Wednesday, September 18, 2019

When A Health Center Takes Over A Practice

Large health centers, often based on an academic hospital, are amassing practices as owned or affiliated entities. Such vertical integration solidifies their businesses, makes them even more formidable as political actors, makes them less vulnerable to competition from other medical centers who would enjoy the referrals that are now guaranteed to them, and makes them even more formidable when negotiating with insurance companies. In a business sense, this is a savvy thing for them to do with all the money they have accumulated from their profits. 

As the practices are wooed by the medical center, the pressures on them to succumb to the wooing are telling – join or be frozen out, join or we will make offers to your practice members that they can't refuse, join or else.  A very talented friend of mine found himself in a situation where he couldn't help but join such an expansionary system. If I were head of the system that acquired his practice, I would very soon promote him to a position of great responsibility within the system – he is very smart, capable, experienced, knowledgeable, and management-savvy. The acquiring medical systems, of course, are usually very short on some of these very characteristics, but I imagine that they think that since they are in control, they do know what they are doing. But, as he writes below, that's not what happened.

My own experience in selling my practice to Stanford was more favorable than my friend's – I think they have done a decent job in putting a network together, although their excellence in science is not matched by their excellence in administration. Nonetheless, seven years after the Stanford takeover, Bayside offices and practitioners seem to be doing OK, so I'm grateful. On the other hand, this short note from my friend in another city serves as a cautionary tale for other docs, policy makers, and the nation as a whole, for what can happen in less favorable hands.  Although, it should be noted, the price rises after the Stanford takeover were in the same ballpark as my friend's experience.

Beware of the large monopolistic centers, the monopolists, the bureaucracies, the rent extractors, the corporate capitalists!

Here is his letter (slightly shortened and made anonymous) to me:

Hi, Budd:

I wanted to take this opportunity to fill you in on my experience with (Large Academic Medical Center X) this year. As you remember, my group suffered greatly as a result of ACA. Our area saw lots of narrow network changes at the same time ACA was implemented, and we lost a meaningful number of patients ( ~40%) as a result. Newborn visits in the nursery for me fell from ~300/year to < 20.

We shopped around several of the larger hospital systems, and ultimately ended up joining X Center. This has not gone well, the result of which has been legal action. Our complaint alleges that X offered to pay our malpractice tails, and then reneged: offered to pay to store our paper charts, and then reneged;  offered to pay us a "transition fee" equal to 1/3 of our annual salary for 3 consecutive years to "transition" our patients to the new practice, and then made this transition fee into a bonus that was conditional on performance on metrics over which we had little or no control; discarded personal belongings; overbooked time scheduled to see patients, and a variety of other things.

In addition to issues surrounding our agreement, there have been multiple issues surrounding administrative and clinical services. Administratively, X's charges are - in my view - breathtaking.  Here's part of our price list:

99212    188
99213    406
99214    570
99215    640
99392    459
99393    390
99394    455
99395    490
Prevnar       600
Hepatis B    254
Gardasil      455
90460         113 

Largely due to the fact many of our families have high deductible plans, and due to the increase in charges (we got on average $72 for a 99213, for example), more people are leaving than are coming back, which had been the hope (X has access to the narrow network patients we had lost).

Staffing is done predominantly by "rotators," individuals who spend days to weeks to months at a certain office, and then are rotated somewhere else. Can't tell why some people stay one or two days and others spend a few weeks. Only about 1/2 of the staff is "permanent." MA's weigh and measure patients, and give injections, but are not allowed to either draw up injections or take a history.

The result has been a serious collection of clinical mistakes. We have had more incorrect vaccine administrations in one month than we had (on paper) in 20 years. The MDs do not act as the MA's supervisors, and the MAs are not responsible to them, which has resulted in some clinically meaningful episodes of insubordination. The MAs are union, so there is nothing anyone can do. We have had episodes where bilirubin samples on newborns were left in the office and not processed and sent to the stat lab (or any lab) for processing. This has happened on multiple occasions. On other occasions, MAs have refused to administer albuterol neb treatments to toddlers with sats in the 80s.

In sum, the last 9 months have been the worst of my career. Every day is a guarantee of chaos and oversight. Charting (Epic) requires hours after dinner every night. 

I'm done.

We are presently towards the tail end of things, and I expect to be offered settlement documents within a week. In the end, two of the three partners in the group pursued legal action, and they stonewalled us right up until we were going to file (which we still may). More likely though, they will settle and show us the door.


Your Friend


  1. A comment from a colleague who is head of a very successful network:

    Great description of what many of my non-Allied colleagues have gone through. Hopefully you'll help prevent many others avoid a similar fate.

    In our area, physicians are suffering similar experiences at the hands of a large multispeciality group that is now owned by Optum. A terrible sight to see.

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