GI Supergroups

Practice Management Update: GI “Supergroups”

By R. Fraser Stokes, MD PSG Practice Management Task Force Chairman. Disclosure: Dr. Stokes’ practice joined U.S. Digestive Health In June 2022.

@fraserstokes

For many GI physicians in small private practices, it’s crunch time. We are facing a multitude of difficult challenges. Overhead costs are up for supplies, payroll and supporting services such as accounting, malpractice coverage, IT support, and employee benefits. Reimbursements from private insurers have been stagnant for many years and have slowly and consistently dropped from Medicare. Due to a national healthcare labor shortage, it’s harder than ever to recruit new staff and retain established team members. In addition, physician recruitment is quite tough in many places, as there’s a shortage of 1500 gastroenterologists in our country. Administrative work to maintain a healthy practice has become quite daunting, requiring physicians to attend more meetings, problemsolve repeatedly with practice managers, as well as other timeconsuming activities. Keeping a small practice compliant with burdensome health care rules and regulations gets more onerous by the year. The future actually projects a worsening of some of these trends. Examples include inflation showing no signs of cooling, Medicare proposing an 8.4% reimbursement cut in January, and GI docs retiring at an increasing rate.

This has left physicians in small to medium sized independent GI practices with 3 choices: to continue with the status quo, to become an employee of a hospital system, or to join a GI supergroup. The first option is more viable for those in an area with an excellent payer mix and who have a highly skilled administrative team. A dominant national trend over the past five to seven years has been a decreasing percentage of physicians working in traditional private practice. The COVID pandemic accelerated this shift. Hospital systems obviously want to have GI’s in their community to improve patient care, but also to drive hospital finances through inhospital procedures, test ordering, and referring to hospital-based consultants. If a practice is struggling, a hospital may be motivated to purchase the practice and employ the GI’s in that group. Often, salaries are quite competitive, especially with the initial contract. However, hospital employed physicians often complain of a loss of autonomy and of dealing with red tape and administrative decision makers that have suboptimal understanding of and commitment to our specialty. Colleagues that are hospitalemployed may feel pressure to fulfill production quotas. The emergence of supergroups is a hot button topic in medical economics today. Dermatologists, urologists, orthopedic surgeons, ophthalmologists, and gastroenterologists have been increasingly joining single specialty supergroups over the past three to five years. The keynote speech at this fall’s PSG annual meeting focused on GI supergroups. At this point there is one GI supergroup in Pennsylvania, U.S. Digestive Health, that consists of 130 GI physicians and numerous GI advanced practice providers.

What is the typical process involved in joining a supergroup? For an established practice to merge with a supergroup, a highly detailed analysis is run on the private practice regarding finances, compliance, facilities, physician interest, and other parameters. A practice buy-out offer is then made with physician payment coming in the form of both cash and ownership shares in the supergroup. After the deal is closed, a transition then occurs over the next 3-6 months whereby administrative functions are increasingly done by both local staff and centralized leaders. Ancillary services, such as pathology, billing, infusion, anesthesia, nutrition, research, and breath testing are then managed by a centralized specialized administrative team. Employees of the practice, including providers, then become employees of the supergroup. When a practice joins with a supergroup, the supergroup often buys into a portion of the practice’s ambulatory surgery center.

Individual GI’s, such as hospitalemployed physicians or fellowsin-training have also been joining supergroups. They typically work in one of the supergroup practice settings as an associate for one to two years with a competitive salary and signing bonus, before being offered partnership in the supergroup with ownership shares. So, what are the potential advantages of joining a supergroup?

The biggest one might be physicians gaining access to a highly effective administrative talent. This can result in optimized insurance contracts, reduced prices for supplies and equipment, skillfully created compliance programs, knowledgeable and timely IT support, coders and billers that are focused on best practices for revenue cycle management, and access to thought leaders dedicated to strategic thinking and planning. Delegating numerous tasks to this administrative team can reduce stress and free up physician time – leading to less physician burnout. Most supergroups have a single highly efficient pathology lab processing specimens that are reviewed by dedicated GI pathologists. Supergroups often have a clinical research team that allows providers to enroll their patients in trials, which can both improve patient care and allow for an additional revenue stream. Supergroups also offer high level assistance with practice marketing and provider recruiting. Lastly, joining a supergroup can sometimes lead to a valuable exit strategy for gastroenterologists that are in the late stage of their careers. In most cases, supergroups are partially owned by private equity (PE) firms. This allows for greater capital resources to invest in key business infrastructure. PE firms are increasingly investing in nearly all aspects of our economy. PE firms can be highly valuable partners in supergroups. That being said, this author believes that it is paramount that physicians have ultimate say in clinical management decisions. Most supergroups allow for this.

For gastroenterologists, the practice landscape is changing rapidly. Maintaining a viable practice is becoming more and more challenging. Many PA GI physicians in the recent past have turned to hospital buy-outs. A new option for many GI’s may be to join a supergroup.