Community influences decision to stay autonomous
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To understand our position against joining a private equity-backed platform at this time, we must start with the basics — and that means considering our local situation.
We are a six-physician, single-specialty gastroenterology practice with providers of an average age of 42 years. We work in a small urban and semi-rural market with a cohesive community of independent physicians and a cooperative relationship with the dominant hospital system. The average time horizon for our partners is more than 20 years. Although we have many of the same concerns as most other independent medical practices — consolidation of payers and health systems, recruiting and succession planning, CMS pay stagnation or regression in the face of operating expense inflation — we do not think joining a platform currently serves us.
After hearing why some of our colleagues went with private equity, we considered how each of their reasons apply to our practice. Those reasons included succession planning, maintaining market position, ancillary service development, fixing dysfunctional management, addressing challenges with recruiting, needing IT infrastructure/data systems and additional expert management, achieving “economies of scale,” gaining negotiation leverage, or even just professional dissatisfaction or pessimism about the future. Each of these rationales is a story of its own, but our practice did not see how private equity funds could solve those issues better than we could ourselves.
We tried to consider the intangibles, such as the value of autonomy, physician engagement and leadership, flexibility and adaptability to future conditions, and our ability to control our practice culture and quality of life. With an uncertain future, we believe each of these factors favors remaining autonomous.
One of the main reasons my friends have sold to private equity seems to be pessimism about the future. In other words, psychosocial factors — like fear or risk avoidance. But cashing out does not make sense when we plan to practice in this community for many years to come. It is a social contract and a two-way arrangement that requires faith. We still believe that if we meet the needs of our community with ethical and excellent care, the community will take care of us.
I am pretty sure there will come many challenges, such as the pandemic, when we will be glad we own our practice and have control over the decisions we make. Right now, all of us remain willing to take the risks necessary to stay independent.
- For more information:
- Louis J. Wilson, MD, FACG, managing partner at Wichita Falls Gastroenterology Associates in Wichita Falls, Texas.
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