Go into to private equity, not medicine.

Too many trauma docs getting tired of the dinner party questions that followed from the "I'm an ED physician" - like "Oh, an ED doc? Listen, just between you and me, me and the missus haven't, well...so can you hook me up with some blue pills?

And ED with other health professionals

We had a nice practice of 30 OB docs. We had already utilized economy of scale to join together to help with insurance contracts and malpractice contracts. As members of a national OBGYN group we saw most large practices being bought by PE firms. We interviewed 4 and decided on 1 with 200 docs. The promise was income repair for the purchased income in 3 years.

The transaction happened on March 1st 2020. Covid was certainly an answer for a terrible first year but now entering year 3, salaries are still at 50%. The promised increase in payer contracts have not come to fruition and we are struggling.

This video while funny hits a little too close to home in my current situation.

PE doesn’t buy anyone for the people. Physician groups largest value add is its people. How do these two firms come together for partnerships? What does PE employment offer better than a large health system which is at least typically run by doctors and has built in payer contracts? Do they just claim to magically run operations leaner and save money they then pass along to you?

I’m really interested to know when the choice is PE employment, health system employment, or continue the group partnership….what is PE offering? Is it a large up front check? If that’s the case it stands to reason there’s no way salary will remain as high as it was without the large check.

Understanding this topic is really helpful for me personally and I appreciate the responses.

They have staffed most of the Emergency Depts in Richmond for decades. Well run group, very reasonable charges, have avoided all of the "surprise billing" controversy, good hospital citizenship by the partners (committees membership, donating to foundations, etc). They were told there was a mandatory health system wide safety meeting that all members of the group were required to attend (physician partners, physician employees, and PAs). They show up to the meeting at 8am, and the CEO of the health system with other senior leadership and says "Yeah, this isn't a safety meeting. This is a meeting to let you know that your contract is terminated in 90 days, and _______ will be taking over the contract."

And then a partition in the room opens, and there is a food spread, and executives from the new company are standing there saying "Hi, we've heard great things about you and would love for you to stay on with us".

The health system (Bon Secours/Mercy) had received a nice financial incentive to switch, and suddenly a 40 year old physician practice ceased to exist.

from a business end

But having sat through at least 2 of these presentations, the standard deal is this:

PE firm forms valuation of your practice based on EBITDA. They offer you a multiple of EBITDA in a lump sum and then a reduced salary with incentives for some period of time after (usually about 5 years). The enticement for the physician is that this lump sum is realized as a capital gain and therefore not subject to marginal tax rates like regular income.

The other enticement is that they will consolidate with multiple other practices to increase your valuation for a second sell to a larger PE firm, at which point you will realize another windfall.

There is really not a "Secret sauce" to making you leaner - they were fairly candid that most of the time they just increase your throughput. There are some efficiencies realized, but not a ton.

It's attractive if you are at the end of your career and looking for a nice parachute.

for privately ownned "democratic" groups, it is usually a few senior partners with a controlling interest looking to get out of patient cate or greatly reduce their clinical workload that orchestrate the sale

Alternatively, the PE-backed group approaches the hospital and offers a lot of money to put the Emergency Department contract up for bid but essentially the deal is already closed before the RFP is put out. Often, the current group is not even told that the contract is up for bid

The second situation has happened twice in our area, a few years ago Peninsula Emergency Physicians found out that their contract had been put up for bid, and won, by EMCare (Now Envision). Poof...just like that a 40 year old business ceased to exist, and the partners/owners could become employees of EMCare or go work elsewhere. Then, last fall, Richmond Emergency Physicians, the private group that staffs many of the hospitals in the Richmond area, was told they are being replaced by Vituity, with no option to rebid the contract. I told that story elsewhere in the thread

Except for the idea that reimbursement is going down. Hospitals are basically the only industry that have never experienced a year over year revenue decline in the last 50 years. But, a relatively minor nit.

Add onto the price-gouging, exploitative behavior discussed in the video massive consolidation and grossly anti-competitive behavior the limits the potential for any sort of reform. Oh, you're a large employer that wants to steer your patients toward a higher-value hospital for child birth? Well, that's cute, but if you want to have our premier flagship cancer treatment center in your network, you have to take all of our facilities, even the shitty overpriced ones, and also, your benefit plan can't encourage or discourage them from visiting any particular facility. But we will definitely make our doctors refer patients only to other facilities and docs within our system.

It's a disgusting industry.

There was this little thing called Covid that would like a word.

https://www.definitivehc.com/blog/revenue-trends-at-u.s.-hospitals

https://fred.stlouisfed.org/series/REV622ALLEST144QSA

Here's 2019:
Q1 - 292,687
Q2 - 296,186
Q3 - 298,790
Q4 - 304,222
============
1,191,885

Here's 2020:
Q1 - 290,147
Q2 - 285,193
Q3 - 312,298
Q4 - 325,705
============
1,213,343

Your other citation looks at net patient revenue. That looks at what they're able to generate from patient-based payors. It excludes charitable contributions and government grants.

I stand by my statement.

Almost verbatim. He works for a partnership of ER docs that's negotiating their next contract with the hospital they provide services to. The hospital wants to cut rates (of course) and has this partnership basically unable to take their services to another hospital. Its at the point where he and my sister are considering an out of state move from the Boston burbs.

Lots of talk about insurance reimbursement rates, transition costs of electronic records, etc; not so much about whether being a doctor is still a good path to owning a Lexus and a big house.

Essentially in order to maintain income at current levels (which again does not keep pace with inflation) most are seeing more patients, doing more procedures, and working longer hours.

I have not had an increase in 6 years. I am seeing about 20% more patients per shift for the same amount of money as I made 6 years ago. My happiness, and patient satisfaction, has suffered greatly. Despite using all the "tricks" (sitting down, making direct eye contact, asking if there are unanswered questions) we all consistently score much lower on the "I feel like the doctor spent enough time with me" and "I felt like my needs were addressed" questions

I am doing 25 percent more volume for slightly less money than 6 or 7 years ago (not accounting for inflation). We are blessed and I understand that. But I am a lot less happy and more stressed than I used to be.

Incomes can go up for a brief period as new highly reimbursing procedures and buy and bill medicines emerge, but after a few years the medicare beancounters realize that the new highly reimbursed service has been widely adopted, and the reimbursement goes substantially down.

In the long run, it is said that your first year making partner (if you are lucky enough not to have to be employed by a hospital system) is your best financially, and then although income may grow in nominal terms, it will never keep pace with inflation (even when inflation is low - forget about now).

They're not in danger of being poor, but they've largely lost autonomy and are not getting anywhere near as rich as hospital systems. When you look at the total cost of a hospital visit, physician payment is generally a very small portion of it.

There are some niche areas that have been able to consolidate into groups large enough to both stay independent from the hospital systems and have enough leverage to maintain high payments from insurers, but they're the exception rather than the rule.

...Anywhere near *as rich as hospital systems*. 'Small portion of it'.

Question is, are doctors' incomes changing? The question isn't whether consolidation is leading to concentrated profits for hospital systems.

Are doctors getting squeezed and buying a Honda instead of a Lexus? Compare it to lawyers' incomes if you want. Historically, mothers wanted their children to grow up and be a lawyer or doctor, right?


Do we want doctors in small practices with autonomy? My opinion is that I want a doctor that's part of a big system with seamless sharing of medical records, someone always on call that is part of the practice, more standardization and use of best practices instead of doctor's whim (my mom was told a few days ago that there are no anti-virals for covid and the CVS pharmacist didn't know what Test-to-Treat was). But I'm humble here, I have basically zero interaction with doctors beyond their pediatric practice for well-checks and even that is less than common because we've been overseas most of my kids' lives.

I have multiple physicians in my family and two of my boys are lawyers (large firm corporate M&A types), so I have a pretty good feel for the differences.

If you go to med school and complete a residency (and likely a fellowship) you will not be poor. You will earn anywhere from a comfortable to sizeable income. My best guess would be from $150,000 to $1,000,000. It would be a real outlier to make less or more. And it would be close to impossible to make much more than $1,000,000/yr from simply practicing medicine in any specialty.

Law is different. There is no guarantee if you get a law degree and pass the bar that you will be able to make a living practicing law. There a lot of legal jobs that pay less than $150,000/yr. So there are plenty of law school graduates that are worse off than even the lowest paid physician.

But the upper end in law is vastly different from medicine. Partners in big law can earn in the $1-4 million range routinely. There are positions in corporate law that earn in that kind of range. And of course, there is the possibility to make much much more through equity in businesses as in-house counsel.

The high end in law is much higher, and available to a much larger number, than in medicine.

Those earning in the upper ends of law, equivalent to higher paid physicians or more, have lives as demanding as docs. The hours worked and the pressure to deliver is as great, if not greater.

The complaints I hear for life in big law are very similar to the complaints I hear in medicine. The money is good, but the quality of life at work continues to degrade.

The number of lawyers accepted and churned out every year is vastly higher than the number of doctors. As such, the selectivity of the applicant pool is much higher for doctors (~15K spots in the US for <50k applications).

I suspect that if you compare the data on the top 15K lawyers in the US each year and the doctors, the competitiveness of the applicant pool would be around the same, but income would be quite skewed in favor of the lawyers.

If you compare the total law graduate pool to the total med graduate pool on a given year, I suspect that the larger bottom end who go to uncompetitive law schools (of which a med school equivalent does not exist in the US) would drag down both the income of lawyers, as well as the overall competetivenss of the applicant pool.

The reason that 150K is not assured with law school is the prevalence of lower quality law schools and a bevy of lower quality applicants. (which itself is a function of a law school being a money making proposition, whereas a med school is not - at least not nearly to the same degree - more resource intensive per student. Adding more students equals more doctor teachers in clinical years, which does not exist in law school. Just can add more students to the classroom).

I'd say the top of the field is probably orthopedic and spine/neuro surgeons, who are more realistically in the $700k range. If you own a large practice, or have significant ownership in a lucrative surgery center, or have other avenues of passive income, and are also in a highly lucrative field, sure, maybe $1M. Also, I guess, a very lucrative cash only practice like high end cosmetic surgery. But I would not say that it's in the realistic range for 90% of physicians

Only a very small number of docs could be making that much. And most would have some other income stream besides their professional service.

Are doctors less wealthy now?

Likely no, and the data supports that our incomes have competed with inflation.

https://www.mdlinx.com/physiciansense/is-it-better-to-be-a-doctor-now-than-it-was-50-years-ago/

However, there are increased pressures on overhead to maintain a private practice. Increased student loan debt (as discussed in the link), rising healthcare costs for employees (we have been seeing double digit premium increases), increased overhead to cover government mandates on reporting and EHR costs, increased staff to combat insurance company denials and prior authorizations, increased malpractice costs all trim at margins. In healthcare, I cannot simply pass on these costs to my patients, my rates are negotiated and set.

As to your "wants" - simply being an employed physician does nothing to ensure any of that. My partners and I practice evidence based medicine, are on call for our patients 24 hours a day, have direct in office access to at least 3 different healthcare systems EHRs and are intimately concerned with costs and ensuring value to our patients. Private practices and ambulatory surgery centers are some of the most efficient and cost-effective means to supply healthcare.

inflation for doctors. And even if they did, they would not be as wealthy as they were years ago, given the much larger debt load that current doctors carry.


As practices coalesce around large hospital systems, care gets more expensive, not less. Been happening since Obamacare mandated all the reporting.

1) Fragmentation of care between multiple covering doctors, no one of which has ownership over the patient's outcome results in duplication of services.
2) hospital employed physicians can bill at higher rates due to better contracts with the payors based on large amount of market share in an area increases cost, but does not increase doctor salaries or quality. Excess cost goes to the hospitals - for example, one large hospital system in Virginia has liquid funds equaling 1 year of revenue, so they would not have to go into debt even if they did not collect 1 dime over the next year. Their hospital employed physicians in my specialty do not make as much as I do, but their patients' care costs almost twice as much per visit.
3) hospitals mandating primary doctor referrals to other hospital providers who are also high cost. Technically illegal to mandate, but they are give bonusus based on percentage of patients they keep within the system.

And the structures around how income can be generated is also changing. To answer your question of whether being a doctor is a great way to go get rich? I wouldn't make that bet now, given the declining leverage and negotiating power most docs have compared to the past. Regardless of what has happened so far, the trends are such that -- if they continue -- relative compensation for docs compared to other professions will decline.

My discussion of autonomy and the like was also about quality of life, which I thought might be relevant to your question, which I sort of read as "is this a good profession to go into?"

In terms of your last paragraph, I'd prefer that there be less top-down deciding about what "we" want, and allowing individuals to make that choice for themselves, when also faced with the relative costs of those decisions. Some people will want an experience more like an independent practice with relationship building and the like. Others will want the efficiency and corporatization and facelessness that comes with it being a big business. I think there should be room for both models, and it should be driven by consumer preference rather than political or expert choice about what "we" want.

We do so much uncompensated work (prior authorization, multidisciplinary rounds, pressure to join committees, multiple family member updates, etc) and the work we are compensated for is so time consuming (charting) that a regular day for most physicians balloons to 12 hours a day that people get burned out. Doctors have railed for years about this and no matter what we do it just gets worse.

What I have noticed, and been a part of, is a growing movement by most doctors to simply side step this by going part time. Even though I’m a hospitalist (and do 7 12 hour days on, 7 days off) I along with most of the older members works part time. I’m a .9 which means I get 3 more weeks off a year, currently our hospital provides full benefits down to .75, and I plan to drop to that level in a few years. The issue is as more people do this scheduling becomes more onerous, and I suspect eventually there will be push back, but for now that’s the pressure release. It’s not just my field, I know clinic docs do the same. Time is increasingly becoming the most valued commodity for doctors.

I now work in the SNF after 12 years as a hospitalist.

The majority of our providers in the SNF group fall into 3 categories. About 33% completed geriatric fellowship. About 50% are former hospitalists. The remainder are former clinic providers.

The 12 hour days, the after hours, giving up 50% of weekends and holidays, and the overnights pushed me out of the hospital.

The years as a hospitalist still prove invaluable in providing care, in my opinion.

Thank god there’s people who are willing to take more money to work them. It’s a huge stress off me.

You are certainly correct about the increasing volume of mandated uncompensated work. But it is also what occurs during those hours of work that has changed dramatically.

Most physicians are paid on some variation of an RVU formula, and in some cases a base fixed salary or hourly fee. There has been little change in the reimbursement for those RVUs over the past 30+ years in dollar amounts, so inflation has significantly eroded the pay docs receive for a unit of service. In organized radiology we consider it a significant win when we can hold annual Medicare decreases to estimated overall reimbursement to 1-2%, not accounting for inflation. And of course, those decreases along with inflation are compounded year after year.

But the biggest change I’ve seen since I started practice in 1983 is the sheer volume and pace of work. That increase has allowed some specialties to maintain, or even increase, their annual income. But others specialties have not been able to sufficiently increase the volume and have seen an effective decline in compensation. The idea of having a break for lunch, even 20-30 minutes, is a thing of the past. Having time to sit and chat with colleagues or discuss a case in depth with a referring physician is long gone. Every physician I know feels that they are on a fast spinning hamster wheel and are behind the moment they walk in the door in the morning.

As just a rough guess, I think the number of cases that I interpreted each year doubled from when I started until I retired. And the volume of images and complexity of interpretation increased vastly more. What was a flat and upright abdomen with a PA chest x-ray with 3 images has become a CT scan of the chest-abdomen-pelvis with 200 to 1000 images. The reimbursement is probably 3 times what I got for the plain films. There is no comparison in the degree of difficulty involved.

The intensity of the work, the pace, and the overall volume reached a point that I know I could not do anything more. Were I to work another 10 years I know my effective income would decrease as I simply could not generate any more RVUs and the effective reimbursement per RVU will continue to diminish.

Government, Society, Insurance Companies all started treating Physicians as business people, and the delivery of care as a commodity.

Doctors get paid too much! Hospitals make too much money!

There was only one way for Physicians to respond. Treat medical care like you do Wal-Mart and we will begin to act like a business.

We're one of the remaining independent groups left in IN. We're a bit behind other states in that it's only been the past few years we're seeing CMG creep into the state, but mostly in NWI, Fort Wayne, Lafayette, and more rural hospitals. The biggest domino to fall of late is Vituity taking the Ascension St. Vincent EDs for the entire state.

We partner with in a MSA with a management group out of TX that has helped us keep overhead low, profitability high, renegotiated insurance contracts and weathered the storms of COVID volumes. Their goal is to keep groups like ours independent and strong. Fingers crossed that we will - we have focused on metrics, pt sat, LOS, & utilization rates for a long time, and we have a team that has built great C-suite relationships, which are critical to keeping our contracts.

in Wisconsin with more than 20 physicians each.

Now, there is 1 truly private radiology group in WI with more than 20 physicians.

You drop in one PE group and it's like a bomb goes off--everyone scrambles to choose a team.

Combination of hospital consolidation driving group consolidation, fear of losing out, belief that you can't compete with huge corporations, continued increased regulatory burdens, and decreased reimbursement. Add in hospital systems taking over groups and academic medical centers owning "community groups" to siphon off money for their academic practices.

As has been discussed on the board recently--private practice is evaporating. It may not want to go on the cart and it may feel happy, but it's getting clubbed over the head.

He nails it…as he always does.

“This is the future of medicine. A handful of ultra rich individuals exploiting the altruistic tendencies of healthcare professionals in order to extract an ungodly amount of wealth from the most vulnerable members of society.”

If you work in medicine his stuff is just pure gold. Also, interesting fact, he suffered cardiac arrest and his wife knowing CPR is what saved his life.