“Future of Healthcare” Roundtable at AAPL Spring Summit: Private Equity and Patient Care

By Andy Smith | AAPL
July 12, 2019

During his days as an ICU anesthesiologist at Baystate Health in western Massachusetts, Thomas Higgins was frequently summoned to the recovery room to tend to what he describes as “agitated” patients.

“The nursing staff often wanted me to give medication to calm them down,” Higgins, MD, MBA, CPE, FAAPL, told peers during a “Future of Healthcare” roundtable discussion at this year’s American Association for Physician Leadership’s Spring Summit in Washington, D.C. “Instead, I'd sometimes go to the patient’s bedside and ask what was wrong.”

He recalls one of those patients asking to hold his hand, “so I held her hand while I asked her what was going on and got her calmed down.” He didn’t change the woman’s medications, but he did make a compassionate connection in a way that tempered her disposition.

“That (human element) is not something that fits into the spreadsheet that the private equity guys are looking at, but it’s an important part of what we do that will never be replaced by artificial intelligence,” says Higgins, a third-year board member with the American Association for Physician Leadership and chief medical officer at the Center for Case Management in Natick, Massachusetts.

“There is no billing code for human compassion,” he adds.  Not yet anyway.

His message is a reminder of the need for effective and vocal physician leadership in the face of the “equity guys” – those behind the mergers and acquisitions which have emerged as a dominating disrupter in today’s healthcare industry.

“We need to remember the human side of medicine,” Higgins implores. “I don’t think anybody (goes) into medicine just to make a buck or just to bring technology into use. We want to take care of patients. As Albert Einstein said, ‘Not everything that counts can be counted and not everything that can be counted counts.’”

Translation: Patients count more than profits – or they should.

The argument I have with healthcare today is that everything profitable that can be carved away is being carved away, and what you’re left with is the stuff that nobody else wants,” says Higgins. “My worry as venture capital begins to carve away yet more things, it leaves the hospitals in the very vulnerable financial position of having to serve people with things that aren’t profitable.”

Given the trajectory of healthcare finance today, he says, “the current system is unsustainable. And if people continue to carve away the profitable stuff then we’re going to be in big trouble.”

It’s a problem compounded by the fact that “everyone wants to do healthcare (but) they’re not it in for the long-term,” adds former AAPL board member Laura Clapper, MD, MPPA, CPE, FAAPL, a market medical executive at Cigna for southern California and Nevada. “In private equity they look for opportunity to increase the value of what they purchased – and then stop. That’s what they do.”

That healthcare represents nearly 18 percent of nation’s GNP makes it a very attractive target, explaining why there were 1,182 related M&A deals in 2018, according to PricewaterhouseCooper which termed it a “banner year” for such transactions after a 14.4 percent increase over 2017, and with no signs of it slowing down this year.

Clapper likens the dizzying number of M&A deals to “a gold rush” but warns if the influence of private equity continues another five years that it could be to the detriment of the industry. “I’m not sure it’s good for healthcare.”

All of which raises the question: How should physician leaders respond to this epidemic of industry disruptions?

“The first very important step is to recognize that the status quo no longer is the status quo – that change is our new status quo,” offers AAPL board member Lisa Laurent, MD, MBA, MS, CPE, FAAPL, president of the medical staff at Advocate Lutheran General Hospital in Park Ridge, Illinois. “The new normal now is all about mergers and acquisitions, and if you accept the fact that change is inevitable you’ll place your mind in that space where it needs to be – to be more receptive to change (and) that with change comes challenges of culture integration.”

There’s a difference, however, between accepting change versus being a guiding voice in how that change occurs. So, if an M&A deal rocks your world, don’t be a bystander.

Summit roundtable

Consider the advice of Byron Scott, MD, MBA, CPE, FACEP, FAAPL, vice chair of the AAPL board and the deputy chief health officer at IBM Watson Health Simpler, who encourages physician leaders to seize the chance to sit on the boards of venture-capitally-backed health care companies and “help guide and influence” conversations about ethics.

“Be active and be thoughtful because you can really influence a lot of the other non-clinical people on those boards and educate them,” says Scott.  “As physician leaders, you can make a tremendous difference in influencing those organizations and, in that case, that board influencing (its) leaders.”

Related M&A issues discussed include:

Artificial intelligence: Because protocol drives so much of medicine at a time when AI is rapidly improving, Higgins says, “My fear is that private equity management will conclude that fewer doctors and nurses will be needed as decision-making is increasingly automated or delegated to lower-priced individuals.”

Stark Law: It’s difficult to reconcile federal laws that prohibit physician self-referral when, as Clapper notes, private equity initiatives result in the acquisition and merging of healthcare companies, their practices, hospitals and technology, all of which leads her to wonder, “How do you get around the anti-Stark (law) now that (private equity) can own the MRI machine, the ortho practice and the ambulatory surgery center? (How can) they can do referrals and not be into issues. It’s a huge area.”

 

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