PERSPECTIVE

How Physician Ownership Provides a Stable Future for Health Systems and Patients

The sudden collapse of American Physician Partners in 2023 sent shockwaves through the healthcare industry. Overnight, health systems found themselves scrambling to staff 119 emergency departments and inpatient units. A staffing transition should ideally happen stepwise over several months to ensure smooth onboarding and maximize care continuity. Imagine the shock when many of APP’s hospital clients learned their staffing provider would cease operations in just ten days.

The APP debacle is a cautionary tale about mixing patient care with profit. The corporatization of medicine has accelerated in recent years, driven by increased regulation, consolidation, and private equity investments. Given the spate of recent closures, bankruptcies, and lawsuits among physician staffing companies, it may be time to shine the spotlight on a more stable alternative model: physician ownership.

Theo Koury , MD

President of Vituity

Published August 08, 2024

A Brief Overview of Physician Practice Models

When staffing their hospitals and emergency departments, administrators basically have three models to choose from:

Direct Employment

Health system employers enjoy considerable control over how physicians practice, which makes care standardization and strategic planning easier. On the downside, employing physicians can be expensive. What’s more, most employers insist on calling the shots. This limits autonomy and tends to sap physician motivation, innovation, and productivity.

Corporate-Owned Staffing Groups

Companies like APP are usually large and well-resourced, allowing them to bring new advances and innovations to their hospital partners. On the other hand, many are for-profit entities that are beholden to non-physician shareholders and investors. This can give rise to conflicts of interest and ethical dilemmas. In addition, many corporate staffing groups have been recently destabilized by rising interest rates and the No Surprises Act.

Physician-Owned Groups

With equitable partnerships like Vituity, all physicians are shared owners who receive a portion of the group’s profits. Having "skin in the game” incentivizes them to solve problems and improve care for their patients and health system clients. Physician owners also enjoy a high degree of autonomy, which lends itself to innovation and creative solutions.

Smaller physician-owned groups may struggle to meet their hospitals’ efficiency, quality, and value expectations. However, some partnerships include thousands of physicians, allowing them to invest in robust practice management support. For example, Vituity’s medical services organization handles billing, credentialing, recruiting, and IT support. This frees our physicians to focus on patient care.

Benefits of Physician-Owned Provider Groups

For health system administrators concerned about the stability of their corporate staffing partners, the physician ownership model can provide a sustainable alternative. Benefits of partnering with a physician-owned staffing group include:

Goal Alignment

Physician-owned groups may be more aligned with the hospital's mission and objectives. This can lead to better collaboration, smoother communication, and a shared commitment to patient-centric care, benefiting both their patients and hospitals.

At Vituity, our physicians can focus exclusively on the patient and create long-term value for our health system partners since we have zero investors and no outside stakeholders to add pressure on profits, cost-cutting, or patient volume quotas. Our profits stay in healthcare, funding further innovation and investment in our practice sites.

Physician Satisfaction and Retention

Physician-owned groups offer clinicians a higher degree of autonomy and control, which can lead to increased job satisfaction and engagement. When Vituity picks up a new contract, our ownership model drives provider retention and streamlines practice transitions, thereby minimizing disruption and friction. Once they realize what we’re all about, over 90% of physicians whose contract we assume choose to join Vituity.

Cost Management

Collaborating with a physician-owned group can help hospitals reduce costs while improving care quality. The group's experience in managing resources and optimizing operations can lead to cost savings. At Vituity, for example, one of our medical directors developed a virtual patient navigation solution that saved the hospital $500,000 in its first year while addressing the root causes of health issues.

Navigating Different Options

Despite the benefits of physician ownership, hospitals should carefully evaluate all potential staffing partners. Key factors to consider include alignment with the mission, financial stability, breadth of service offerings, and clinical and operational track record.

It’s also important to closely evaluate ownership claims. Staffing companies know health systems are concerned about physician group stability. A few have started calling themselves “physician-owned” when they have outside investors or “super owners” who may wield an outsized influence on physician practice.

At the end of the day, it’s important to choose a physician staffing partner that’s right for your system both now and in the future. I hope this article helped inform your knowledge of the different provider group models and inspires you to factor the differentiators of provider-owned groups into your decision-making.

This article was originally published on LinkedIn in September 2023.

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