Keith Loria

Private equity firms’ acquisition of physician practices has escalated in recent years, and urology practices are currently garnering great interest due to an increased demand for services from an aging population and a low supply of urologists.

Victor Houtz and E. Scot Davis shared their contrasting opinions on urologists teaming with private equity partners at the LUGPA 

 in Chicago, with a point/counterpoint debate. Houtz is chief operating officer of New Jersey Urology, which last year teamed with private equity firm J.W. Childs Associates and praises the benefits of the partnership. Davis, who is CEO of Arkansas Urology and has more than 20 years in physician practice management, is not completely in favor of private equity.

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Usually in private equity cases, a urology practice will receive an upfront tax-advantaged payment associated with an ongoing salary reduction while yielding control of the business but not the medical aspect of the practice. And while that new capital can be used to improve the practice to compete with larger hospital systems, some argue that because the private equity firms are going to demand a much higher level of performance and higher level of organizational discipline, it might not be worth it.

Houtz and Davis started by explaining some important questions need to be addressed before deciding to go the private equity route, including “Why are you doing it?” “What aren’t you doing it?” “What is the value to the practice?” and “How does it impact the culture?” Each answered these questions weighted by their particular opinion.

Davis, who was in a physician practice management company earlier in his career, said the private equity model today is similar to his previous experience in growing a practice, though there are some differences. He questioned whether private equity firms truly offer security and autonomy, which is what the private equity companies promise. In reality, he said, urologists probably lose control over their day-to-day operations.

Conversely, Houtz explained why losing some autonomy may be of the best interest to the practice group.

Does private equity benefit all partners?

One question Houtz and Davis debated was whether a private equity arrangement benefited all of the partners or a specific subset. “One challenge is that more senior physicians who are looking to retirement may cash out and then could quit or slow down their production,” Davis said.

Houtz explained that his group requires a certain production level from physicians, with penalties attached, to keep this from becoming a problem.

However, Davis countered that in the basic private equity model, physicians create EBITDA (earnings before interest, tax, depreciation and amortization) by giving away their income for a period of time. And the model is too young-just 3 years-to determine if this is viable for the future. He doesn’t have any empirical evidence, but said it should give pause.

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Another question the executives debated was whether private equity impacted the quality of care. Houtz emphatically stated it doesn’t, but Davis expressed concern that at the end of the day, private equity firms are looking for money and if a certain threshold needs to be hit, that could ultimately affect quality.

Davis admitted he’s not diametrically opposed to private equity and can see the value for certain groups. But in his practice, he said he doesn’t feel there’s value now, although there could be value in the future. He encouraged others to consider that before making any decision going forward.

Houtz also said he feels private equity isn’t the best choice for every urology group and agreed that multiple factors needed to be considered.

Regardless of whether one was persuaded one way or another, at the end of the presentation, The debate ended with one key answer to the question, “Is private equity right for you?” The answer: “It depends.” It isn’t for everybody, but it might be for some, and the two speakers armed attendees with items to consider before stepping into a private equity discussion.

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Why private equity is right for some, not all, practices

Having four generations of physicians working in the same practice is both a blessing and a significant source of complications, said Haydn Shaw, CSP, at the LUGPA 

Shaw, the author of “Sticking Points: How to Get 4 Generations Working Together in the 12 Places They Come Apart,” used his to talk discuss three key components of the topic-four generations interacting in an office, how to recruit and keep clinicians happy, and how to hand off a practice.

This is the first time there have been four generations in the workplace, he explained, and it’s soon to be five-although there are already five generations of patients today as life expectancy has increased 30 years since 1900.

“It’s one of the great blessings of modern medicine and science,” he said. “It also makes life a lot more complicated because through most of the centuries, there were only three generations of people and a clear hierarchy. But now that we’ve got five generations in a workplace, there are a lot of opinions from different generations, and there are traditionalist practitioners who are still effective in their 70s. But if the older generations expect the younger staff to wait their turn to push for their preferences, they will be surprised.”

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He explained while the process has always been to “wait your turn,” today’s graduates don’t want to pay their dues for 20 years and are looking to be heard from the get-go. It’s not that the younger generations want to be running the place in a year; the research doesn’t support that, Shaw said.

“As a matter of fact, both generations believe that traditionalists and boomers know more than anyone else in the workplace, so both Gen X members and millennials have a lot of confidence in the work experience of older generations. What they don’t want to be told is ‘wait your turn’ and that they will be at the card table instead of the big table for another 15 years.”

While younger generations don’t expect to make the decisions, they do want to observe and occasionally be asked their opinions.

Another critical factor when it comes to creating a happy work force with multiple generations relates to retention and boredom. As millennials get older, Shaw explained, they’re better able to deal with boredom, but younger millennials don’t have a lot of tolerance for boredom. A Gen Z member may take a job with more boredom if it provides security over a job that’s their passion.

“Gen Z watched people have to work really hard just to get what boomers got the week they graduated from college,” he said. “They’re a little more serious about things, but boredom is still a major threat.”

So, when they get to work and the boredom factor is not taken into account, turnover may ensue and retention could be problematic.

A third piece Shaw addressed was the importance of emerging adulthood and how older generations who don’t understand this concept will blame a lot of things on millennials.

Emerging adulthood, he explained, is the life stage between adolescence and early adulthood that has been expanding over the last 40 years as people postpone marriage, having kids, and finishing an education. But all that can get pushed back due to demands of a career, and many physicians have been pushing it back for decades.

“One of the common complaints is that older nurses say that younger nurses are not as dedicated to patients,” Shaw said. “Often, it’s because they don’t want to take the worst shifts or they want a long weekend. They may want Columbus Day off because a bunch of their friends are going away for the weekend but are told they’ve only been there 9 months and need seniority for that. The problem is the oldest nurse has been there 23 years and they will never get seniority for that.”

When baby boomers entered the work force, a 24-year-old nurse was often married (maybe with a child already) or knew who they were spending the rest of their life with, so they didn’t need to go off with friends for a long weekend to find someone.

“So, when older nurses say younger nurses don’t care as much about outcomes or about patients, what they’re often saying is younger nurses don’t care about patients enough to work shifts that make it hard to find love. It’s a choice previous generations with a short emerging adulthood life stage didn’t have to make and don’t realize younger nurses do unless the old rules change,” Shaw said. “And when you explain it that way, a whole lot of nursing managers better understand and say that makes a lot of sense.”

Shaw warned Gen Xers in a physician practice to brace themselves for what he had to say.

“One of the things I hear quite a bit of from people who own their practices is, ‘While I admire and appreciate the professionalism or the education of my Gen X staff, it just seems like a lot of Gen Xers care more about how much money they make and how much time off they get than they do about patients,’ ” he said. “There is growing research that older millennials are willing to put in the most hours of any generation.”

He noted work-life balance has always been valued more by younger than older generations. One physician said he couldn’t sell his practice in good conscience because none of the younger generations cared about patients as he did.

Physicians need to raise their generational IQ, Shaw concluded, so they can work better together in the office, quit blaming a generation for challenges, and start making the adjustments that transition them into the future.

Having four generations of physicians working in the same practice is both a blessing and a significant source of complications, said Haydn Shaw, CSP, at the LUGPA annual meeting in Chicago.

How four generations of physicians can work together

In an era of increasing and costly cyber-attacks in health care, physician practices must arm themselves with technical controls as well as internal protections to reduce their risk, according to Michael C. Lamprecht, president of Chicago-based BigData Insure, LLC.

Lamprecht spoke at the LUGPA annual meeting in Chicago in a presentation designed to educate urologists on potential cyber risks and how practices might be affected by a privacy breach, ransomware attack, extended computer system downtime, and similar cyber perils that frequently impact the health care field.

A 20-year veteran of the insurance industry, Lamprecht initially started working with technology and dot-com firms before dedicating himself to a single type of risk, now known as cyber risk. Over the past 25 years, he’s been providing cyber risk management consulting and cyber risk insurance to all types of firms.

He explained that various industries face different cyber risks, and physician practices have increased exposure to certain risks, such as privacy breaches and reputational injury as well as unique exposures, including negative patient outcomes as a result of cyber-attacks.

Lamprecht told LUGPA attendees how to identify their own cyber risks and potential losses based on their practice’s activities, use of technology, and the data collected from patients, insurers, and vendors. The core cyber risks for urologists, he said, are employee dishonesty, human error, viruses, hacking, software failures, ransomware, and social engineering, which commonly cause urologists to incur financial losses due to the resulting privacy breaches, HIPAA violations, computer system downtime, loss of patients, extortion payments, and fraudulent funds transfers.

In one example provided by Lamprecht, a small physician practice was the victim of a sophisticated ransomware attack designed to “lock” the firm’s equipment, software, and databases.

“The hackers demanded $58,000 to unlock files, and the group paid the ransom and unlocked the equipment,” he said. “However, some damage was done, which required some of the data to be restored by a specialty IT firm. In this scenario, the extortion coupled with the $53,150 in data restoration and $29,800 loss of income resulted in a total loss of more than $143,000.”

In another example, a hacker found his way into an insured’s computer system after stealing a physician’s laptop, which had remote access to the patient information database, resulting in mandatory notification in 27 states and optional notification in two other states. However, before the practice could notify customers, it had to conduct extensive forensics to identify which patients were affected and pay credit reporting agencies for the current contact data for many of them.

“The insured opted to provide their clients with a full 24 months of identity restoration and monitoring services supported by a private call center,” he said. “The total loss was $495,305.”

Cost-effective cyber risk loss prevention protections include technical controls such as virus protections, firewalls, user access control, and data encryption as well as policy- and procedures-based loss prevention, including a firm privacy/security policy, employee security training, data sharing, and compliance with state and federal regulatory guidelines and best practices.

Lamprecht also offered advice if a privacy breach does occur. “A coordinated response to a privacy breach includes immediate triage and response, scope and impact assessment, targeted response to resolve issues, and long-term monitoring to prevent recurrence,” he said.

Does medical malpractice insurance cover cyber risk claims? Lamprecht explained that in some cases, it may provide help with claims, but it depends on the circumstances of the claim, the type of loss, and the policy in place. He suggests reviewing your policy carefully.

When discussing cyber risk insurance for urologists, he gave examples of policies designed to protect small- to medium-sized physician practices from first- and third-party cyber risk losses. Some policies also include coverage for medical billing errors and omissions, he said, and many insurers offer health care-focused incident response services as well as access to risk management services and best practice training.

Types of coverage available to urologists, Lamprecht said, include Data Breach Response Expenses coverage, which covers the insured’s expenses of responding to a data privacy breach including technical forensics to identify the source and scope of the data breach; legal counsel, to advise on the applicability and actions necessary to comply with professional, ethical, and regulatory requirements; notification, to alert individuals or organizations about a data breach; identity monitoring, to provide data breach victims with health care record monitoring, credit monitoring, identity theft remediation, and fraud resolution for up to 24 months; and public relations, to advise on, design, implement, and execute a response to reduce damage to the practice’s reputation and prevent loss of patients.

Other coverages available include Network Security and Privacy liability, which covers the insured for regulatory investigations, legal defense costs, damages, fines, and penalties due to a privacy breach, HIPAA violation, negative patient outcome, or breach of payment card industry violations; Electronic Data Restoration Expense, which covers the insured’s expenses of repairing the practice’s computer and electronic data following a cyber-attack; Business Interruption and Extra Expense, which covers the insured for a loss of income following a cyber-attack; Ransomware and Extortion, which covers the insured for extortion payments and expenses to mitigate or terminate a threat to disclose patient information, disrupt the practice’s computer system, or lock the physician’s computer system or data with ransomware; and Cyber Crime (fraud) and Social Engineering, which covers the insured for loss of money or securities due to fraudulent funds transfers.

Lamprecht said capacity in the cyber risk insurance market is growing, with more than 65 insurers offering cyber risk insurance products and up to $500 million in capacity across the marketplace.

The key take-aways, he said, are that urologists need to understand their cyber risks, implement critical protections, and if they choose to purchase insurance, make sure they buy the correct coverages for the practice.

Benchmarking involves collecting information from various sources and comparing processes and performance metrics to determine how other businesses achieve their high levels of performance.

It’s data collection that urologists can utilize to discover ways to improve their practices.

LUGPA recently teamed with IntrinsiQ Specialty Solutions (IQSS), part of AmerisourceBergen, to support a new benchmarking program powered by InfoDive, IQSS’s business analytics solution. This collaboration, LUGPA says, will allow LUGPA member practices to compare independent group practice performance metrics against that of other member practices.

Cass Schaedig, vice president of provider analytics, ION Solutions for AmerisourceBergen, says this benchmarking tool will ultimately enable hundreds of urology practices to manage their time, lower administrative costs, and spend more time with patients while implementing the latest treatments into their practices.

 about the value of benchmarking in patient care, practice management, and health policy.

Characterize how benchmarking data is changing practices in 2019.

 By giving practices the ability to quantify the value of their care, particularly in comparison to similar-sized or focused peers, benchmarking helps practices demonstrate their eligibility for appropriate reimbursement to public or private payers. Benchmarking also helps control for a practice’s possible overutilization, and it allows providers to identify areas of strength or opportunity, where they can continue investing, or where they may eliminate a service or develop an action plan to address any underperformance.

How can urologists better leverage benchmarking data to enhance the quality of patient care and capitalize on market opportunities?

A sound benchmarking program should gather data from the entire patient treatment journey and allow practices to analyze the quality of care holistically. For example, with InfoDive, practices can track how many patients receive a biopsy and, as a result, experience a complication. This gives practices the opportunity to dive deeper and analyze what the root of a problem is and how to avoid it in the future.

What do urologists need to know to utilize InfoDive properly? Is there a significant learning curve?

There is no learning curve for InfoDive; we’ve worked hard to make it an intuitive tool. We help practices understand how the variables reported in InfoDive relate to one another, so they know what underlying or complementary factors may be contributing a particular result.

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For example, a practice may observe a physician has a low volume of new patients. The cause may be that the doctor is treating current patients for diseases that take more time and have a longer course of treatment, and as a result, he or she doesn’t have the bandwidth to take on new patients. Before determining a course of action, the practice should review additional data points for more context. That’s what we help practices understand: how to look beyond a single indicator and understand the relationships between multiple metrics.

What sets InfoDive apart from other similar platforms?

We are the only source of benchmarking that can provide more detail around relative value units, a measure of value and productivity used in the Medicare reimbursement formula for physician services. We calculate metrics from the raw billing data and apply the exact same cleansing rule and logic to create statistics from the filed claims.

How will the program inform education programs and advocacy priorities?

LUGPA and its member groups can use the insights drawn from the benchmarking program to better inform legislators and other stakeholders on how policies impact both practices and patients. Just as individual practices can use the data available through this partnership to demonstrate their value to payers, LUGPA can leverage membership-wide insights to demonstrate the value and needs of urology practices across the country.

What are you doing to safeguard patient information?

For example, when a new government rule is proposed that could affect practices, we can apply the proposed changes in InfoDive, so LUGPA groups are able to see the potential impact. Practices can then use that information to shape their responses to legislators’ calls for public comment.

Who can participate? Is the program available only to LUGPA member practices? 

In order to establish critical practice benchmarks, LUGPA established a task force of informed professionals from member practices to provide oversight for the benchmarking program, establish key metrics, and determine the reporting structure and cadence to members. IQSS will provide consultative support to the task force and, using InfoDive, data analysis for ongoing reporting. The relationship we have with LUGPA offers discounted licensing of InfoDive as well as access to LUGPA-specific benchmarking reports.

How can it improve performance and patient outcomes?

Having access to InfoDive gives practices insights into the full patient care journey, making it easier for practices to identify pain points and where there is room for improvement. The platform provides a view of a practice’s performance and operations that’s not often visible through its existing billing and EMR systems and can inform how to restructure services to a patient’s benefit.

For example, “Physician A” may only do a few procedures of a certain type a year, while “Physician B” may perform a high volume and have a high patient success rate. A group practice may be able to use InfoDive to analyze whether it makes more sense for Physician A to refer his or her patients requiring the procedure to Physician B and focus on other patient needs. Ultimately, InfoDive helps practices to determine the more efficient route that will also protect and promote patient health.

Cass Schaedig, vice president of provider analytics, ION Solutions for AmerisourceBergen, talks with Urology Times about the value of benchmarking in patient care, practice management, and health policy.

Author | Keith Loria

Articles

Why private equity is right for some, not all, practices

How four generations of physicians can work together

Protecting against cyber risk: Solutions are available

How benchmarking helps manage your time, identify problem areas