Part of the ‘Go Big Or Go Home’ series
Two organizations known for supporting independent physician practices are making big moves to expand and gain economies of scale. The heads of AAEM and USACS explain how these initiatives will help them compete in an increasingly competitive marketplace.
Click here to read: AAEM Creates a ‘Physician Group’ to Bolster Small Practices
If you attended the ACEP Scientific Assembly in Boston, you may have noticed that one of emergency medicine’s biggest recruiters was going by a new name. Why did EMP become U.S. Acute Care Solutions and what does it mean for other physician-owned groups? To find out, we talked to Dominic Bagnoli, MD, CEO of both EMP and USACS.
EPM: What was the motivation behind morphing EMP into USACS?
Bagnoli: We are passionate about our strategy that physician ownership matters and should be the cornerstone for our platform, but also realistic enough to understand that size, sophistication, excellence in operations, and scale for contract negotiation and health system partnership matters as well. US Acute Care fires on all these cylinders. But I am very willing to speak openly about how we got here. Until 14 months ago, EMP had no intentions of doing anything different than it did for the first 23 years of its history. Of course we talked to people when they approached us, but unless someone would have presented us with a visionary plan, we wanted to continue to grow organically. Our goal from the beginning was to create a physician partnership that staffed hospitals across the country, with care delivered by the highest quality clinicians. But the market changed around us, and as we evaluated the opportunities we asked ourselves: What could we do to make sure physician ownership played a role in our industry for the next 20 years? Could EMP create a model that would allow physicians to remain majority shareholders of a national company that provided acute care? We believed that we owed it to our physician partners to explore the market because all of a sudden we saw the landscape change, and payers, health systems, and other groups were consolidating rapidly. That’s why we started this process. One of our first marketing ads was “when you find the right fit, you know it.” We ran that ad with a picture of a pair of jeans. Well, US Acute Care Solutions was the right strategy and felt like “the right fit”, and now feels like “the right fit” for all of the partnerships we are creating with other high quality groups. Our partners are groups like us that had never considered doing anything else and often have been providing care within the same systems for decades. Our doctors voted without one single dissenting vote to work with Welsh, Carson, Anderson, and Stowe to create US Acute Care Solutions together and build a national company centered around physician ownership.
EPM: Is this move a harbinger for other independent groups around the country?
Bagnoli: Independent physician-owned practices are feeling the same things we felt as we decided to make this move. Several groups have just decided that they don’t want to deal with the challenges ahead and have already been acquired by public companies, losing their ownership stake, voice, autonomy, and engagement, and there are many others looking as well. In the early days of emergency medicine, physicians were employed by hospitals. Then the creation of independent groups began because they could provide a better opportunity for emergency physicians than what they believe the employee model provided. The independent groups believed that owning their practice made a difference. Lowering administrative costs and scaling became important and they started to grow mainly as regional groups. At the same time, national groups appeared, but they were very different, not focused on a large physician partnership, but more around an entrepreneurial founder and an independent contractor model. The regional and national groups became very competitive with the local groups and that’s how “big” became “bad” in our industry. No one cared what your structure was… if you were big, you were bad. The larger groups could reduce the administrative cost, and be more efficient sharing best practices. The problem was that the profits weren’t shared with the physicians. So the reputation just got worse. Later, ED groups became public companies so they could raise the capital they needed to continue to grow. Large groups can provide more resources and support to their physicians than small groups. They also can negotiate and work with the payers and the hospital system more efficiently. Soon we will have 3 large commercial payers and health systems are growing and merging rapidly. The decision makers in healthcare recognize size and strength when looking for partnerships, and that naturally extends to physician services as well. If our industry doesn’t respond, we will have no ability to exist long term.
EPM: What’s in a name? Why switch from “Emergency Medicine Physicians” to “Acute Care Solutions”? It feels like you’re downgrading the importance of emergency medicine and broadening your scope. Is that true?
Bagnoli: There were two real reasons why we changed our name. The first was if we were going to become a national platform and have other high quality independent physician groups join us we wanted to create a new entity in which we could all be founders. If you’ve worked 10 or 20 years creating a brand of the company, it’s hard to give that up. But it’s easier to do that if it helps develop the next great company by joining a new organization that levels the playing field. The second reason why emergency medicine is not in the name is because emergency medicine must evolve outside the four walls of the emergency department. No longer can it function as an independent specialty. We fought for years to be recognized as the front door. We brought people through the front door of the hospital and treated them and either sent them back out or moved them into the hospital. There are many more things to manage today, and emergency physicians can be great resources for our health system partners by taking control of the acute care process. I firmly believe we are the best equipped to do so. Patients need to have access to multi-channel acute-care depending on the level of severity of the illness and the services they require. This approach also helps us reduce the cost and provide lower-cost services for patients who don’t need high intensity, high cost, hospital-based services. Additionally, observation services, hospitalists and pre-and post acute care all need to be included in this system to make a real difference. We believe that to be successful as for the next 20 years we must create an organization that helps health systems manage their patients more effectively and control the entire acute care lifecycle better.
EPM: I’ve noticed USACS announcing new partnerships lately. How big do you want to be? What’s the general trend behind the growth strategy?
Bagnoli: What we’re trying to do is find groups that are willing to join as partners. Physician groups who are interested in selling their practices, working as less engaged employees, or retiring are not the right fit for USACS. We are looking for physicians groups who remain committed to physician ownership and are looking to partner with a large organization to continue down the path they started. USACS is doing the exact opposite of what some of the larger companies are doing. They believe that physicians will be as engaged after they are sold, as they were before when they had full ownership. I don’t buy it. Not for a second. And I think we are seeing this play out in the marketplace. Our VP of Recruiting, Dr Travis Ulmer, always says on the recruiting trail “Do you ever wash your rental car?” I don’t care what industry you’re in or how big or small you are, owners always work harder than the employees. How big do we want to be? We will continue to grow as long as there are high quality physician owned groups that want to join us. They now have three choices, sell out and become employees (and who knows what the future will bring), stay the course and risk contract changes as your hospital consolidates, or join USACS to take some risk off the table and own part of a larger organization with the same principles you had as a smaller group owner.
EPM: In a market full of large contract management groups, what’s going to make USACS stand out?
Bagnoli: There is no comparison. The three largest groups in the country are public or majority owned by a private equity firm. Physicians own the majority of the stock in USACS. Physicians represent a majority of our Board of Directors, our chairman is an emergency physician, Peter Hudson, MD, and our minority partners think that this is the secret sauce that will differentiate us from the competition. We know that this is the truth and we see it working every day. It won’t ever change, unless we as physicians decide to change it.
EPM: What’s the biggest difference between EMP and USACS?
Bagnoli: The mission, vision, and values are the same, but EMP is just one of four founding partners now. And before long we will add a few more groups as founders. The biggest difference is that we now have the resources to compete directly with the larger companies in our industry.
EPM: How are you adapting operations on a large scale to meet changes coming down from the Affordable Care Act?
Bagnoli: Once we made the decision to create a national company we hired an executive senior leadership team from all parts of the industry. They have experience running and managing billion-dollar companies in healthcare. We also started to reach out to some larger health systems to find out what they want. Some of them have been burned by public companies buying practices, taking physicians and turning them from owners into employees. Productivity and efficiency go down after purchase most the time. We believe that happens because they lost the motivation of ownership. That’s why in our partnerships we want physicians to remain owners in USACS. Then we can align the incentives of what the health system wants with what our physicians will benefit from.