Radiology and the Private Equity Bait and Switch

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.


Rick Chambers 12.06.20 Reply

This is a big problem in radiology. Hopefully smaller groups start to pop up and physicians can once again control their own destiny

Alton 12.09.20 Reply

Thank you for posting this, young radiologists who don’t know better need this perspective when making a job decision. The same type of senior partner who is willing to sell out the practice for a big payout is also likely to paint an inaccurate picture of the job to recruit new hires to similarly benefit themselves.

Darren 12.12.20 Reply

No surprises here. What I do think could happen is that if the current job market persists these trends could reverse but on the other hand, CMS cuts may drive things further downward.

Richard Rizzo 12.13.20 Reply

I joined the biggest private practice group in Baltimore in the mid 90’s. Then came the merger, so that we became a mega group (75 rads). Then came the buy out of the group. It was touted to be a multiple of 15-20, and ended up about 3. I was 2 1/2 years into a 4 year partnership, and got nothing, because I hadn’t crossed the “line in the sand”. True quote from a partner. Then the group got sold a few more times, until a Canadian pharmaceutical firm, who didn’t know about radiology, bought the practice. Then the house of cards collapsed, and the group basically got dissolved. The other mega group in town bought the profitable parts. The rest of the practice and hospitals were left in the cold. Eventually, these type of ventures will dissolve, and we will be left with smart physicians who will go back into traditional private practice, where you get what you work for. My only caveat is that training programs (medical schools and residency programs) aren’t teaching about private practice. They are teaching the next generation to join the system, where you will have no worries. The problem is that these universities and training programs will pay you half of what you generate,and give you half of the vacation. They pocket the rest of the earnings from your work. They are training widgets into their system. I don’t know how that is going to play out. I wish all new radiologists the best. Good luck, and watch out for all of those that are looking to take advantage of you.

Coolio 12.14.20 Reply

I appreciate the topic, Ben, as it is a huge issue in several fields, surprisingly. I believe this kind of burn and churn (adding to more burnout) exists in the Emergency Medicine world; it may have even affected them for longer and more severely than anyone knows at this point. However, the poster child is indeed radiology due to the fact that technology has led to great things but also easier commoditization. As a radiologist, let me share a few, additional thoughts. The demons of the system are all around, usually they aren’t as coordinated as it might seem, but rather additive in particular motions or policies that reward a particular person or entity. For example, residents come out with huge school loans/debts and feel locked in to get those paid down or start their lives (a spouse might further complicate this by spending or desiring more). Academics in the ABR changed (near the end of my training) the boarding process to delay it so that they could get more out of 4th years and fellows; some even did or still do two fellowships. Several other small issues, as you know, complicate things making jobs less and less attractive or stress higher (location of family, etc).

As far as RVUs are considered, let me just say that I believe that 15k for a radiologist is the beginning of dangerous. 20k certainly is, and 25k, when I read your quote, made me laugh almost (so as not to cry). Now, I’m an employed rad but at a system where I was able to land a job (let’s say academic) where I could have a less stressful job because I value that over making more money. Maybe I’m lucky, but the system I am in started me at this rad’s salary, roughly, anyway. That’s one of the reasons I made the decision.

The constant creep of government funding or subsidization of health care, enlarging bureaucracies, and lobbying of hospitals has led to all of this madness. What’s saddest about it is that physicians and patients increasingly get a raw deal. Most hospitals lowball groups for all of the things they provide, or if they go this route and hire PE, it sets in motion a sick cycle that you have detailed. I could write pages more on the idea that overnight coverage is desired to the max (and rads aren’t on call – that is working a shift) by admins and other services/departments, but no one is willing to pay up for how horrible a job that is, and with high burnout and turnover, to boot. When you consider that physicians 30+ years ago made the amount or more in non-inflated currency, it’s amazing that in this day and age doctors get lowballed so much, know more, and are asked to do even more.

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