The choice between autonomy, true partnership—or the slow drift to ‘thralldom‘

Bhagwan Satiani

Anthony Valdés, MBA, the president of Tampa, Florida-based Collaborative Health Systems, declares that what physicians want is to “deliver great clinical outcomes, get paid fairly for that care, and stay independent.” It is becoming clearer with every passing year that, while we do, for the most part, deliver great clinical outcomes, and many physicians do not think we get paid fairly for providing that care, the hopes of remaining independent appear to be fading for many of us surgeons. And by physician independence, I am assuming that implies autonomy to make decisions in all things related to the practice of medicine.

Over time, some of us may feel we are facing up to a state of what might be called thralldom—or held in a kind of bondage-type relationship—and we are, thus, looking for other options. In general, other than to retire early, the conventional choices left to us are perhaps to remain independent within a specialty or multispecialty group; accept employment in an academic, private or government health system; choose another career; or seek out novel ways to remain in practice.

Novel options may include to stay in practice but consider non-traditional or even provocative paths. While office-based labs (OBLs) and ambulatory surgery centers (ASCs) are now mainstream, new actors are in play.

Putting the traditional deep-pocket potentates to one side, some colleagues have taken up employment with device makers, pharmaceutical companies, and even Wall Street outfits. The job may start part-time, but, if both parties are satisfied, the physician acquires some relevant new knowledge or a business degree, and then segues to an executive role that comes fully equipped with stock options. And now there are even newer, more powerful capitalist players with deeper pockets still. Amazon, with a current market cap exceeding $1.7 trillion, is launching Amazon Care for its employees in all 50 U.S. states, hiring 3,000 new corporate types and offering virtual care just as a start. Not so long ago, the mega insurer UnitedHealth Group, which already has 30,000 employed or affiliated physicians (Optum), completed a $4.9-billion acquisition of DaVita Medical Group, which employs 13,000 physicians. It is now well on the way to becoming the largest single employer of physicians.

Probably the biggest earthquake was the entrance of private equity players. These outfits can be lucrative sources of funding whose methods involve investing institutional capital in order to purchase operating entities, as in physician practices. Our recent review of the pros, cons and risks of being part of a private equity structure is concerning.1 COVID-19 has had a deleterious effect on the number of deals in North America, with buyout volume and value both dropping in 2020, the latter by 25% to $34.7 billion from 2019. Although it is still early, employment with private equity-owned practices is the newest but untested kid on the block. Provider (oh how I abhor that term!) deals were the most frequent, falling to 52% of all deals—the relevant figure was 60% in 2019.

Growth has occurred in other sectors of healthcare: information technology, telehealth support, payors, medical technology companies, biopharma and life sciences in general, and next-generation models of care like home care. What does strike as particularly surprising is that, in the provider area, surgical-type practices are represented in the majority (>50%). Granted, most could be classed as either ophthalmology, ear nose and throat (ENT), or dermatology, but specialty surgery practices may not be far behind. So why are private equity outfits attractive to physicians? For doctors who are either looking for an exit or not risk averse, there is an opportunity to be a participant in the private equity companies’ playbook. This means bringing in new management, creating efficiencies, offering and delivering more services, negotiating with payors for higher reimbursement, and micromanaging finances with the aim of selling the practice. This, of course, results in a share of the hefty profit yield a few years down the line. Although the

number of practices owned by private equity players is unknown, the Medicare Payment Advisory Commission (MedPAC) estimates these entities bought at least 2% between 2013 and 2016, after which acquisitions picked up. Paul Ginsburg, MedPAC vice-chairman, recently noted: “Private equity is more aggressive. The loopholes in our payment systems will be exploited more rapidly.” Federal and state prosecutors are now investigating private equity companies over excessive loans from the Small Business Administration’s COVID-19 Paycheck Protection Program.

Another new term we may become familiar with is the special purpose acquisition company (SPAC). This is another option for private equity-owned medical groups looking to exit arrangements after three-to-seven years as an alternative to an initial public offering (IPO). SPACs avoid the labor-intensive IPO process by allowing a shell corporation to take the company public. The existential question for doctors is this: How do we take control of our own destiny? Or has the horse bolted from the barn already? Are we now on the road to what Friedrich Hayek called the road to serfdom? A lot depends on how the current generation of physicians sees the security of employment in exchange for the freedom of owning their own practices. While we deal with conflicts of interest regularly, the pressure to produce is a step up from work relative value unit (wRVU)-based compensation models and may be a leap too far. Are we ready for the intense probes that will surely follow? Will we be just about anyone’s chauffer? At this juncture, I would recommend reading Carl Hauser’s thought-provoking presidential address at the Western Trauma Association.2


  1. Satiani B., Zigrang T.A., Bailey-Wheaton J.L. Should surgeons consider partnering with private equity investors? The American Journal of Surgery. 2020 Dec 19; S0002- 9610(20)30806-0. doi: 10.1016/j.amjsurg.2020.12.028.
  2. Hauser C. Ownership. J Trauma Acute Care Surg. 2017. Volume 83, Number 5

Bhangwan Satiani, MD, is professor emeritus in the division of vascular diseases and surgery in the College of Medicine at The Ohio State University, Columbus, Ohio. He is an associate medical editor of Vascular Specialist.


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