An Alternate Take on Private Equity in Anesthesia

Originally published by our sister publication Anesthesiology News

I am always surprised when I see the debate on whether private equity (PE) belongs in healthcare as if it is a simple yes or no proposition, in other words an either-or logic fallacy. As a partner in an anesthesiology practice that has superb clinical quality, top-tier patient satisfaction and highly engaged clinicians—and yes, also some PE support—I cannot help but think there are far more nuanced questions we should be asking about practice governance.

I cannot speak for how all PE firms operate. In fact, no one can. Trying to sum up every PE investment in a physician practice with one overarching statement is like trying to say that every mode of transportation is the same because it has wheels. I can only speak about my experience, and it is likely quite different than another physician’s experience, which, in turn, would be very different from another’s.

As a physician who has been practicing since 2005, I have worked within many different models of healthcare systems, including several different private practice groups, Army active duty and healthcare for veterans.

I have been a partner in my current practice for 14 years, and, like all private practices, we have faced many unique challenges along the way in trying to maintain our independence. We struggled with the administrative burdens of increasing regulation, revenue cycle management, cybersecurity threats, technology upgrades, quality reporting, credentialing—I could go on. I would add that quality care is not only fundamental, but we also need to be able to show that quality to hospital administration in a clear, concise and objective way.

I would argue that it is not whether you have an outside capital partner that is important, but rather, how their investment affects practice management. The key question a physician should ask is not, “Will an external party provide funding for my practice?” Rather, the question should be, “Before I join any group practice—whether for-profit, nonprofit, academic and so on—how exactly are the clinical decisions made and who makes them?”

My practice joined U.S. Anesthesia Partners in 2017, and one of the key drivers behind that decision relates to how the organization is structured. Specifically, each practice remains locally governed, and each clinical governance board is made up of local physician owners, like me, who make the key decisions about clinical protocols, recruitment, staffing, compensation, scheduling, hospital and payor contracting, supervision ratios—everything. Because these governance boards operate locally, what one board decides in Florida for their practice may be different than what another decides in Washington. Not once has our group been told how to practice medicine, nor whom we should or should not hire, nor has anyone mandated what our local compensation structure should be.

Additionally, belonging to a larger organization has given my practice access to financial support that we wouldn’t have had otherwise. For example, while many anesthesiology practices suffered greatly during the COVID-19 pandemic, we managed our practice with minimal financial impact. When the Change Healthcare cybersecurity event crippled many practices last year, the investments we received for information technology systems and experienced professionals allowed us to recover quickly and mitigate the financial impact. There have also been investments in data analytic tools to streamline capture of billing data, quality metrics, optimize OR efficiency and anesthesia staffing.

To be clear, I am not making a case for what an individual physician or practice should decide is the best course for their future. Rather, I am advocating that we not make sweeping generalizations when weighing our options. Yes, my organization has survived challenging times that other practices have not been able to navigate. And while there have been many ingredients in our sustainability, our ability to access needed capital while also maintaining our physician-led model has served our patients, our practice, and our healthcare partners well.

Morgan reported no relevant financial disclosures.