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The Keckley Report

For Physicians, Four Reasons the Post-Pandemic is an Opportunity

By August 31, 2021March 1st, 2023No Comments

The landscape for physicians was changing before the pandemic. It’s likely to change even more with some gaining advantage. Here’s why:

1. The Replacement of Fee-for-Service Payments to Physicians and Hospitals with Value-Based Alternative Payment Models has been Slow

Less than 25% of payments to physicians is based on “performance” aside from productivity (volume) and only a small fraction is at risk. “Accountable care” has been marginally effective in slowing health costs: economists and policymakers are rethinking their approaches and physicians are evaluating all their options. What’s clear is that physicians influence the majority of spending decisions in healthcare: what’s not clear is how to equip physicians to play that role more effectively to achieve optimal outcomes, access and lower costs. Fewer, simpler and mandatory participation in alternative payment models is expected from the Center for Medicare and Medicaid Innovation (CMMI) but no one knows for sure. What’s known by physicians is that the practice of medicine is getting more complicated. Some see that as the opportunity.

2. Hospitals, who Now Employ 49.3% of Physicians, Face Growing Pressure from Large Employers, Private Insurers and Medicare to Lower their Costs and Disclose their Prices more Effectively

The new Hospital price transparency rule prompted pushback legitimate by hospitals, but little patience from payers and regulators. Over the next decade, inpatient hospital revenue will be 35% lower and bed demand -44%. Complicating matters, consolidation in their ranks faces tougher scrutiny by the FTC and DOJ: Friday’s court decision in the lawsuit against Sutter, pending litigation against HCA for its acquisition of Mission Health (Asheville) and deals pending in at least 60 markets stoke physician fear they’re pawns on the hospital chess board. All physicians think hospitals overspend on administration and 41% do not feel they’re fairly compensated. As pressures from payers and regulators increase, employed physician angst mounts. The pandemic is the latest chapter.

3. Private Equity investors- and Others- are Capitalizing on Disaffection and Physician Concerns about their Financial Security

Private equity funds have $1.8 trillion to invest: physicians are an attractive target. In the last two years, more than 300 practices have been acquired in deals wherein physician income is tied to increased revenues by the ‘new’ organization and lower administrative hassles via professional management. Today, 20% of physicians work for a corporate entity (private equity/investor-owned insurer) that operates in multiple markets with enviable access to capital in the friendly monetary-policy environment. Most operate regionally and seek to build brand recognition with consumers and payers. And all offer physicians an alternative to hospital employment. Many physicians believe private equity’s primary concern for its shareholders can be appropriately aligned with their concerns for clinical autonomy, financial security and patient adulation.

For example, consider PPM deals (and offshoots) announced just in the last month:

  • Heritage Group’s $20M growth equity investment in Equum Medical- an acute care Telehealth provider with one of the largest panels of critical care physicians.

  • Centre Partners- backed Vision Institute’s continued expansion with its most recent add on acquisition of Northeastern Eye Institute, bringing the group’s footprint to 50 practice locations and 9 surgery centers over Maryland, Washington D.C., Virginia, and Pennsylvania.

  • The secondary sale of MDVIP- a personalized primary care, membership-based platform serving roughly 360K patients with a network of 1100 physicians- to coinvestors Charlesbank and Goldman Sachs.

  • Ontario Teacher’s majority stake purchase of Acorn Health- a leading provider of Applied Behavior Analysis (ABA) therapy for those suffering with Autism- from MBF Healthcare Partners. Acorn operates in 7 states, has 51 clinics and provides both on-site and in-home services.

As you can imagine, each one of these deals is just a glimpse into what PE and various funds are doing to not only integrate an otherwise fragmented healthcare system, but also to make healthy returns. There is inevitably a technology platform they are targeting (or already own)- whether it’s administrative, clinical, or both- that should merry nicely with the provider network, in theory. Whether or not that is achievable- especially across recent deals and within the context of an industry undergoing significant consolidation- remains to be seen, but that’s the opportunity.

4. Consumers (Patients) are Receptive to New Models of Medical Care and Large Employers Welcome Alternatives

A whole-person care clinical orientation, 7-24 digital access, on-site primary and preventive health clinics, extended hours and narrow networks of specialists and hospitals are alternatives embraced in the working-age population. Physicians looking forward see post-pandemic services to consumers that extend well-beyond office visits, tests and pills. For many, that’s the opportunity.


These are unprecedented times for physicians. Many are despondent; some are optimistic.

Physicians who are organized to accept fully delegated clinical and financial risk, oriented to technology-enabled self-care, operated as teams to optimize outcomes and user experiences and serious about affordability and transparency for their patients and customers will emerge from the pandemic successfully. But it’s not utopia.

Physicians in these organizations face enormous challenges: staying abreast of emergent technologies, optimizing the effectiveness of their workforces, achieving scale and expanding services, securing capital efficiently, integrating clinical and financial data real-time and replacing cultures focused on “ME” with “WE” are required.

It’s the opportunity for physicians emerging from the pandemic.


P.S. Today in San Jose, jury selection begins in the federal government’s case against Elizabeth Holmes, 37, the founder and CEO of defunct blood testing enterprise Theranos. The suit charges Holmes and her former COO Ramesh “Sunny” Balwani with two counts of conspiring to commit wire fraud and 10 counts of federal wire fraud in defrauding investors.

The Theranos story has been widely reported: the saga of the Stanford dropout’s journey to fame and legal misfortune based on a novel approach to blood testing. Between 2010 and 2015, the company raised $700 million from investors including Partners Investments, Fortress Investments and others, created an all-star celeb board that included notables like two former Secretaries of State (George Shultz, Henry Kissinger) and former Senate Majority Leader and transplant Surgeon Bill Frist and secured strategic partnerships with Safeway, Walgreens, Cleveland Clinic and other equally brand-conscious organizations. Holmes became a celebrity running the 800-employee company out of Palo Alto while amassing net worth estimated at $4 billion at the height of the private company’s valuation in 2014. Then it crashed when inside whistleblowers alerted journalists and regulators to the company’s success of its technology and associated finances.

Holmes and Balwani have pled not guilty, and each could face up to 20 years in prison and a fine of $250,000, plus restitution for each count of wire fraud and each conspiracy count. The Balwani trial is set for next year; Holmes’ trial will likely continue for months starting tomorrow. And unflattering media attention will again be given to the industry’s dirty linen.



“PAI-Avalere Health Report on Trends in Physician Employment and Acquisitions of Medical Practices in 2019-2020”; Physician Advocacy Institute

“International Physician Compensation Report”; Medscape

“3 surprising trends in seniors’ telemedicine use during the pandemic” Health Cost Analytics Institute August 30, 2021; STAT News

“Connected Healthcare: What Consumers Want from their Healthcare Customers Experiences”; a collaboration between PYMNTS and Rectangle; July 2021; PYMNTS


Polling: 61% of Unvaccinated Unlikely to Get Vaccination after Pfizer Approval, Employer Mandate will Encourage Vaccination

According to the latest Morning Consult poll:

  • 61% of unvaccinated U.S. adults said they’re still unlikely to receive a COVID-19 shot in the next month vs. 29% who say they’re likely to get inoculated in the next month given FDA’s full approval of the Pfizer shot.

  • 84% of vaccinated adults say they’d be comfortable getting a booster shot of an FDA-approved vaccine this fall.

  • 7 in 10 unvaccinated adults cite concern over side effects as a reason that influenced their decision to not get the shot.

“Despite Full Approval of Pfizer’s COVID-19 Shot, 3 in 5 Vaccine Holdouts Say They’re Unlikely to Get Vaccinated” August 30, 2021; Morning Consult

Axios/Ipsos Parent Survey:

  • 31% said FDA approval would not make them likely to take the vaccine—down from 44% in early August.

  • 43% said their boss requiring vaccinations would make them likely to do so, up from 33% a month ago.

Axios-Ipsos poll: “Vaccine hesitancy may be crumbling” Polling August 27-30, 2021; Axios

CDC: Unvaccinated 29 Times More Likely to be Hospitalized if they Test Positive for Covid 19

According to a new report last Tuesday by the Centers for Disease Control and Prevention (CDC):

  • Unvaccinated people are 29 times more likely to be hospitalized with Covid-19 than those who are fully vaccinated.

  • Unvaccinated people were nearly 5 times more likely to be infected with Covid than vaccinated people.

  • As of last Monday, more than 201 million Americans, or 60.8% of the total U.S. population, have had at least one Covid shot. More than 171 million Americans, or 51.5% of the total U.S. population, are fully vaccinated.

US Centers for Disease Control and Prevention

Pfizer Vaccine Gets Final Approval by FDA

Last week, Pfizer-BioNTech was granted full approval of its vaccine for use by those 16 and over while allowed under the EUA for those 12 to 15. Pfizer is now free to market the vaccine, under the brand name Comirnaty

“FDA approves first COVID-19 Vaccine”; August 23, 2021; FDA

Study: ICU Capacity Stress

The KHN research team analyzed Intensive Care Unit bed capacity and physicians per 1,000 people as of August 23, 2021. Findings:

  • Over 77% of ICU beds across the country are currently being used.

  • Nearly 25% of hospitals are dealing with critical staffing shortages.

  • More than 90% of ICU beds in five southern states are being used.

  • Nationwide, there are an average of 2.96 physicians and .32 ICU beds per 1,000 people.

“Over 100,000 Covid Patients Hospitalized; 77% Of ICU Beds Full”; August 26, 2021; KHN


Study: PE Acquisition of Surgical Activity Increasing

Researchers analyzed the acquisition and funding of surgical practices and facilities by PE firms in the US from January 1, 2000, to October 30, 2020. Findings:

  • A total of 193 investments were made by 101 PE firms to acquire or fund surgical practices and facilities. Of these investments, 100 (52%) involved operative facilities including ambulatory surgery centers and 93 (48%) involved surgical services including physician practices.

  • The number of investments to acquire and fund practices by PE firms increased each year, from 4 in 2000 to 19 in 2019.

  • Overall, most practices and facilities acquired and funded by PE firms (88 [46%]) were in the South; however, after 2016, the number of practices and facilities acquired and funded by PE firms was similar among the census regions.

Billig et al “Trends in Funding and Acquisition of Surgical Practices by Private Equity Firms in the US From 2000 to 2020”; August 25, 2021; JAMA Surgery

Study: Half of Not-for-Profit Hospitals Compliant with ACA Community Needs Assessment Requirement

The Patient Protection and Affordable Care Act (ACA) mandates that all nonprofit hospitals (1) conduct a triennial community health needs assessment (CHNA) and adopt an implementation strategy. This cross-sectional study by Yale researchers examined compliance in a cross section of 500 US nonprofit hospitals. Findings:

  • Among the 500 hospitals in the sample, 495 (99.0%) reported on their Internal Revenue Service 990 form that they had conducted a CHNA, and 412 (84.0%) of these CHNAs were identified online.

  • 229 (60.0%) had both a CHNA and corresponding implementation strategy that could be found online.

Lopez et al “US Nonprofit Hospitals’ Community Health Needs Assessments and Implementation Strategies in the Era of the Patient Protection and Affordable Care Act”; August 24, 2021; JAMA Network

Study: Nonprofit Hospitals Invest for Returns, Not Mission

KHN analyzed IRS filings for 2019 for 1632 non-profit operators that own/control 2568 hospitals. Key finding:

In 2019, 93% of more than $283 billion in investments by nonprofit hospital organizations was made in publicly traded securities or other financial vehicles, such as hedge funds or private equity. The nonprofits categorized 7% (19 billion) of their investments as devoted to their core mission.

“Mission and Money Clash in Nonprofit Hospitals’ Venture Capital Ambitions”; August 24, 2021; KHN

Study: Hospital Lawsuits Decrease After Media Exposure

In this cross-sectional analysis of 50,387 lawsuits filed by 67 Virginia hospitals, Virginia hospitals filed 59% fewer lawsuits in the year after a research article and subsequent media coverage exposed the practice compared with the year before publication. Overall, 11 hospitals banned the practice altogether.

Giuseppe et al “Trends in Hospital Lawsuits Filed Against Patients for Unpaid Bills Following Published Research About This Activity”; August 23, 2021; JAMA Network


USPTF Lowers Age for Type 2 Diabetes Screening

Last Tuesday the US Preventive Services Task Force (USPSTF) recommended that routine screening for type 2 diabetes should begin at age 35 instead of 40 for all overweight or obese adults. The new recommendation lowered the screening age by five years, drawing on research showing that the incidence of diabetes rises sharply beginning at age 35, and evidence showing that early intervention can prevent serious complications.

U.S. Preventive Services Task Force

Study: 18 million Children Underinsured, 6.3 million Uninsured

In this cross-sectional study, researchers examined trends in coverage among children younger than 18 years. Findings:

  • The number of children uninsured for all or part of the year rose from 5.9 million (8.3%) in 2016 to 6.3 million (8.8%) in 2019. Over that period, the number of underinsured children rose from 16.2 million (22.8%) to 18.1 million (25.4%).

  • Of children in Medicaid expansion states, 30.9% were inadequately insured vs 35.3% in nonexpansion states.

  • Among insured children, inadequate insurance was more common when insurance was private vs public (34.8% vs 17.5%). Rates of inadequate insurance were higher among children with medical problems.

Gaffney et al, “Medical Uninsurance and Underinsurance Among US Children: Findings From the National Survey of Children’s Health, 2016-2019”; August 23, 2021; JAMA Pediatrics

Study: Homebound Population has Doubled in Past Decade

The researchers used data from the National Health and Aging Trends Study, which includes information on the homebound status, household, health and digital access of 10,785 older adults from 2011 to 2020. Findings:

  • The share of the population that rarely or never leaves their homes rose held steady at about 5% from 2011 to 2019 but leaped to 13% last year, likely driven by isolation during the COVID-19 pandemic.

  • 65% of Hispanic people, 44% of Black people and 35% of white people reported fair or poor health. 77% percent of Hispanic respondents do not own computers compared to 57% of Blacks and 42% of whites.

Ankuda et al “Association of the COVID-19 Pandemic With the Prevalence of Homebound Older Adults in the United States, 2011-2020”; August 23, 2021; JAMA Internal Medicine