Pitfalls of Private Equity Takeovers

01.28.19 // Medicine, Radiology

You may have heard about this absurd story in the NYTimes a few months ago: An academic journal pulled a legitimate article comparing practice characteristics of groups that take on private-equity funding and those that do not. Why? Because a PE firm put the squeeze on their editor, that’s why:

In an interview, Dr. Hruza [the incoming president of the American Academy of Dermatology and board-member of United Skin Specialists, the largest PE-backed derm practice in the country] said he did not ask that the paper be taken down. He did, however, confirm that he expressed his concerns to Dr. Elston, the editor, after it was posted. Two days later, Dr. Elston removed the paper.

From the reporting in the times, this situation is absurd. If people have quibbles with the conclusions of a peer-reviewed article, then they should write a commentary. You don’t get to line-edit someone else’s manuscript.

Dermatologists account for one percent of physicians in the United States, but 15 percent of recent private equity acquisitions of medical practices have involved dermatology practices. Other specialties that have attracted private equity investment include orthopedics, radiology, cardiology, urgent care, anesthesiology and ophthalmology.

PE firms are following the money. However, their primary objective of extracting profit doesn’t necessarily equate with an understanding of how to actually run a successful, responsible, and sustainable medical practice.

Dr. Konda, [the paper’s lead author], said he first grew interested in the topic when several of his trainees went to work for private equity-backed practices and told him of clinical environments that emphasized profits at the expense of patient care.

With that preamble, check out this interview with radiologist and former PE analyst, Kurt Schoppe, MD on Radiology’s Nearest Threat, Commoditization, and the Misguided Notion That You Will Be Paid for Everything You Do.

Lots of excellent responses, but these three quotes give you a nice flavor of private-equity takeovers in broad strokes:

One of their favorite marketing lines is “physician-owned or physician-operated.” That’s really a misdirection because, frequently, they set up a holding company under which the physician group is a wholly owned subsidiary. Yes, the physician group is owned and operated by physicians, but it is not controlled by physicians because, as a wholly owned subsidiary, the parent corporation, or the holding company, is going to have absolute control. That holding company is not majority-owned by the physicians. The wording on the contracts is going to be such that the PE firm or the corporate entity is going to have control over the parent entity when it needs it.

…

What I’m getting at is no matter what the marketing says, no matter what they are telling people when they are selling services, these entities must make money for their owners/investor as their primary objective. Changing the economics of radiology group ownership is not fundamentally about the patients or saving money for the payers. They do these things to make money for their investors. This is not a negative judgement, it’s just a fact. If physicians want to sell their practice, if someone is only 4 or 5 years from retirement, and they only have a 4- or 5-year hold on their contract after they sell their group, well, that is just logical. From a purely personal economic point of view, it makes sense for them to sell, because they are not looking at a 15- to 20-year timeline.

…

The people who need to look out for this are the people in training, the people coming out of training, and the younger physicians in the group who have a 15-, 20-, 30-year timeline. If your goal when you came out of medical school was caring for patients, positively affecting the health care environment, or doing things for the greater good, I think you are better able to do that as a physician group in which you decide, as a group, how much money you need to make, what sacrifices you choose to make, and for whom you will charge less. If you cede control of your decision-making to a group that will only be motivated by its ability to make returns for its investors, you’ve put someone else in that conversation who does not necessarily share your values and ethics as a physician.

Anyone joining a hot-bed field like dermatology or radiology needs to understand the business model of your chosen profession and evaluate the health of both the practice and local market you consider joining.

While partners may get short-term windfalls in some buyout scenarios, non-partner employees are the primary profit source. Spending time in a partnership-track without eventually being a partner is a waste if the position becomes untenable and you need to start fresh somewhere else.

NRMP Says: Rank Them How You Want Them

01.24.19 // Medicine

President and CEO of the NRMP, Mona M. Signer, talking with Medscape:

I certainly understand why applicants and programs engage in post-interview communication, but applicants and program directors shouldn’t create their rank-order list on the basis of post-interview communication from the other party. They ought to create their rank-order list based on their true preferences. Applicants should rank the programs where they want to train in order of preference, not where they think they will match. Program directors should rank applicants in order of preference, not the applicants with whom they think they will match. The matching algorithm works best when Match participants rank each other in order of true preference.

YES. Seriously people. I would also add that people shouldn’t create their ROL based on communication (or assurances) during the interview, either.

After all these years, some students and programs still think there should be other considerations to the ROL. But there aren’t. It shouldn’t really matter what the other side wants in this system. It matters what you want. It’s your list.

From “The Residency Match: Interview Experiences, Postinterview Communication, and Associated Distress” in the Journal of Graduate Medical Education:

In terms of postinterview communication, more than 70% of respondents indicated that they wished such communication were explicitly discouraged, and more than half said they wanted programs to bar candidates from notifying them of a high rank in order to avoid match manipulation.

There are no positives to the ego-stroking, play-acting, and intermittently grossly-misleading game that programs (and applicants) play. Everyone wants to be loved and get their top choices, but the only communication that should really have any impact (or be permissible) is new information:

My spouse early-matched to a program at your institution.
My mother has become ill, and I truly hope to end up in your city so that I can help take a greater role in her care.
I just won the lottery, and there is a significantly increased risk of me not completing your grueling program.

Though the NBME allows everyone to dance, the best advice will always be rank them how you want them.

Retort of the week

11.13.18 // Medicine

Do you have any idea how many bullets I pull out of corpses weekly? This isn’t just my lane, it’s my [expletive] highway.

Pathologist Dr. Judy Melinek, responding on Twitter to an NRA tweet admonishing doctors to “stay in their lane” and stop discussing gun control.

IMGs and the Match: What are my chances?

11.02.18 // Medicine

Much more than US students, IMGs have a much harder to time figuring out a satisfying answer to the “what are my chances?” game. If you haven’t already read it, I’d strongly recommend reading the “Charting Outcomes in the Match for International Medical Graduates” available at http://www.nrmp.org/match-data/main-residency-match-data/.

For an example of IMG board score considerations:

Overall, matched U.S. IMGs had mean USMLE Step 1 scores of 224.5 (s.d. = 17.0) and matched non-U.S. IMGs had mean USMLE Step 1 scores of 233.8 (s.d. = 17.1), both well above the 2016 minimum passing score of 192.

Overall, matched U.S. IMGs had mean USMLE Step 2 CK scores of 232.6 (s.d. = 15.0) and matched non-U.S. IMGs had mean USMLE Step 2 CK scores of 238.8 (s.d. = 15.6), both well above the 2016 minimum passing score of 209.

This tells you a couple of important things right off the bat:

Being a US citizen makes a big difference for an IMG. Needing a visa or having your English proficiency called into question requires a bump in your Step scores.
Successful IMGs have higher scores than US medical graduates, but as you can see, not by as much as you might guess.

That being said, averages can be misleading. The average IMG is typically applying to less competitive fields on the whole, so within many specialties, the requirements will be substantially higher.

IMGs will doubly benefit from an “in” or personal connection at a particular program. For better or worse, IMGs have historically been funneled into high-need fields like family medicine and psychiatry. They also make up a disproportionate fraction of residents at less competitive community programs.

Note that there are some exceptions to the need to complete a residency in the states in order to practice in America. For example, radiology has an IMG alternative pathway, which is four years of fellowship at a US institution after completing residency training in a foreign country. While this is functionally equivalent to a radiology residency in duration, the competitiveness is different, as you are applying for generally less-competitive fellowships and not residency spots. See https://www.theabr.org/ic-img-dr.

Ultimately, no one online (definitely not me, and not even most residency consultants, I’d venture) can likely give you a great answer for your particular circumstances. Chances are your school and former classmates know the track record and what their luck has been in recent years. That’s probably your best bet.

With new medical schools opening while residency spots staying flat, competition is such that more and more programs aren’t even reading international applications except on a case by case basis for exceptional (hello research) applicants.

Broad application strategies and backup plans are a must.

When antibiotics equals ratings

10.09.18 // Medicine

A new study published in JAMA last week (summarized by NPR) is another great example of the obvious negative externalities of prioritizing patient satisfaction scores (i.e. the Yelpification of medicine). It analyzed a large number of telemedicine visits for URI:

Seventy-two percent of patients gave 5-star ratings after visits with no resulting prescriptions, 86 percent gave 5 stars when they got a prescription for something other than an antibiotic, and 90 percent gave 5 stars when they received an antibiotic prescription.

In fact, no other factor was as strongly associated with patient satisfaction as whether they received a prescription for an antibiotic.

The outsized and misplaced importance of patient satisfaction scores is a perfect embodiment of Goodhart’s law, well-paraphrased as “when a measure becomes a target, it ceases to be a good measure.”

If you make patient satisfaction scores a critical target—and they are—you will see consequent mismanagement. This is so blatantly apparent when it comes to urgent care and pain management that, if anything, high satisfaction scores are likely a more meaningful signal of poor care (like in this study when patient satisfaction scores positively correlated with patient mortality).

I used to know a bunch of residents who would moonlight at a doc-in-the-box for-profit standalone urgent care. They were, apparently, told to make the patients happy and provide antibiotics for most URI visits.

Even outside of quality metrics, you need patients to make money, and the “customer” is always right.

Explanations for the 2017 Official Step 3 Practice Questions

09.09.18 // Medicine

Here are my explanations for the 2017 version of the official USMLE Step 3 free question pdf. This is a constant reader request, so enjoy my take on these 137 questions.

You can find my thoughts on preparing for Step 3 here. In short, I think the free materials and UWorld should be enough for most folks. If you want books recs, they’re in that post. If you need another question source, I haven’t tried any of them, but you can get 10% off BoardVitals if you’re interested by using code BW10.

As for this free practice exam, Blocks 1 and 2 are “Foundations of Independent Practice” (FIP). These should take up to 1 hour each. Blocks 3 and 4 are “Advanced Clinical Medicine” (ACM). These should take up to 45 minutes each. Total practice time should be no more than 3:30 if taking under test-day conditions.

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NYU and the slow coming wave of “free” school

08.30.18 // Finance, Medicine

A couple of weeks ago, NYU announced that they were making medical school tuition free for every student. Dean Robert Grossman stated, “This decision recognizes a moral imperative that must be addressed, as institutions place an increasing debt burden on young people who aspire to become physicians.”

My first thought on this news was, Man, Harvard is going to be so pissed that they weren’t first.

The idea of free tuition has been discussed and debated in multiple contexts across Ivy-type schools for years. These institutions are not immune to the burgeoning reality that their educations are financially untenable for most people and crippling for others. With many such schools fostering endowments numbering in the tens of billions of dollars, actual tuition dollars are no longer the bedrock of a healthy world-class institution. Over the past ten or so years, Harvard has often led the way on increasingly generous undergraduate financial aid, and many similar schools have made corresponding efforts to make undergraduate education more affordable, but until now, no one has taken meaningful steps to fix graduate schools, many of which are now considered mandatory for advancement across many industries. Even this move is largely a token effort, as every other extremely expensive NYU school will still keep its top-dollar cost in the shadow of this brilliant PR stunt.

As an illustration of the numbers involved in making one small school free:

The annual NYU med tuition was an exorbitant $55k per year, and there are 442 total active medical students, which gives a total cost of $24 million per year. “Paying” this requires (according to NYU) an endowment of $600 million because the school is utilizing the famous 4% rule that would make this massive endowment essentially guaranteed to last forever based on historical stock market returns.

Numbers aside, I do agree with the words of the dean (though I would expand them). There is a moral imperative to fix the cost as well as the delivery of medical education. The length, cost, and inefficiency are all otherwise mutable strong arms that are breaking healthcare and squeezing the joy out of young doctors in training from coast to coast.

NYU will not be the only school to offer free tuition. Other rich schools in and outside of medicine likely have been and certainly will be shoring up their endowments to join the club as is feasible. I anticipate this is the first in a salvo of private schools slowly making various programs free, and this will speed up if/when PSLF is eventually canceled, as the program is basically the only justification for charging otherwise unmanageable amounts of money to students who are destined to never be able to actually service their debt. Beleaguered state schools with their chronically strapped budgets will struggle.

My second thought is that free tuition will now make NYU about as affordable as the best-priced state schools (because the cost of living in New York is otherwise so high). Four years of living expenses will never be cheap, and it’s much harder to scrounge time to be gainfully employed during medical school compared with college. Clinical rotations are inflexible more-than-full-time jobs.

This will also result in, I imagine, a huge increase in applications to NYU. When my wife and I applied to medical school, we only applied to state institutions back in Texas where we were still residents while away for college. We were not keen to spend as much in a single year as we could on the whole package. People like me may now decide to add NYU to the list, especially since NYC is glamorous.

So, good on NYU for being the first to pull the trigger. I hope more schools join their ranks, and I hope most of all that this well-publicized confrontation of medical training costs will lead to a paradigm shift that allows schools and hospitals to rethink the whole process. We can do so much better, for our doctors and for our patients

The Med Ed Trifecta

08.20.18 // Medicine

Akhilesh Pathipati, writing “Our doctors are too educated” in the Washington Post (emphasis mine):

U.S. physicians average 14 years of higher education (four years of college, four years of medical school and three to eight years to specialize in a residency or fellowship). That’s much longer than in other developed countries, where students typically study for 10 years. It also translates to millions of dollars and hours spent by U.S. medical students listening to lectures on topics they already know, doing clinical electives in fields they will not pursue and publishing papers no one will read.

We’ve done an amazing job in medicine findings way to fill years with reasonable-sounding and potentially useful activities and then pretending they are not only worthwhile but necessary.

Burnout may be a misnomer

07.29.18 // Medicine

Simon G. Talbot and Wendy Dean, arguing in STAT that burnout is actually a misdiagnosed consequence of unchecked moral injury:

We believe that burnout is itself a symptom of something larger: our broken health care system. The increasingly complex web of providers’ highly conflicted allegiances — to patients, to self, and to employers — and its attendant moral injury may be driving the healthcare ecosystem to a tipping point and causing the collapse of resilience.

The term “moral injury” was first used to describe soldiers’ responses to their actions in war. It represents “perpetrating, failing to prevent, bearing witness to, or learning about acts that transgress deeply held moral beliefs and expectations.” Journalist Diane Silver describes it as “a deep soul wound that pierces a person’s identity, sense of morality, and relationship to society.”

The moral injury of health care is not the offense of killing another human in the context of war. It is being unable to provide high-quality care and healing in the context of health care.

Which is why the chorus of hollow wellness outreach efforts for trainees and other physicians are so patronizing and eye-rollingly ineffective:

The simple solution of establishing physician wellness programs or hiring corporate wellness officers won’t solve the problem. Nor will pushing the solution onto providers by switching them to team-based care; creating flexible schedules and float pools for provider emergencies; getting physicians to practice mindfulness, meditation, and relaxation techniques or participate in cognitive-behavior therapy and resilience training. We do not need a Code Lavender team that dispenses “information on preventive and ongoing support and hands out things such as aromatherapy inhalers, healthy snacks, and water” in response to emotional distress crises.

Explanations for the 2018-2019 Official Step 2 CK Practice Questions

06.09.18 // Medicine

The NBME recently released an “updated May 2018” official “USMLE Step 2 CK Sample Test Questions,” but these are actually completely unchanged over the past two years since the June 2016 update, which was itself almost unchanged from the 2015 set.

Since it’s been a couple years, I’ve included the explanations below (which are, again, unchanged). You might see the comments on the old post for possible additional questions you may have. The multimedia question explanations are also at the bottom of this page.

Last year, helpful reader Jarrett made a list converting the question order from the online FRED version to the pdf numbers. I didn’t go through in detail to see if the online version order has changed, but the multimedia questions were in the same spots except that the block 3 question had shifted by one, so they may have done a little something.

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