Hi, everyone. This is Erica Spicer Mason with
Becker's Healthcare. Thank you so much for tuning
into the Becker's Healthcare podcast series.
I'm looking forward to today's discussion about physicians
and their employment decisions
and the impact this has on financials, patient
care, and more. And helping us navigate this
topic today is Marty Nichols, cofounder and acting
COO of Physicians First Bancorp.
Marty, welcome to the podcast. Thank you so
much for joining us. Well, thank you guys
for having me. Becker's has been
a big deal to my industry for a
long time, so it's an honor to be
here.
We're thrilled to hear that, and we're equally
honored to have you here with us, Marty.
And before we get into the meat of
our discussion today, would you mind sharing just
maybe a little bit more about your professional
background, your current role in organization,
whatever feels top of mind for you? Yeah.
Sure. I I I started in the orthopedic
world and the MSK world in the mid
to late eighties.
I was fortunate to get on with a
company called Depew Orthopedics. This was pre
Johnson and Johnson.
I started as a rep and worked my
way up to a distributor with them and
then started seeing some things change in the
industry and especially,
around the time of the Johnson and Johnson
acquisition.
There was a lot of consolidation
going on in the device
world at that time, and it's still going
on today.
I kinda realized and started looking at the
industry was going to make devices a commodity,
that a knee was going to become a
knee, a hip was going to become a
hip. And although I don't necessarily agree with
that, I believe that there are differences in
the devices.
I think what the industry saw and knew
was the real magic in the outcome was
the physician.
I've always believed, you know, that give me
a a good physician and a mediocre implant,
and I'll give you a better result than
with a mediocre physician and a good implant.
And I think that's true with the technologies,
and stuff that we're introducing
now today too.
The physician is really what makes it work.
And along with that consolidation in the big
companies, we started to shift the focus away
from the relationship between the with the device
companies used to be the physician was their
customer,
and the hospital and insurance companies were entities
that they had to deal with in order
to do business with their customer, which was
the doctor.
The bigger companies started moving the the customer
to be the hospitals. Contracts became more important
than devices and sales,
and the doctors started becoming the people,
that you had to deal with in order
to do business with your customer.
So I was fortunate. I got an opportunity
to jump on with a company called Pleus
Orthopaedics out of Lucerne, Switzerland. We introduced a
technology called Pi Galileo
into the United States. We had a wonderful
run with it. I got to work with
some great physicians. We we did a lot
of neat stuff with technology.
They got acquired by Smith and Nephew.
I was then blessed, and I met the
Siccardi family,
and was able to get involved with Medacta,
who looked at technology different than navigation and
robotics and computers, but looked at technology as
being a technique, surgical techniques or tables and
things that we could change it, but really
had a focus on the physician customer.
So I was able to work with them
as they brought the direct anterior
approach in the United States and really focused
on education
and focused on, you know, physician driven
products
and services and and techniques. And then a
very dear friend of mine and a mentor
to me that taught me a lot about
orthopedic, George Cipolltti,
was at Omni at the time, and they
were looking at a a technology acquisition out
of Grenoble, France called Praxim.
And he offered me the opportunity to come
and integrate it into them. And we, developed
what is now the Apollo,
with Korn. Again, the company eventually gets acquired
once the technology gets good enough, but we
developed the the balancing and stuff.
So now what I've done is shifted my
gears, and I'm now working in and looking
at the financial side of of health care
and stuff and trying to give something back
to the industry.
And that is all of my career, we
worked towards making physicians more efficient so that
we can cut their pay every year, and
they can still maintain a level of income.
I'm now trying to work with physicians to
find a way to increase the amount of
money that they hold and hopefully allow them
to start seeing less patients,
and make
the same money. Because I think we've kinda
crossed a chasm where where efficiency is no
longer a good thing in MSK.
Marty, what a great intro. Really appreciate the
background. And just based on your career path,
it sounds like you have such a a
unique perspective. You've got this medical
device and kind of the business side that
you've seen, but also it it sounds like
you have a really
strong working understanding of the clinical
side and what physicians are facing on a
daily basis as well. So I think it's
great that you're here for for this conversation
and especially to address this topic of kind
of physician employment trends that we're seeing today,
which to your point about how you noticed
all of those changes in the medical device
side, we're certainly seeing a lot of changes
in in the ways that physicians are working.
So to give you a a quick example
example, and this is more so for our
listeners, of course, We know that nearly 80%
of physicians now work in an employed setting.
So wondering if you can give our listeners
a sense of the current landscape for independent
physicians and the factors that have led so
many to choose hospital employment.
Yeah. No. This is a great question and
something that we need to pay attention to.
I think one of the challenges that we're
seeing in America right now is we've become
a country that's so divided that that that
we tend to wanna think that there's only
one solution. You know? Everybody should be a
hospital employer. Everybody should
be in private practice. And and that just
couldn't be further, you know, from the truth.
The reality of it is is you need
competition. You need multiple different venues or or
places for this to go, and that's what
drives, you know, better care. The most concerning
thing to me about the trend towards the
physician employment of hospitals
is the reason why
the physicians are going there. If you look
at it traditionally,
a physician
health care shouldn't be about profit. Health care
was never about driving profitability and things. It
was about treating an ailment, making a a
vulnerable patient better.
When a when a physician in a private
practice negotiates
terms or or treats a patient,
the profitability
is basically the salary, the money that they
get paid.
When you introduce 3rd parties into this, things
like a hospital,
now you not only have to pay that
physician.
You also then have to make shareholders happy.
You have to support other
areas within the hospital and make that work.
So my biggest trend is and I'm not
one of these people that says that hospital
employment is bad. It's not bad. There'll always
be a role in a place for physicians,
hospitals to employ physicians.
What's bad is if a physician feels that
they didn't have any other choice.
And that's what we see right now
with our financial institution or with the holding
company as we're interviewing and talking to these
doctors.
About
20%
to 30% of the physicians that we talk
to that are within the first five years
of their practice after getting out of a
residency or fellowship that are hospital employed.
As we talk to them, they'll tell us
they say, look. When I got out of
medical school or I got out of my
fellowship, I just really wanted to take care
of patients. I just I was trained to
do surgery. I was trained to see patients.
I was trained to treat them. I didn't
wanna have to run a business. I didn't
wanna have to hire and fire people. I
didn't wanna do all that other stuff. So
they, in essence, hit the easy button. They
went to work, you know, for the hospital,
and that's good. If that's what they wanted
to do and that's what their passion is,
that's a good thing. I think later on,
they start to realize that some of their
autonomy gets taken away,
so it can be challenging.
The other 70% that we talked to, this
was the scary bunch. These were the people
that you talked to that said, look. I
would have really liked to or preferred to
go into private practice when I got out
of my training residency.
But with the amount of debt that I
had from my student loans
and no work history,
I couldn't afford to buy into the ambulatory
surgery center and the private practice. I couldn't
afford to buy into the PT and the
other ancillaries,
so I didn't feel I had any other
choice. The deal that the hospital offered me,
you know, was a better deal. And this
is why we have so many doctors reaching
burnout,
and an unhappy point in their care of
their patients and stuff is they took a
position not because that was what their passion
was and what was driving them. They took
a position because they didn't feel they had
any other choice, and and that's what I
think we need to address in health care.
Yeah. Marty, you're you're touching on something that
we know just from our readers and what
we hear at our our conferences and events
is that physician autonomy is so crucial, not
just to the physician's own happiness, but the
way that they deliver care and their experiences
with patients. So,
yeah, I really appreciate you kind of painting
that that landscape for our listeners. I think
that's really helpful.
And I wanna dig into just a few
other business trends that I think would be
great to get your perspective on.
So we know that within about the last
decade, the number of physician practices that are
owned by private equity groups has jumped more
than 600%,
which is
a jarring statistic. We do know there has
been a bit of a slowdown in the
last year, of private equity activity, but in
any case, huge jump. And so we'd like
to know based on your experience,
how has private equity affected private practices?
And what challenges or even opportunities do you
see here?
Yeah. And, again, I I don't think it's
good to label something good or bad. I
think you have to look at why. You
know, ask why why what's driving that 600%,
you know, drive and everything else?
Private equity,
there could be a role in a lot
of different companies or a lot of different
industries and stuff. I'm just not sure
that private equity is right for MSK delivery
with where we're at today.
And and and I'll talk about that a
little bit deeper in the reality that what
private equity really does
is they make money through efficiencies, through driving
efficiencies.
And I think one of the really big
challenges that we're seeing and why you're seeing
the drop off and I think the drop
off's even gonna be higher,
and accelerate almost as fast as it ramped
up. I think it's gonna start to deteriorate
and go out the other way. This is
an industry that was already so efficient
that it was almost frightening. When when I
got into this industry,
the giants, as they talk about at the
meetings that we stand on the shoulders of,
the John Insoles, the Engs, the Westmorelands,
the Hungerfords,
the Harris',
These doctors did 80 to a 110 total
joints a year,
and they were able to make the money
that they needed to make and practice medicine
the way they wanted to practice it.
Today, we have a gentleman out there that's
talking about 12 by 12, doing 12 total
joints by 12 o'clock,
in the in the afternoon.
And as with anything in business, there's a
curve even with the technology and the efficiency
curve. There is no doubt in my career,
I was I've seen a transition from there
was a point where the more that the
physicians did of this procedure, the better the
outcome and the better procedure came and the
more efficient,
things got. But with all things like that,
there's also a point in that curve and
a point in that time
where efficiency can now start to bring. And
when you start moving these surgeons from from
a 110 joints a year to the middle
of the road, surgeons now are doing 400
to 650
of these surgeons
surgeries in a year, what happens is there's
a point where something starts to break and
you no longer gain benefits from that efficiency.
Something breaks down on the other side of
it, whether it's the quality of the outcome
because you're doing too many of the same
procedure
or you start to lose the efficiencies of
the cost.
And I think if you look at why
PE got into health care, PE got into
health care because they saw an opportunity for
profits.
And as I said before, health care shouldn't
be about profitability.
Health care should be take be about taking
care of a patient, you know, that that
needs help and needs that assistance.
So what's one of the challenges that PE
is going to see is the fact that
we've peaked that deal or they're trying to
come into an industry
that's so efficient
in in the delivery of the actual product,
the surgery to the patients, that the efficiencies
have to come from taking away, taking away
services, taking away, you know, staff on the
inside, taking away something else. And one of
the biggest things that are taken away that
scares me the most, they're taking away the
patient physician,
relationship. We now hear the term provider used
an awful lot, and there's actually people that
would like provider and physician to be interchanged.
And that's a really dangerous bad place. There's
a reason the physician's a physician. There's a
reason they go to the school that they
go through, and they carry the licensure that
they do. That's not to diminish what providers
provide. Providers, PAs
and nurses and scrub techs all provide a
critical role. They're trying to make it homogeneous
that they're all the same. They're just not.
And within my career, one of the things
that I saw and one of the things
that this efficiency in the PE has really
taken away from it is is that they
now want a provider to preop the patient
because the the doctor's making them money, making
a hospital money and making PE money when
they're putting a knife to skin. So they
want the provider to see the patient and
work them up before the surgery. They want
the provider to see them post op after
the surgery. And that's a really dangerous thing
because
a lot of these cases that I saw
early on with these doctors, there was times
that we would walk out of the OR,
and we'd shake our head. Things didn't go
as well as we wanted them to. It
was a struggle. You know, it was a
fight. And they'd go, oh my gosh. I
hope that this goes well. And, man, I
hope we didn't do any damage. I hope
that this doesn't end up a revision. I
mean, their passion in them, they really hurt.
And it was that patient that 2 weeks
later or a month later, they saw in
their clinic, and it was that patient that
hugged them and cried and said, you know,
doctor, you gave me back my life. You
know?
I'm so happy. And the and the doctor
was sitting there shaking their head going, oh
my gosh. You know? If she's happy or
he's happy, you know, what what are my
other patients doing? We're taking that
aspect of passion and
and and and that part of the care
away by just having these doctors
operate every single day. I think the other
challenge that PE is facing and the problem
is
our medical system is broke that if I,
as an entrepreneur,
build a company and I grow it from
nothing to 10,000,000 or $20,000,000
one of the bigger companies is gonna look
at it because I've made an impact. And
at the end of my career, I can
sell my business. And if I'm doing 10,000,000
in sales or 10,000,000 in in gross profits,
I can sell that for 3x to 10x
to one of these other companies, and that's
part of my exit strategy.
We have this terrible misnomer in the United
States that physicians are rich because how much
they're paid, and yet they're cut every single
year. We've cut the physician's reimbursement,
but the cost of health care is going
up. Physicians make the money they make because
of how hard they work, not how hard
they pay. And then the second thing that
hits them is they get to the end
of their career, and there's no exit strategy.
The day they can't see patients anymore,
they can't make money, and nobody's gonna buy
their practice from them because they're saying, look.
This guy can't operate forever. They're gonna have
to to drop out. I'll just pick up
their patients when it comes out the other
side. So
PE tends to focus on those physicians that
are late in their career that see a
nice piece of money, a a means with
which to sell out their practice and move
into retirement.
But for the people that are on the
other end of the curve, PE may not
provide the same value and the same solution.
And I think alignment is a real challenge
within our our industry and
and and and physician satisfaction.
So I don't know that PE is necessarily
bad. I'm not gonna say PE is bad.
I don't think PE is the solution for
where this industry is at in its, in
its maturity and its curve.
I really appreciate the perspectives here, Marty. I
feel like we almost need a multi part
podcast episode to get into so many of
those points that you addressed. I would love
to come back. I agree.
Yeah. But just wanna say I I really
appreciate kind of this reframe on efficiency that
you're bringing up here. I think in almost
every podcast episode or or virtual panel that
I've moderated lately, efficiency is coming up as,
you know, a key topic area, something that
hospitals and health systems really need right now
to work with slimmer staffs, you know,
respond to an increase in demand for care.
But but it's interesting to consider, you know,
when efficiency is pushed to a certain point
on that curve like you like you mentioned,
what's at stake and what has to be
sacrificed. So,
so, Marty, you know, considering all of the
trends that that we've discussed, whether it's physician
employment
and where we're at with that, the status
of PE investment in health care,
what advice or best practices or even next
steps would you recommend to ASCs and physician
owners to really support and sustain their private
practices?
Yeah. So first of all,
ASC owners and managers, the people that do
that, you know,
make sure that the physician and pay physician
patient relationship is the focus, not profitability. If
you if you do the right thing in
health care, about taking care of the patients
and stuff, money should take care of itself.
If you if you start to focus too
much on the money, you know, we give
up what the real prayer the real principle
of all this is, which is health care.
For the physicians and stuff coming up today,
you know, I I don't think you get
caught up in the argument,
you know, or the concern, you know, hospital
employment versus,
private practice, which is better, which is worse.
It's a it's a personal answer to you.
The thing that I found and learned with
physicians is that it most physicians, it truly
is a calling. It it's the passion that
they have to provide, you know, care to
the patients.
So I think that the two things you
have to do is follow your passion
and then look for the culture
that allows you
to to follow your passion. If if hospital
employment
truly allows you to do what you believe
is in the best interest of of your
training and stuff and and and care of
the patient, then find the hospital
that has, you know, is going to give
you at least the autonomy of the implants
and stuff that they contract with or ones
that you're comfortable with you use, that the
staff that they provide you, that you have
some touch point and stuff in their own.
When we talk autonomy, it's such a big
word. It's not just patient physician relationship. It's,
you know, might doing a procedure with a
with a nurse that was in a heart
room an hour ago, and so I'm having
to train the nurse or the scrub tech
at the same time I'm trying to do,
you know, my case.
So if you're gonna go into the employment
world, you know, follow your passion in that
employment world and then look for those sorts
of things. Make sure that they allow you,
you know, the the autonomy of of treating
the patient in the best manner with which,
you know, you can treat that patient.
And I think the same thing with with
private practice. If you believe that private practice
can take you, there's a lot of organizations,
like myself,
what we're doing here at PFBI
and others. There are some really neat groups.
For years, we've talked about how physicians traditionally
aren't good business people, and I think that
that's just wrong. Physicians weren't focused on business.
They're they can be good business people if
you want them to. And if you look
around again, if you're gonna go into into
private practice,
make sure you find that culture. And there's
some really strong I mean, we're seeing groups
like Emerge Ortho and and and OrthoVirginia
and CAO out of DC and OrthoIndy
and OrthoCinci,
DMOS. I mean, as these physicians are coming
in groups, are coming together in their in
their consolidation and what makes their consolidation difference
is they're consolidating not to make more money.
They're consolidating
to stay in private practice.
While PE and hospitals want doctors to make
more money by seeing more patients,
The value on private practice is if you
get in with the right ones, you should
be able to see the right amount of
patients to provide the care that you want.
And there's organizations now like PELTO,
and Hopco,
a lot of people that are focusing on,
know, keeping physicians independent if that's what you
want.
And and I think that that's where we
need to go. And I think that's the
most important message to to health care right
now. Competition is good. There shouldn't be one
solution,
for physicians to come out and treat patients,
but there should only be one focus, and
that focus should be the health care or
the health of that patient.
Mhmm. So well said, Marty, and really important
considerations for our listeners about following their passions
and looking for culture,
workplace culture that can enable it.
Again, really appreciate the time and and your
insights today. Before we close our discussion, is
there anything that you'd like to share with
our listeners? Any final thoughts here?
No. Just thanks to Becker's and and and
and, you know, and all these doctors and
stuff,
get involved. You know, part of the problem,
I think, that that that we've gotten the
industry to where it is is because a
lot of physicians, a lot of people in
this industry just kept their head down and
thought, you know, as long as I just
work hard, as long as I do this,
everything else will take care of itself. If
you want a better environment to work in,
better outcome and stuff for your patients, you
know, get involved. In in in the Becker's
meetings, there's a lot of really good meetings
out there and stuff, but but you have
to be involved. You can't sit on the
sidelines and hope somebody else
make sure life and your work environment a
better place to work. You know? So
Oh, Marty, thank you again. I've truly enjoyed
talking to you today. Thanks again for making
time for our podcast. I will see everybody
in Chicago
in the new at the next ASC meeting.
Can't wait to see you there. And Alright.
We'd also like to thank Physicians First Bancorp
as well for sponsoring today's episode.
So listeners, you can tune into more of
our podcasts by visiting Becker's podcast page at
beckershospitalreview.com.