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AHLA's Speaking of Health Law
Physician Practice Employment and Acquisition: What Is Driving the Changing Landscape?
When it comes to physician practices, the rate of employment, acquisition, and alignment activity among health care corporate entities like payers, payer-backed groups, private equity, and major vertically integrated retailers has outpaced similar activity among hospitals and health systems. Danielle Bangs, Director, Veralon, speaks with Mike Flammini, Chief Development Officer, Privia Health, and Eric Tower, Partner, Blank Rome LLP, about the changing landscape of physician practice employment and acquisition. They discuss what is driving expanded interest among these corporate entities that are employing and aggregating physicians, what is driving expanded interest among physicians in these new arrangements, and how hospitals and health systems are responding. Sponsored by Veralon.
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Speaker 2:Welcome everyone. We are thrilled to be here today and excited to , uh, share our perspective on the changing competitive dynamics in the physician practice space. Uh, this is not only a , a formative force that's shaped what the healthcare industry looks like today, but it's something that will continue to , uh, impact how it evolves in the future. And it's also , uh, an area that is core to the work that , um, my co-host and I do. My name is Danielle Banks. I am a director at verlon. My work focuses on , uh, supporting partnership, merger and acquisition , uh, initiatives for our clients, which are predominantly in the healthcare provider space. And I am joined by two seasoned industry leaders who I will let introduce themselves. Um, Mike, do you wanna kick it off?
Speaker 3:Happy to , uh, thanks Danielle. Uh, this is Mike Fini . I'm with privia Health. I'm the Chief Development Officer at privia, responsible for the expansion of our, of our model across the country. Been with this organization nine plus years, and , uh, a long , uh, standing healthcare executive, having worked in insurance hospital systems , uh, and very much , uh, appreciate the opportunity now to be working on behalf of the independent physician. And thank you for having me on today, and look forward to the discussion with you and Eric.
Speaker 2:Right , thanks Mike. Uh, and Mike and I are also joined by Eric Tower.
Speaker 4:Hi, I'm Eric Tower. I'm a , uh, healthcare transactions partner at Blank Rome in shock , uh, Chicago. Um, I've been doing ambulatory acquisitions, including physicians for almost 30 years . Um, so at some point I'd like to think that I've seen it all, but , uh, it never ceases to surprise me , uh, what occurs in the marketplace.
Speaker 2:Great. Well, thank you both. I appreciate you joining me today, and I have a no doubt this will be a great discussion. Um, so just to lay a little context for , uh, you know, what we're here to , to chat about today, there's been, you know, a material shift in the physician practice landscape. We think about , um, you know, comparing what it looks like today to 40 years ago, you know, then the , the industry was a highly fragmented, largely independent practice. And if we think about how that compares to today, it's a , you know, the physician practice base is characterized by pretty high rates of consolidation. Majority of physicians today are employed, whether that's by health system or some other entity, and a lot of that consolidation and employment has been led by the health systems and hospitals, but particularly in the more recent years , um, the rate of employment and acquisition and alignment activity among sort of the , the bucket of other corporate entities. So payers, payback groups, private equity, major vertically integrated retailers, and, you know, the quote unquote other aggregators , um, has been outpacing the rate of , uh, employment growth among hospitals and health systems. So, to start us off, what, what is driving this evolution? What is different about today's environment , uh, that's contributed this expanded interest, both, you know, by some of these different , um, you know, types of entities that are employing and aggregating physicians and what's maybe contributing to the expanded interest in these other paths among physicians? Uh , Mike, I don't know if you wanna, you wanna kick things off for us,
Speaker 3:I'd be happy to. Uh, so I think what's driving the change is competitive dynamics. Uh, you know, the , the individual doctor sitting in their practice providing great care to their patient every day , doesn't always see this, but what's happening around them in terms of consolidation between health systems, some of these new corporate entities, you know, they're all looking to get as close to the patient as they possibly can. And so being in the direct provision of care strategically is a conclusion that they've come to that makes sense for them. So this vertical integration , uh, we see happening at an accelerated rate with some pretty massive deals that have been announced over the last couple years. We'll see whether or not, you know, they achieve the stated stated objectives. But I think there's a lot of debate going on right now as to the value of vertical integration , uh, and, you know, whether or not it'll, it'll add , uh, to the quality and lower the costs of, of healthcare. But I think clearly, you know, from a competitive and strategic perspective, it's trying to get as close to that, that patient , uh, as you possibly can. And also, you know, just scale, revenue scale. And at some point , uh, large payers or corporations recognize the multi-trillion dollar , uh, industry that we're sitting in, and they played a role within a certain set of profit pools. But, you know, at some point now they're , um, reaching into a new set of profit pools on, on , uh, on direct patient care. And I'm sure that has a lot to do with where they're driving towards as well.
Speaker 2:Eric, what are your thoughts?
Speaker 4:Um, very much comparable to Mike's. I'd say that one thing I've noticed is a , an increased focus on the total cost of care. And that's really driving a lot of this. Um, so rather than, than having the segmentation that we've seen historically where you've got all these different actors functioning fairly autonomously and getting paid on a fee for service basis, more and more people are getting paid, you know, a bundle to provide the total care for the patient. And to do that, you need to make some significant investments in your IT infrastructure. Um, and a lot of the physicians, if they're autonomous and they're on their own, it can be daunting to even begin to do that. Uh, you know, you also do have some push on some of the younger doctors who don't necessarily like to be taking call every other day. Um, you know, so when they go to make decisions, it's, it becomes easier to join a group than it is to continue, you know, and hang out a shingle. And I think that's a big part. The other part that Mike touched on that I heartily agree with is consumer driven healthcare. And so, rather than creating these large buildings and making the patients come to us, I think a lot of people are realizing we have to go out and be in the community and take care of people in the community in an efficient manner, rather than kind of the old hub and spoke system that we saw until more recently.
Speaker 2:You know,
Speaker 3:Danielle , I I add from the doctor's perspective, because a big part of, you know, privia as we support about a thousand different practice locations, most of which are still , um, the small traditional primary care office, five doctors and fewer, the line is out the door with organizations that are interested in speaking with them. And so naturally they start to listen and they're hearing from all types of organizations, the privia of the world, private equity, their local health system, corporations. And , uh, I think it's inevitable that, you know, at some point they are recognizing the , the challenges of, of just simply running a practice, the affordability, the investments that need to be made in technology and reporting the challenges with hiring and retaining good quality staff. Uh, so this just getting to be more and more difficult as a small business owner to maintain an effective practice. So they're obviously just listening to all the different messages out there, many of which are confusing, many of which probably also just sound the same, even though there are very important, yet subtle differences between them. Uh, so it's very uncommon for a , a practice of any size not to at least be aware of and entertaining , uh, different models because I think they're just running out of options to really remain truly independent in that small setting. So we're seeing that as a, as a trend where it all leads, you know, who knows, they'll make their own mind up, but , um, you know, they're being bombarded with , uh, with different messages about , uh, the value of, of, of these different models.
Speaker 2:Yeah, I would, I would agree with that. I mean, I think, you know, in , in the work that we do, it's , you know, particularly for multi-specialty groups , some of the single specialty focus, but , um, you know, there's a lot of interest and diverse interests. So, you know, competitive situations where hos uh , where physician groups are, you know, entertaining different types of offers with that , you know, have different , uh, implications for what, you know, that partnership or that partner might , um, result in, in terms of operational impact or what the long-term might look like. What do you, what do the two of you see in terms of the factors that are, you know, having the most, sort of , weighing the most in terms of how physicians are making decisions about what the right path might look like for them? Eric , how about you? You wanna , you wanna take that one to start?
Speaker 4:Sure. Well, I think one of the things that I see more and more now is , um, the physicians don't necessarily want to be employed at a health system and be a cog in a machine. I think for a while, private equity was doing a fairly , uh, effective job of convincing the physicians that if you went with a private equity actor, nothing would change. And I think there is some degree of recognition now that, you know, if you sell to private equity, things are going to change, period. Um, so I'm seeing a lot more activity by physician-owned groups, actually , um, who are becoming active in the market, and they're actually really trying to, to keep their autonomy , uh, and they can legitimately sell themselves as being physician centered organizations. Mm-hmm . <affirmative> , uh, and, and they're doing it somewhat effectively, I think , uh, and they're getting capital.
Speaker 2:Yeah, I , I would agree with that. And, you know, I think even, you know, whether it's the, the physician owned groups or even some of the, you know, the health systems that I work that I think are more creative and competitive, I think what they're recognizing and tapping into is, you know, the desire for , um, you know, tapping into that entrepreneurial spirit, providing the opportunities for ownership participation and growth. Um, and I think that that regardless of sort of which, what type of entity or whatever, what form is one of the , one of the things I see as being increasingly important in, in sort of potential partnership negotiations or something that, you know, physicians , uh, you know, that I've been working with lately are really seeking whether that's , um, you know, if it's more a specialty area, the opportunity sort of jointly develop , uh, ambulatory surgery centers or ancillary services. Um, you know, sometimes it's the opportunity to partner on , um, development of a health plan or something, you know, in the managed care space that would allow them to share. So then the equity that's created by , uh, by that shift to risk. Um, Mike, what are your thoughts? What, what do you see, you know , as being really kind of material fact , uh, material factors that are driving physician decision making ?
Speaker 3:Specialty matters a whole lot? Um , yeah , obviously a surgical specialty versus a primary care specialty, they're gonna have very different needs. The ones that are doing it well and really evaluating their options like they should or, or balancing multiple different factors, control and autonomy , uh, is key. As Eric said, you know, oftentimes they think they can keep it under a private equity model, and that tends not to be the case. Um , the money matters. So how are they being recapitalized? How much are they being recapitalized? That certainly , uh, factors into this. We often hear too, about the importance of , uh, protecting their brand over the long term . And many of them have been in practice for decades, have the best brand in town and need to maintain that and want to ensure that over the next decade or two, that what they leave behind is in good hands, both for the physician shareholders that are there, but for that next generation of physician shareholders. So they're looking for models , uh, that are durable and that protect , uh, the identity of that practice so that they, they're really leaving it in a better spot when, when they came in. So there's always this confluence of factors. And, you know, part of what I'm speaking to a lot of groups about is just balancing all of those and knowing what the pros and cons really are, and going through that, that assessment, then you'll make the right decision for you and your patients. Mm-hmm. <affirmative> .
Speaker 2:So we've talked a couple of times about , um, you know, private equity has come up a couple of times in our discussion, and, you know, while there's been, you know, a lot of activity over the, you know, the most , most recent years by private activity, it isn't , uh, private equity. It's not the first time that, you know , private equity has made a significant play into the physician practice space . And the first , um, its first foray , foray in in the nineties is largely considered to have been pretty much a , a failure. Eric , I know you did, you know, have been , have worked in, in this space, you know, both, both during that , um, that initial private equity push and today, how do you see it being a little bit different today than it was then? Or, or similar?
Speaker 4:Well, I , I think back in the day, we didn't even use the word private equity. We called it for-profit healthcare, just, just to date myself a little bit. But, you know, it was more of a scale situation where we were gonna grow these organizations rapidly, provide the back office, maybe have some leverage , uh, with payers to get better, better rates, and then, you know, sell or go public. Um, there has been some of that currently in this iteration, but there's also a couple different models that have been used. One of the models that we saw until the No Surprises Act was , uh, you take some of your hospital based doctors, you take 'em outta network , um, and you can do pretty well just charging full freight out of network rates. Uh , I think, you know, some of the players in that market are, are trying to resolve that problem right now , um, because that model is probably a little dated. Another model that you see all the time is , uh, you grow your ancillaries on your practice. You see that more in, in , say, dermatology, where people start offering aesthetics and other stuff. Uh , multi-specialty groups can offer imaging and other services that, you know, a standalone doc can't do. Um, and lastly, and the one that I think probably has a lot of traction is the value-based care. To do that, you need to make a lot of investments in your infrastructure, and you also need to, to take risk and spread it over a large enough pool of patients where it's feasible to actually ensure that you're getting some sort of return and not losing your shirt. And , uh, where I'm seeing most of the activity now is in that latter category of value-based care.
Speaker 2:Yeah, that makes a lot of sense. And I, and I do think that that value-based care piece is, is a key, is a key difference , uh, today. Um, and I , I think there are a lot of , um, you know, a lot of different companies and entities and different, you know, competitors that are looking to capitalize on some aspect of the opportunity that's created by risk or the shift to value-based , um, reimbursement. What I think still remains to be seen is what it's going to take to be sustainable and successful in those models. Um, and, you know, particularly from a financial perspective , um, Mike, I'm interested in your thoughts. I think, you know, what , what do you think, you know, a successful model that, that is able to sustainably capitalize on the value base and risk opportunity? What do you think that looks like?
Speaker 3:Well , I appreciate you raising those, those concepts , uh, sustainable, repeatable, predictable in the end, you know, whether we call it value-based care, whatever label you wanna put put on it, this idea of payment reform, this is gonna be a long term transition for the industry writ large. And so from , from the physician's point of view, what we have to be able to demonstrate is that the payments received by delivering , uh, higher quality care at a lower total cost are sustainable. And they're repeatable year in , year out, product by product , payer by payer today, I think there's too much of a black box at times , uh, where physicians that are part of a larger a c o or risk-bearing entity don't understand either why they're getting a bonus check or why they're not getting a bonus check. It tends to fall into a black box. And so I think transparency in reporting , uh, and the predictability of these models for their long-term success are really key. We have to defend against rent seeking in this industry that, you know, parties coming in and just trying to take a piece of that profit pool and not delivering at least as much or more value in return. You know , that's often been the complaint of some of the models that haven't , uh, succeeded in the past or those that aren't working very well. We also have to be weary of just pure arbitrage and financial engineering opportunities that are creating, you know, certain capital flows, but not really , uh, in return for creating value. So again, if you keep the doctor and the patient in the center of all of this, and you think about the sustainability of the model , um, the models will emerge that work over over time. Uh , and we just have to be weary about some of these other models that are very short term in nature and, and are rent seeking , uh, in, in the way that they're designed. I'll give you another example on the , particularly on the value-based care side. You know, we see , um, that there is a distortion at times in terms of, of this idea of risk. And so companies are coming in and fully backstopping physicians that , and they're saying, look, we'll , we'll get you into value-based care deals, and we will protect a hundred percent of the downside forever. And okay, that's great if I'm a physician and I think I've got a free ride on this, but it's not gonna create the kind of behavior change and the kind of new , uh, understanding of how to manage populations in a risk-based environment. You know, it creates what the insurance companies have referred to as moral hazard Past , where the, the risk is born by the entity , uh, not, not, not really, but you know, responsible for it. So again , I'm not saying those models can't work and aren't important to help get the industry started, but I think we have to come back to what's sustainable and repeatable. And I think making sure that as physicians are in these new payment models, they have a good appreciation of the risk and rewards of the decisions that they're making on behalf of their patients, you know, in , in the way that they practice medicine every day . So there's a lot of experimentation going on now. Some of the models are already revealing themselves as not sustainable. They're collapsing underneath their own weight. Uh, and we will , you know, I like the, the level of innovation, and it's gonna take a lot of different , uh, uh, innovators to figure out ultimately what the right models are. And it may differ as you look across the country where markets are very different. Uh, they're very different stages. So, you know, we're seeing as , as much new innovation happening today as I can remember in my career. Uh, and , uh, you know, time will tell which models will, will , uh, win in the end and which ones will fade away.
Speaker 4:You know, to build on your point, Mike, I just wanna say one thing I've observed with a lot of physicians, they want to practice at the top of their license . And so some of the models that have evolved allow the physicians to focus on the more complex matters and spend less time getting a referral or scheduling a patient for a mammogram or something like that. And those appear to be potentially effective. I , I don't have a crystal ball, but , uh, the doctors really like it. And from what I've seen, the patients like that too, because it creates a , a more seamless ex consumer driven experience.
Speaker 2:So, shifting gears a bit, you know, how do you see , um, you know, the, the landscape changing with respect to the role that hospitals and health systems play in the physician practice landscape, and, you know, putting yourself in the , the shoes of a hospital or, or health system, how, how do you think about, you know , their positioning and response to this, you know, heightened and more diverse competition for alignment and aggregation of physician physician practices? You know , Eric, you wanna, you wanna start off?
Speaker 4:Well, I think if you look at the traditional health system, they view the doctors as a source of referrals to get patients in for hospital procedures, inpatient or outpatient. Um, in many instances it's well documented. Hospitals lost money on their physician groups, and the physicians were somewhat of an afterthought. Um, now with service site neutrality and a real drive , uh, out into the community and these new competitors, hospitals have to rethink how they're approaching their physician relationships. Um, and I, I personally think they can't necessarily be all things to all people the way they traditionally view themselves. So now they've gotta approach things from a more strategic view of how do we align and how do we pick who we align with in order to be able to provide the care that we need to provide? And we still need hospitals, and hospitals still need specialists, and they still need primary care doctors, but, you know, what is the nature of that relationship? And do we simply employ them and forget about them, or do we find other ways to partner with them? And then, you know, we as a hospital, how do we change behavior when we are at risk? So, you know, the traditional model, you want people in your hospital because you get paid more, but if I'm getting paid a per member per month and my costs are high, I'm gonna lose my shirt. So, you know, I need some way to adjust by entire care delivery system to accommodate that. And I think what you're seeing now is a lot of hospitals are saying, well, we understand that maybe it's not great that we employ everyone and we're gonna come up with new ways to partner. And we also accept that not all patients are gonna end up in our hospital. Mm-hmm . <affirmative> , and how are we gonna accomplish that?
Speaker 2:Yeah, I would agree. And I, and I do think, you know, some of the , um, the ways in which I've seen health systems evolve on this front in , in a way that I think is, you know, favorable to their long-term positioning is to recognize that, you know, they are in a position to support diverse alignment models with physicians. They , you know, they aren't as sort of targeted a business model. They have a , you know, a a diverse business. They're, you know, not sort of just a, a a focused niche sort of clinic model. And they can be flexible and they can meet , um, you know, if, if they have the ability to sort of push that cultural change and, and implement and accommodate different models, they can have a more closely aligned medical group. They can have a more, sort of a looser m s o structure that aligns some of the independent physicians. They can have, you know, structures that connect those physicians that are really looking more for, you know, a , a value-based care vehicle. And I, and I have seen, you know, some of my clients that are, I would say more , um, progressive and, and frankly competitive in this space, pushing the limits there and really, you know, taking a step back and, and having hard, you know, conversations with themselves around, you know , what it will take in order for them to be best positioned to be sort of the best PR place to practice for the most physicians. Um, so I , I do think that is a way that, you know, Hoss health systems and hospitals are, are well positioned if they, if they take advantage of, you know, the things that make them a bit different than these other competitors. One other thing that I think is really , um, interesting and, you know, certainly has , um, been more common lately is for health systems , think about some of these other competitors potentially as partners. And I know Mike, this is , um, you know, something that is core to, to privia. So I don't know if you wanna, you know, share your thoughts, you know, on, on the health system positioning, but also, you know , specifically around , um, you know , what it might look like for health systems to partner with one of these other , other entities that is, you know, in , in this space.
Speaker 3:Yeah. Um, as of January of 2022 , which is the last data I've seen, and there is likely to be more current, but I'm sure it's still reflective, 54% of all physicians were employed by a hospital or health system, and then another 25% on top of that through some corporate relationship, private equity, or the large corporations leaving really only about 25% of the physicians , uh, truly classically independent. For many years, the hospital was the best solution, really the only solution for physicians , smaller physician practices that were looking for help, help in managing their, their practice, their overhead payer contracting , um, M S O services. And there were no other options. So it was a very natural place for those relationships to, to form and come together. They already had existing clinical relationships, so this is just a very natural extension, but that came at a pretty heavy cost as Eric pointed out. I think the, the data would suggest anywhere between 150,000 and $200,000 , uh, of loss per doctor per year is what these health systems had had carried really with the, I guess the value proposition on the, the downstream that they'd be gaining, you know, business , uh, terms of referrals and , uh, all appropriately done. But , um, you know, just downstream business that helped to, to cover those costs in a post covid world in which the balance sheets of the health systems are not as strong as they used to be. Cash flow and margins are being compressed. Staffing issues are top of mind, I I'm hearing from a lot of health systems. They just don't have the, the, the resources, the capital resources to continue to invest in a, employing more physicians , uh, and b maybe even maintaining the employment status of the current physician medical groups that they, they have. So they are seeking alternative answers and solutions to this sometimes through partnerships, other times through raising capital. Um, but I think they're also recognizing that , uh, it's not always core competency , uh, to own and operate , uh, medical practices and clinically integrated networks. Uh, and so they're looking for help in how do you scale it, how do you get the, the best practices, the technologies, the workflows, et cetera . Uh, the physician governance models and the way that you engage doctors as well. Uh, and so there , I think that we're seeing wouldn't quite call it a trend yet, but we're certainly hearing from a lot of , uh, health systems that are interested in exploring different models that maintain alignment , uh, with the physician community and the health system , uh, so that they can manage clinical programs and service lines and do the right thing around patient engagement , uh, integrate technologies and data. All of that is really important. Uh , but they're looking for different, you know , organizational models that can, can help to , uh, solve some of these, these problems. Privia has four existing health system relationships, all of them, each of them a little bit different, solving different problems, but really all all are premised on the idea that , uh, we can , uh, help them better align community-based physicians into models where they can then work , uh, more seamlessly with those community-based physicians without having to acquire their practice or employ the doctor. Uh, so, you know, for them it's a, for the health system, it's a win-win much , uh, more capital efficient model, but , uh, strengthen the alignment long-term with these doctors. And for the physicians who were never interested in employment, it's a great solution because they are able to , uh, better integrate with their local health system, which they already know and trust , uh, and , and are able to , uh, get more sources of, of value , uh, that they can deliver back to their patient. Uh, so we're, we're playing in that middle ground, forming these relationships. Um , we're hearing from more health systems every day , uh, about their needs. And so I think we'll see more partnerships , uh, over time. But partnerships are hard. Partnerships , uh, require different , uh, culture, different norms, different ways of working , uh, than , um, all of us maybe grew up , uh, used to. And so, you know, we're, we're establishing things, we're testing them, and we're looking for , uh, like-minded organizations if you partnerships, as a real critical aspect of their growth model going forward.
Speaker 2:Yeah. That I, you know, appreciate all of that. And, and, you know, particularly that last point, partnerships , partnerships definitely are hard, and I would say that I agree , uh, with the, you know, the increasing , um, uh, rate at which hospitals and health systems are at least exploring and thinking about partnerships as a strategy and, you know, a potential way to improve performance , uh, on kinda all fronts in this regard. Um, Eric , when you and I have talked in the past, I know you've also sort of, you know , been working in this space where you've seen this , um, you know, increasing trend , uh, of partnerships. And I'm interested in your thoughts, you know, what are the key sort of areas where that, you know, our , our key focus area when negotiating a partnership. Um, how do you think about what a successful partnership looks like and, you know, guide your clients in , in the things that they should think about when, you know, going down that path?
Speaker 4:Yeah, I , I think the first thing is it requires a change of orientation by both parties. I think to some extent, a lot of actors, you know, in the more recent acquisition phase have have taken the view of, well, we don't need health systems. We can go it alone. We can go outside it. And a lot of health systems have taken the view of, I need to control everything. And so all sides of the equation need to kind of meet in the middle. And that's a , that's sort of a mental change. And it also, you , you need to have some level of governance that's joint and allow, you know, both parties some say and how things go because, you know, the health system typically is still going to provide services within their walls that are gonna be affected by any partnership. And they rightfully need to have some level of, of say over that. Uh, by the same token, you know, they can't bring in a physician group or, or a private equity entity and tell them what to do. Um, and , and a lot of them have started to realize, well, we're not really truly conversant in the physician space anyway, but how do I get myself comfortable that this alignment model is actually gonna work out for the health system? Um, you know, in some instances, the, the conversations I've had have been predicated upon , uh, prior conversations with payers saying, Hey, we're thinking of going this route, be it value-based care. You know, are you going to come to the table with us and, you know, help us partner and come up with solutions so that we break down kind of the old fee for service walls that existed. Uh, and I'm seeing that a little more too. Um, I guess those are the key drivers that , that I've noticed to date. It's , it's really getting over that first hump mm-hmm . <affirmative> , and to be honest, Daniel, I've seen somewhere where one party or the other just can never get over that. I think that's changing because of , um, financial pressures predominantly , uh, and somewhat of a changing of the guard , um, in the industry where a lot of the ones who really grew up under fee for service are now retiring or retired, and you've got a new generation that, that views the world a little differently. But , um, that's really the gating issue that I've noticed.
Speaker 2:Yeah. Mike, you know, you all have , have gone through this process with four , four health system partners. I think looking back, you know, what do you think , um, what, what are the kinda the characteristics of a , a strong sort partnership and alignment, you know, what you, what you look for now in a potential partner that, you know, makes you think this is gonna be, this is gonna work, this is gonna be successful. Uh , are there , are there things that you sort of may have done well before or may not have done so well , and so looking back, you know ,
Speaker 3:Yeah, I , I'd say way more things I didn't do well that I've learned, learned important lessons from, that's the important thing. You know, it starts of course, with , uh, shared vision for where the partnership should go. It starts with , uh, uh, you know, the appropriate alignment to make sure that , uh, you know, we're financially and operationally and strategically aligned to achieve the results that we're, we're looking for. Uh, but it's a people business. So at the end of the day, it always comes down to culture and shared expectations and clear expectations on behalf of each other, gets into the governance related , uh, items and working out as much of that in advance of launching the partnership. You can never anticipate everything, but we do a good job. And having been through several of these, we continue to add to our, our view of the world in terms of the scenarios that , uh, could or couldn't happen. So, I mean , testing and working through a lot of the what ifs and how they would be handled , uh, so that we're , uh, engendering trust upfront , and , uh, you know, these are are brand new. The people are, are, are new together. And so having that relationship that you can fall back on when things inevitably get , uh, difficult and challenging is, is really Im important. And we find the more hard discussions you have as early as you can so that you work through 'em or not, but, you know, ideally work through 'em, but also just develop that level of trust and , uh, and a culture of how do you work through 'em in a way that is gonna work on both sides. So I find those are really the critical things . So when you launch this thing and never goes as you planned, right, it always , uh, deviates from the work plan and the, and the strategy. So it's how do you deal with the tough issues? And if you've worked some of that out already, I think , uh, all, all the better to get these launched successfully.
Speaker 2:Yeah, that makes a lot of sense. I , I would also add, you know, making sure that, you know, you have the right operational and, and market leaders involved at the right time to make sure that, you know, the <laugh> the deal that you, you develop and the , you know, the plan that you put in place makes sense and is gonna be able to be implemented by the folks that are gonna be out there , you know, making it happen. It is definitely a , a lesson I've, I've learned.
Speaker 3:Yeah, we, we found also in dealing with such complex organizations that our health systems, even a local health system, putting aside a regional or national health system, that creates additional challenges. But even the local health system at times can be, you know, just, they have a unique culture, bureaucratic, consensus driven , uh, and so understanding how they make decisions, how they build consensus , um, setting very clear expectations and thinking about, you know , how do , how do you communicate all that, and really having support from the very top, like that is something we talk about all the time at Privia. We need to have the C E O bought in, we need to have the board bought into this. This is , uh, at times for these health systems dramatic change. So we need to ensure that that's being driven from the , from the top down where it can really be sponsored at that level.
Speaker 2:Yeah . Eric, I can , I can see you nodding along. It seems like some of that resonated with you. Anything, anything to add?
Speaker 4:I, I think there's an appropriate emphasis here on, you know, the tone at the top, I'll call it, or the leadership. And I'm working now with a situation where a couple parties had alignment and now there's a new management team. And the trust that was built, you know, is, is now being jeopardized because people are coming in and, and changing how they're viewing the world and changing how they're communicating with their medical staff. And, and in this case, the doctors had this arrangement, and it's being called into question. Um, it's really incredible to me sometimes how the personalities really drive , um, the results. And if you don't really line up those, you know, at the very beginning and continue that you can really , um, set up a situation that that gets difficult .
Speaker 3:That's a great point, Eric . We spend a lot of time when we form our partnerships and thinking through , um, a how to make 'em long term , but within that long term nature, accounting for what will just inevitably the changes that are gonna occur, people come and go, leaders come and go. The industry itself is, is changing so rapidly and new entrants coming in and leaving consolidation happening. Uh, so we try to design to where the partnership needs to be reactive to all of those, and to it certainly adjust, but at the same time, it, it has to sort of withstand all of that and come through the other side. Uh, so we, we spend a lot of time in the design of our relationships, again, scenario planning and accounting for different things that could happen and, and just making sure that , uh, in the end, the partnership itself will still be true to the original vision that, that it was premised on.
Speaker 2:Well, great. This has been a , a great discussion. I guess, you know, we have, we have a minute or two left and I think, you know , um, might provide the opportunity just sort of for a closing takeaway or, or final, final thought. Um, I can go first. I think, you know, the thing that I would, I would focus on from this discussion as it, you know, probably relates most to the work that I'm doing is there's a lot of , um, pressure right now on health systems both from, you know, intense pressure from a financial perspective, but certainly also, you know , heightened competition when we think about what's happening in the physician practice space and, and other aspects of innovation and disruption. Um, and I think that, you know, what we are seeing to be , um, you know, the, the folks that we're working with that seem to be , um, taking that pressure and seeing it as an opportunity to evolve , uh, they're, they're getting out ahead of the game game and , um, you know, it sort of turning , uh, lemons into lemonade in , in , in that regard and, and, and taking it on themselves to push themselves and, and , and try and figure out how, how they can evolve and, and grow and, you know, meet, meet the market as it at evolves rather than staying complacent. Uh, and I think that, we'll, we'll continue to see more of that. Um, you know, I, I, as, as things progress, Eric ,
Speaker 4:Um, this is gonna sound strange for a lawyer to say, but you know, I think we've got all keep in mind that we're talking about people here and humans and you know, I used to think people did all these deals. They got in a room, they pounded a table and yelled at each other and got it done. And that's just not the reality. Um, the reality is all people have emotions and they're all driven by certain things, and, and there's a lot of fear right now. Um, sometimes there's greed, there's opportunism, but from all that, you know, people need to create structures that function within our society and and allow each other to thrive. And you know, one of my takeaways in life at this point is if you're not meeting the other side's needs and you're not looking at the other side and you're not looking at your patients , um, you're not really solving anything. So, yeah, I guess, I don't know , it's hard to, hard to characterize it , um, in a legal way, but the approach has to be to solve problems jointly.
Speaker 2:Great . All right , Mike, you can close us out here. <laugh> ,
Speaker 3:Uh, <laugh> a lot of pressure to close us out on something intelligent here. I , I , I just come back to the point we talked about earlier around sustainable and repeatable and predictable. Um, we all, as , uh, you know, people have been involved in this industry, I think we have a moral obligation to leave it better than we found it. And we all know it's well documented, the issues that the health industry faces. Um, and so what we're, we all need to continue to keep in mind are the , the models that you know, need to be put in place today that improve the models that are the status quo models, but models that also have a chance to sort of develop and evolve and, and sustain themselves over a long period of time. You put yourself into that small practice doctor, seeing a patient doing the very best that they can to improve the outcome for that patient. And all of this other stuff is sort of noise around it. And we just need to make sure that , um, the , the infrastructure, the technologies, the payment models , um, all are ultimately there to support that physician patient relationship and, and to do it in a way where takes the burden off of the doctor and the patient and just allows them to have that relationship that they need to have to improve the, the care that they they're getting. So I think all this innovation is fantastic, much needed. Um, some of it will last, some of it will not last, but I, I think, you know, we all need to be looking out for those models that are most sustainable over a long period of time .
Speaker 2:Absolutely agree . That's a very good closing, closing thought for us all. So I appreciate both of you. This was a great discussion. Uh , appreciate your participation and I , uh, appreciate everyone that's , uh, joined in and listened. Thank you all very much.
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