Healthcare leadership lacks the racial diversity needed to reduce health disparities
      Hospital divided into multiple pieces
      Health systems may be warming to offshoring, a mainstay practice for insurers
    • A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
      A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      self service station
      COVID-19 pushes patient expectations toward self-service
      Targeting high-risk cancer patients with genetics
  • Transformation
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Highmark Health inks six-year cloud, tech deal with Google
      Study: 1 in 5 patients report discrimination when getting healthcare
      HHS proposes changing HIPAA privacy rules
      Android health records app launches at 230 health systems
    • California hospitals prepare ethical protocol to prioritize lifesaving care
      Amazon, JPMorgan Chase, Berkshire Hathaway disband Haven
      Digital pathways poised to reshape healthcare continuum in 2021
      Healthcare was the hardest hit by supply shortages across all U.S. industries
    • A phone screen showing the question, "Mary we hope this information was helpful and we'd like to keep guiding you. Are you interested in knowing when it's your turn to receive the vaccine?"
      Chatbots, texting campaigns help manage influx of COVID vax questions
      A woman with a wearable sensor talking to her provider.
      Wearable sensors help diagnose heart rhythm problems in West Virginia
      New care model helps primary-care practices treat obesity
      How hospitals are building on COVID-19 telehealth momentum
    • Regional insurers bet big on virtual-first plans
      MedPAC votes to boost hospital payments, freeze or cut other providers
      Most Next Gen ACOs achieved bonuses in 2019
      Congress recalibrates Medicare Physician Fee Schedule after lobbying
  • Data/Lists
    • Rankings/Lists
    • Interactive Databases
    • Data Points
    • Health Systems Financials
      Executive Compensation
      Physician Compensation
  • Op-Ed
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
    • Wellstar CEO calls adapting for the pandemic her bold move
      Howard P. Kern
      Recognizing the value of telehealth in its infancy
      Dr. Stephen Markovich
      A bold move helped take him from family doctor to OhioHealth CEO
      Dr. Bruce Siegel
      Why taking a hospital not-for-profit was Dr. Bruce Siegel’s boldest move
    • Barry Ostrowsky
      Ending racism is a journey taken together; the starting point must be now
      Laura Lee Hall and Gary Puckrein
      Increased flu vaccination has never been more important for communities of color
      John Daniels Jr.
      Health equity: Making the journey from buzzword to reality
      Mark C. Clement and David Cook
      We all need to 'do something' to fight inequities and get healthcare right, for every patient, every time
    • The missing piece in our fight against COVID-19: primary care
      Ambulatory surgery centers offer extraordinary value in a high-cost healthcare system
       Alan B. Miller
      Looking ahead with optimism as we continue to transform healthcare
      Dr. Bruce Siegel
      By protecting the healthcare safety net, Biden can put us on the path to a stronger country
    • Letters: Eliminating bias in healthcare needs to be ‘deliberate and organic’
      Letters: Maybe dropping out of ACOs is a good thing for patients
      Letters: White House and Congress share blame for lack of national COVID strategy
      Letters: VA making strides to improve state veterans home inspections
    • Sponsored Content Provided By Optum
      How blockchain could ease frustration with the payment process
      Sponsored Content Provided By Optum
      Three steps to better data-sharing for payer and provider CIOs
      Sponsored Content Provided By Optum
      Reduce total cost of care: 6 reasons why providers and payers should tackle the challenge together
      Sponsored Content Provided By Optum
      Why CIOs went from back-office operators to mission-critical innovators
  • Awards
    • Award Programs
    • Nominate
    • Previous Award Programs
    • Other Award Programs
    • Best Places to Work in Healthcare Logo for Navigation
      Nominations Open - Best Places to Work in Healthcare
      Nominations Open - Health Care Hall of Fame
      Nominations Open - 50 Most Influential Clinical Executives
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Top 25 Minority Leaders
    • Top 25 Women Leaders
    • Excellence in Nursing Awards
    • Design Awards
    • Top 25 COOs in Healthcare
    • 100 Top Hospitals
    • ACHE Awards
  • Events
    • Conferences
    • Galas
    • Webinars
    • COVID-19 Event Tracker
    • bright.md logo lockup webinar
      Sponsored Content Provided By Bright.md
      Webinar: Enabling a hybrid care model — Streamlining the patient path to both telehealth and in-person care
    • Leadership Symposium
    • Healthcare Transformation Summit
    • Women Leaders in Healthcare Conference
    • Workplace of the Future Conference
    • Strategic Marketing Conference
    • Social Determinants of Health Symposium
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Minority Leaders Gala (2022)
    • Top 25 Women Leaders Gala
  • Listen
    • Podcast - Next Up
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
    • Dr. Karen DeSalvo
      Next Up Podcast: What to expect with telehealth and healthcare technology in the next four years
      Carter Dredge
      Next Up Podcast: Ready, set, innovate! Innovation and disruption in healthcare
      Next Up Podcast: COVID-19, social determinants highlight health inequities — what next?
      Ceci Connolly
      Next Up Podcast: How to navigate the murky post-election waters
    • Beyond the Byline: Regulators aim to boost value push with fraud and abuse law updates
      An older man wearing a mask receiving a vaccine.
      Beyond the Byline: Verifying information on the chaotic COVID-19 vaccine rollout
      doctor burnout
      Beyond the Byline: How healthcare supply chain struggles contribute to employee burnout
      Beyond the Byline: Covering race and diversity in the healthcare industry
    • Leading intention promote diversity and inclusion
      Introducing Healthcare Insider Podcast
    • The Check Up: Dr. Joseph Kerschner
      The Check Up: Dr. Joseph Kerschner of the Medical College of Wisconsin
      The Check Up: Chip Kahn
      The Check Up: Chip Kahn of the Federation of American Hospitals
      The Check Up: Trenda Ray
      The Check Up: Trenda Ray of the University of Arkansas for Medical Sciences
      The Check Up: Dr. Kenneth Davis
      The Check Up: Dr. Kenneth Davis of Mount Sinai Health System
    • Video: Ivana Naeymi Rad of Intelligent Medical Objects
  • MORE +
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Physicians
August 31, 2019 01:00 AM

Physician groups crave capital but worry about future sale

Harris Meyer
  • Tweet
  • Share
  • Share
  • Email
  • More
    Print
    InDepth: Private Equity

    Dr. Andrew Rocca said it wasn’t easy bringing his orthopedic group colleagues to consensus on selling their business to Varsity Healthcare Partners, a private equity firm.

    To get the deal done in November 2017, the 25 physician shareholders of the Orthopaedic Institute in Gainesville, Fla., had to agree to accept a sizable upfront cut in pay that would be contributed to equity in the new management services organization, in which they would have a minority share. All the doctors had to think through how the deal would affect their individual financial planning given their age and where they were in their careers.

    “We had to work that through the digestive systems of 25 guys—and surgeons have strong opinions on things,” said Rocca, the group’s chief medical officer. “The fact that our group got to a resolution speaks to the fact that most practices probably are looking at their options.”

    Physicians involved in these sales to private equity firms say they and their colleagues were willing to accept the tradeoffs because they increasingly feel the need for capital, scale and business expertise to survive in a world of bigger players and new, risk-based payment models. They often considered, and rejected, the option of selling out to a local health system or insurer.

    “We would have given up more independence selling to a hospital or insurer. We’ll still be able to privately practice medicine, with no one interfering with our clinical judgment.”

    Dr. Steven Morris, co-founder and chief medical officer, Atlanta Gastroenterology Associates

    “We would have given up more independence selling to a hospital or insurer,” said Dr. Steven Morris, co-founder of Atlanta Gastroenterology Associates. His group closed a deal last December with Seattle-based Frazier Healthcare Partners to form a management services organization platform called United Digestive, of which he’s now chief medical officer.

    “We’ll still be able to privately practice medicine, with no one interfering with our clinical judgment,” he added.

    The goal of the 33-physician Orthopaedic Institute, one of Florida’s largest orthopedic groups, was to expand in other Florida markets and move into at least two other states.

    The management services organization hired a new CEO and chief financial officer, along with merger specialists and a physician recruiter. The management firm already has helped the group expand from 33 physicians in seven locations to 44 in 11 locations, through practice acquisitions and new hires.

    The group is scheduled to soon open a large new clinic near The Villages, a major retirement community in central Florida. And it’s renegotiating all the group’s managed-care contracts and launching four bundled-payment deals. The revenue growth target is 25% per year.

    “We’re looking to join with like-minded, high-quality groups that want to be part of something larger,” said Dr. Richard Gilbert, the new CEO, who touts the many different revenue streams associated with orthopedic practices as making that specialty a smart investment. “It portends ongoing growth to a multistate organization.”

    While critics warn that private equity investors may unduly pressure physicians to see too many patients, Rocca said he and his colleagues welcome the management firm’s focus on measuring the number of visits with new and established patients.

    “We were a well-run practice but metrics weren’t a high priority,” he said. “It’s a high priority for them, and it’s helpful. We’ve seen total throughput increase.”

    Frazier and Atlanta Gastroenterology partnered in United Digestive with the aim of establishing a powerful network of gastrointestinal services in three or four Southeastern states.

    The lure for Frazier was that the 96-physican group already made up nearly a third of all gastroenterologists in Georgia, had its own ambulatory surgery centers, and provided all ancillary services including pathology, pharmacy, infusion and anesthesiology.

    “You can sit with a payer and say we provide quality medicine with broad geographic coverage at reasonable rates,” said Nader Naini, managing partner at Frazier. “You have leverage to negotiate.”

    For their part, the doctors welcomed having a management company handle their business operations and provide capital to expand, with the management services organization serving as a hub for new GI groups that sign on.

    Morris said the Frazier partnership will better position the group for value-based payment arrangements and enable it to get “fairer deals” from insurers as it acquires other practices and gets bigger.

    Still, he acknowledged uncertainty about the future given the limited time frame of private equity investors. “There’s always apprehension about the second owner and the second bite of the apple,” Morris said, referring to the moment when the first private equity owner sells and the doctors receive their second cash payout. “You’re still going to be looking for someone who wants to be a good steward and grow it even more. There still should be significant bandwidth to expand.”

    That uncertainty also weighed on Rocca and his colleagues in Gainesville when they were negotiating the deal with Varsity. Nearly two years in, he’s feeling more confident.

    “One thing we told them was, ‘We all want to practice medicine the way we want. Will you tell us to do it differently?’ ” he recalled. “They said, ‘No.’ Thus far I’d say that’s accurate.”

    More from InDepth: Private Equity
    Specialty physician groups attracting private equity investment
    Success of private equity investment in hospitals, post-acute to be determined
    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Q&A: Addressing unconscious bias requires 'all hands on deck,' says Medical College of Wisconsin dean
    Q&A: Addressing unconscious bias requires 'all hands on deck,' says Medical College of Wisconsin dean
    The Check Up: Dr. Joseph Kerschner of the Medical College of Wisconsin
    The Check Up: Dr. Joseph Kerschner of the Medical College of Wisconsin
    Sponsored Content
    Get Free Newsletters

    Sign up for free enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today

    The weekly magazine, websites, research and databases provide a powerful and all-encompassing industry presence. We help you make informed business decisions and lead your organizations to success.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS
    • Instagram

    Stay Connected

    Join the conversation with Modern Healthcare through our social media pages

    MDHC_Logotype_white
    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • News
      • This Week's News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition
    • Insights
      • ACA 10 Years After
      • Best Practices
      • InDepth Special Reports
      • Innovations
    • Transformation
      • Patients
      • Operations
      • Care Delivery
      • Payment
    • Data/Lists
      • Rankings/Lists
      • Interactive Databases
      • Data Points
    • Op-Ed
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Awards
      • Award Programs
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Top 25 Minority Leaders
        • Top 25 Women Leaders
      • Nominate
      • Previous Award Programs
        • Excellence in Nursing Awards
        • Design Awards
        • Top 25 COOs in Healthcare
      • Other Award Programs
        • 100 Top Hospitals
        • ACHE Awards
    • Events
      • Conferences
        • Leadership Symposium
        • Healthcare Transformation Summit
        • Women Leaders in Healthcare Conference
        • Workplace of the Future Conference
        • Strategic Marketing Conference
        • Social Determinants of Health Symposium
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Minority Leaders Gala (2022)
        • Top 25 Women Leaders Gala
      • Webinars
      • COVID-19 Event Tracker
    • Listen
      • Podcast - Next Up
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • MORE +
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing