It is impossible for physicians to fully control our own destiny in today’s healthcare environment. All of us live within the broader ecosystem of organized healthcare. Scale is the name of the game for hospitals, payers and private practices alike—even if at various levels.
For context, in 2022, the three largest for-profit health systems in the U.S. reported combined revenues of more than $90 billion. United Healthcare, the largest health insurer, reported revenues north of $320 billion (which is greater than the gross domestic product of Finland). This creates challenges for the traditionally fragmented physician practice community. To achieve the clinical and operational benefits of scale, capital is required, and the use of outside capital in physician practices has prompted important questions about the risks, benefits and long-term impact.
Cutting to the chase, scale benefits radiology services, helping practices offer patients innovative healthcare solutions. These enhancements have been shown to improve physician satisfaction and practice performance, such as through IT deployment, AI deployment, process efficiencies, strategic relationships, and by allowing diversification across markets, health systems and payers. Most importantly, capital allows for scaled investments that benefit patients, including clinical programs and artificial intelligence.
Physician groups historically took on all the risk by pooling their own money—or taking out loans—to reinvest into their private practice. Practices now have greater access to capital channels, including private equity (PE). Critics may call this corporatization, but I view it as an opportunity for scaled investments in an increasingly complex environment. Are there risks? Of course. But there are also significant risks in standing still and letting the world change around you.
Do all PE firms seek a return on their investment? Of course. But PE firms are not homogenous, and behaviors differ from firm to firm. Some PE-backed practices are probably overly focused on economics. But let’s also agree that many academic and traditional private practices are also heavily focused on finances; it is why most private practices have radiologists work on initiatives like clinical program development in their free time or with limited dedicated hours demonstrating the prioritization of income distribution versus reinvestment of capital into the practice. Regardless of financial structure, practices should begin with the understanding that a “profits over patients” mentality is never acceptable, and that physicians need to be in leadership positions.
Scale is a strategy; private equity is just a tool. PE is a way to help achieve scale. PE investors are incredibly diverse. People often talk about 3–5-year investment horizons, investments but there is plenty of heterogeneity. For example, fund investments in my practice are more than a decade old by design. My practice specifically looked for investors with a long-term strategy who were aligned with the potential for radiology to improve, which meant reinvesting capital year after year into our practice. So, when it comes to investors for radiology practices, every situation and outlook is different and should be viewed as such. If you’re interested in an investor-backed model, pick the right investor partner, and make sure they’re aligned with your values, goals and mission.
Looking to the future, scale alone won’t protect radiology and radiologists from the many challenges we face, but groups that use scale to better serve the stakeholders that matter most, including radiologists, hospitals, referring physicians and—most importantly—patients, will be best positioned to not just survive, but thrive.
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