Déjà vu All Over Again
 
            One of my Christmas gifts this year was Yogi Berra’s autobiography, which included some of his “Yogi-isms.” The one that comes to mind now is “It seems like déjà vu all over again.” The article that prompted this thought was a perspective published this week in the New England Journal of Medicine considering the trend toward private equity firms buying medical practices with the goal of growing revenue to recoup the investment and make a profit.[1] This trend was increasing before to the marked decline in fee-for-service revenue experienced during the pandemic, partly as a response to the desire of independent practices to compete with hospital-based physicians. The authors worry these are not public transactions, and worry about distortions in clinical practice as a result of these financial arrangements. Among other things, they call for strengthening, or instituting, state “corporate practice of medicine” laws. They do not comment on the possibility that hospital ownership of physician practices might distort clinical decision-making in precisely the same way.
            More than 25 years ago, while I was serving as medical director for my multispecialty group, our administrator made an appointment for us to go to Nashville and meet with an organization called PhyCor, which was then in the business of acquiring large multi-specialty groups and raising capital for expansion projects in the equity market, thereby growing the acquired groups. At the time, hospitals were in the business of buying primary care practices in an effort to control referral flow to the hospital and in so doing were driving up the price of new primary care doctors. Since we were owned by ourselves, this meant hospitals were driving up the cost to each clinic doctor to hire promising young primary care physicians. Their pitch, as I recall it now, was they would buy out the shareholders—the practicing doctors—and then charge us 15% of our net revenues to fund their operations. They would provide some degree of centralized management and infuse market capital to grow the business. The premise was that with enough growth, you could get back the 15% increase in overhead and come out even. We decided we did not need cash that bad and passed on the option, although a few doctors were tempted by the cash buyout.
            In the same era, we were trying to build a geographically dispersed primary care base to improve our ability to contract for pre-paid “managed care” contracts, now usually termed “population health” contracts. The hospital became concerned we were trying to gain control over their referral flow, which in their view was through the Emergency Department. We thought most patients were sent to the ED to see specific doctors and this was a net zero issue for the hospital. I remember talking with one group we wanted to join us when one of the older doctors asked me if everything would stay the same if they joined. I told them no one was going to come from Jackson and micromanage their clinical decisions, but that some things would certainly change. The administrator of the hospital told me that was a mistake, and he was going to step in and make them an offer. In the end, they took our offer, but the deal did not work out, because they really did not want to change, and, in the end, they became independent again.
            So, the anxiety in this week’s article seemed like “déjà vu all over again.” The more things change, sometimes the more they stay the same. Last week I was advising a young medical leader, who asked my opinion about the pros and cons of acquiring practices as opposed to just trying to work with them. He also asked if I thought cash payments for services rendered was a good idea and how much was enough to get cooperation from practitioners with his corporate objectives. Both of these questions were more déjà vu.
            How much financial incentive was necessary to get the doctors to change in whatever direction was of interest to them? My standard answer was that unless it was at least 1% of W2 income, the doctors would not even notice, and if what they wanted done was going to be hard, they needed to think in terms of 5% per physician. This invariably was more than they thought it was worth. Unfortunately, as I pointed out in my recent conversation, this answer only served to reinforce their bias that physicians were “all about the money.”
            Now money is not irrelevant, but the issue is more complicated. The practice of medicine, at its best, is invariably personal. We need physicians who are invested in their process and outcomes of care—think what would have happened during the pandemic if the physician workforce had suddenly decided it was all about the money. Was there enough money to pay people to take mortal risk? In fact, most doctors took the risk and got less money due to the decline in fee-for-service revenue noted.
Given that medical practice is both personal, and inherently uncertain, physicians have a strong preference for sticking to the tried and true—what has worked in the past and will likely work in the future. This does not mean that new drugs, tests and procedures are rejected—rather there is a skepticism about the new thing until it has been around awhile. When the benefits are obvious, think laparoscopic surgery, adoption is relatively quick. The third thing, which might not be as evident, is that physicians tend to see their practices as a series of encounters of n=1, meaning each patient is unique. Most clinicians remember enormous detail about their patients, but can’t see group trends.
            Yet what many of these outside organizations want is for physicians to do a great job and, (as uncompensated work,) and move the needle in the desired direction. But most efforts at improvement identify outliers quickly, and narrow the dispersion of results, but don’t move the median much at all. Which leads me to Wright’s Rule of Medical Management. “Physicians have a deep-seated, intuitive understanding of Gaussian distribution, because they all got into and out of medical school being graded on the curve. If you show a physician good data that he is more than two standard deviations off the median for his peers, he will correct the problem before you can figure out what it is. If he doesn’t respond, then he has a personality disorder, and the sooner you separate him from the organization, the better.” I used “him” because all of the cases in my personal experience were men, but I suspect it was just because of a limited sample size.
            So, Yogi had it right. What’s old is new again. Maybe it is time to revive the phrase from a couple of decades ago. “Been there, done that, got the T-shirt.” Owning the doctors, by itself, solves none of the issues of cost and quality facing clinical enterprises.
 
21 March 2021


[1] Zhu JM, Polsky D. Private Equity and Physician Medical Practices—Navigating a Changing Ecosystem. N Engl J Med 2021;384(11):981983. doi.10.1056/NEJMp2032115.

Further Reading

Accountability
If asked about the greatest advances I have seen, my outside the box answer would be the insight that the quality and safety of medical care is as much about system design as it is about human performance. Current efforts to make providers financially accountable, though, threaten the utility of this insight.

Actionable Data
Medical organizations have a lot of data, much of which is not "actionable." However, if taken as a vital sign, such data can lead to important actions that indirectly improve "the numbers."

Alignment
Alignment is another buzzword that means different things to different people.

Big Medicine
Big medicine may be financially necessary, but it poses risks unless care is taken to become a real system, which requires putting the clinical enterprise at the center.

Care Redesign
Care Redesign is one step needed to deal with clinician burnout.