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Private equity, burnout, decreasing revenue affect private practice

MAUI, HAWAII — In a discussion hosted by the Women’s Dermatologic Society, panelists aligned with private equity-backed groups focused on whether independent dermatology practices can survive given the impact of private equity, burnout and diminishing revenue.

The dermatologists on the panel also discussed strategies to overcoming these hurdles, or at least another way of looking at them.

Private equity firms

Dermatology practices are often approached by private equity firms that have good intentions, such as helping with the more mundane, nonmedical tasks, according to Chris Kane, CEO of West Dermatology, a physician practice management company operating dermatology clinics in Arizona, California and Nevada. However, he expressed concern that private equity firms will often bring their own agenda whose focus is not necessarily on the well-being of patients.

“The private equity companies typically have a focus on financial performance that is typically new and different from those providers, even for those that run their practices very professionally,” Kane said.

Mitchel Goldman, MD, medical director, West Dermatology, said he was also previously wary of equity firms for a similar reason. But as he got closer to retirement age, those feelings changed.

“I never thought of joining a big group because I love being the benevolent dictator and basically calling the shots and doing everything that you think is best,” he said. “But after [practicing for] 30 years and having two incredible grandchildren, I found myself wondering, ‘where is my out?’”

Goldman was worried about losing autonomy by joining a private equity firm, but after researching his options, it came down to “a feeling” about the group’s leadership and his ability to make a difference within the practice. Based on this feeling, he joined West Dermatology. He encouraged other dermatologists that are considering professionally aligning themselves with a private equity firm to weigh the pros and cons of each firm before making a decision.

Business alignments allow many dermatologists to get back to being medical practitioners, instead of becoming business managers, added Betsy Wernli, MD, FAAD, of Forefront Dermatology.

“By partnering together, you leverage group resources and go back to being doctors. We have a management team that's helping us do the things we don't want to do, and we have full autonomy in our clinic,” she said.

Mark Kaufmann, MD, chief medical officer of The Dermatology Group, provided a way that dermatologists can restore the control they may feel they lost when a private equity firm became involved in their practice.

“We have a clinical advisory committee that only has physicians as members,” he said. “This group makes all the decisions.”

Dermatologist burnout

“The biggest threat to all of us, whether you're in solo practice, the hospital system, academics or a large group is the changes to our electronic medical record,” Wernli noted. “All of these restrictions that take us away from the ultimate job of providing the best care for the patient. We’re seeing record-high burnout for dermatologists right now.”

Dermatologists, like most other medical professionals, spend the majority of their time in front of a computer rather than a patient, agreed Goldman.

Wernli said to combat that negative attitude, all her company employees meet for a biannual retreat to “have fun.” She offered another way that dermatologists can combat burnout that may be particularly helpful to those further along in their careers.

“Figure out what your new professional summit or goal is, and how you are going to reach it,” Wernli said. “Some will find that they want to expand their cosmetic practices or maybe some want to learn new surgical skills. Once they had these new summits, they started climbing them and job satisfaction doubled. That's a missing piece of the puzzle.”

Kaufmann provided one more way to overcome burnout that can be applied to everyone in the dermatologist’s office.

“The key to avoiding burnout is to work at the top of your license,” he said. “If you are doing what you were trained to do at the highest level, you're not going to burn out.”

Declining revenue

According to Maui Derm program chair George Martin, MD, during a recent 20-year period, Medicare, Medicaid and TRICARE provided the entire medical community a 0.4% pay increase annually, or less than a 10% raise in a 20-year period.

“We are having to make more money in less time to stay where we are,” Martin said.

“We are pitted against insurance companies. We've had to find alternative sources of income.”

Goldman said the solution might come from teaming up with other dermatologists to designate one person in charge of billing.

“That's the whole point of joining forces,” he said. “Instead of having everyone trying to negotiate with insurance companies, there's one central person at my practice that does it for 168 providers.”

Wernli offered another solution: ask medical societies to push lawmakers to make changes. “Give money to [such organizations] and get them to lobby for change,” she said. - by Janel Miller

Reference: Women’s Dermatology Society reception. Presented at: Maui Derm for Dermatologists; Jan. 25-29, 2020; Maui, Hawaii.

Disclosures: Goldman reports he sold his practice to West Dermatology and is now medical director of the group. Kane is CEO of West Dermatology. Kaufmann reports his practice was acquired by The Dermatology Group and is now chief medical officer of the group. Wernli is president of Forefront Dermatology.

Editor’s Note: This article was updated on Jan. 30, 2020, with additional disclosure information.