With permission, I’m reposting a (very lightly edited) anonymous social media post from a young radiologist who joined a private practice that had recently been purchased by private equity:
I think I committed a huge mistake in signing up for a job with a large private practice group that was bought by a big private equity group in the radiology space. There has been a massive turnover of non-partner radiologists, over 30+% pay-cut in collections, very close monitoring of productivity, poor leadership, and no concern for younger radiologists. Almost everything told to me at the time of my interview turned out to be incorrect including work volume, projected compensation, and the reasons non-partners had left.
Several older partners are retiring as they made their millions in the buyout. The practice can’t hire fast enough as younger rads keep quitting or getting fired, so we’re overall chronically understaffed. I work extremely high volume (25k or more RVUs/year) extremely busy call with very low salary of $300k.
I fear there could be another sale of the practice in the future given how rapidly this private equity company is trying to acquire other practices, further driving down salary. We’d stay understaffed (many non partners leave after the buy-out), so volume will likely still be too high especially for the salary given. Could go on, but feeling really stuck. Any recommendations if I should stick it out or quit?
This is the private equity bait and switch, and I don’t even mean just in the premeditated awfulness of an operational model largely predicated on buying a business with the intent of squeezing the value-creating units (human beings) for more value by a combination of more work for less pay.
I mean that, in many cases, the natural history of these practices can result in a nonviable work environment through what should be an expected evolution of staffing changes.
Let’s walk through one way this can play out:
- Partners get a buy-out that doesn’t fully vest for a pre-specified duration of time.
- Some non-partners immediately leave the practice due to perceived or real insult, insufficiently generous retention package, or knowledge that long-term income will fall. Non-partners expect to pay sweat equity to become a shareholder, but they don’t want to work hard for less pay if there isn’t a meaningful long-term partnership at the end of it.
- Non-partner employee exodus results in immediate understaffing. With the same work and fewer people, everyone is taking more call and needs to work harder to keep up with the lists. Even a desirable practice can’t necessarily hire people instantaneously.
- The job is therefore less desirable and may have a hard time recruiting and retaining talented employees.
- The partners finally get all of their money. Many may have planned to retire anyway at this juncture but many more will certainly move on if the job now sucks, which it often does.
- Even more understaffing occurs.
Most PE practices haven’t gotten past this timeline yet. Potential outcomes are re-selling to a larger fund, selling the practice back to the original physician shareholders, and/or significant operational changes. In a chronic understaffing situation, employee pay sometimes becomes more competitive in order to retain FTEs. In some cases, the now underperforming practice may lose imaging contracts, which has the unanticipated benefit of fixing the understaffing problem.
Now to be clear, these issues can arise in any practice. There are certainly examples of physician-owned groups squeezing employees in the workup with the promise of partnership only to churn them when the time comes. Corporations and PE groups absolutely do not have a monopoly on being jerks. However, a once-profitable business is automatically less “profitable” when a third party inserts itself to take a mandatory cut. The value-add of oft-touted “productivity” gains can only take you so far, particularly in the face of downward reimbursement pressure.
And to be extra clear, someone just making you work harder and read more cases per day for the same pay isn’t the kind of efficiency gain any group should be proud of. While $300k is obviously a lot of money, the average radiologist reads in the ballpark of 10k RVU per year depending on subspeciality. 25k RVUs is a massive number, which means that the anonymous poster is generating a ton of money for someone else on the back of their misery.
Their job is almost certainly not going to get better, and they should leave.
Lesson: Know the group dynamics and local market of any practice you consider joining.