These discussions should never lose sight of that all-important trio: quality care, patient access, and patient satisfaction.
What is the Proper Role for Private Equity in Dermatology?
Dermatology is a small specialty with many bright leaders and differing opinions. As we experienced firsthand at this year’s outstanding Annual American Academy of Dermatology Meeting, Dermatologists take pride in debating practice issues with great spirit, vigor, and intellectual honesty. At the moment, one topic drawing much debate is private equity (PE) and its proper role in our field.
I believe conversations about the role of private equity in dermatology are healthy and necessary. But, as a physician and the President of Forefront Dermatology, a successful group practice backed by private equity but led by me and other physicians, I can also say that we must make those discussions fact-based and attuned to difference.
Our annual meeting demonstrated the values we Board-certified Dermatologists share: a sense of community, deep purpose, and a commitment to continuous learning. It also demonstrated that as individuals our paths have naturally diverged. We have gone into academic medicine, hospital positions, or various forms of private practice, each path with its benefits and drawbacks. Working for a private group practice, one backed by PE or not, is not right for everyone. And I think it’s great we make different choices. Why then are critics so suspicious when they talk about private equity? And why are we letting them paint private equity with such a broad brush? You and only you know which path suits how you wish to practice medicine.
The context for PE
Over the past decade, Dermatologists have faced acute challenges from all sides. The pressures facing our specialty have multiplied: from practice management concerns like rising overhead and the number of uninsured patients to the many ways “healthcare reform” has increased and complicated the burden of documentation. This context helps explain the emphasis this year’s AAD placed on practice management and physician burnout, which are of course intimately related. As our administrative burden has grown, so has our rate of burnout. This context also explains why many have welcomed the arrival of practice management support resources to the field.
From a physician perspective, the right Dermatologist-private equity team funds greater investment in superior practice management tools and resources and can spell much-needed relief from overwhelming administrative obligations. In other words, it provides access to operational services on which doctors aren’t interested in spending valuable time. If the physician is an owner of a solo practice, joining a group practice also relieves the profound stresses of small business management, including decisions and negotiations around issues of licensing, insurance, and OSHA compliance, to name just a few. Lastly, some PE-backed practices are helping groups face the stubborn problem of uneven patient access. My group is led by physicians who are dedicated to providing board-certified dermatologic care in areas of low access, and our PE partners have helped us realize this goal. We have been successful in addressing patient demand more systematically and more successfully than hospitals or solo practices ever have.
Bank vs. “backbone”
We Dermatologists have chosen an amazing field: the work is intellectually stimulating, our colleagues are motivated to perform, and we enjoy great job stability because our skills are in high demand. Private equity partners have developed their interest in dermatology for many of these same reasons (high demand above all).
No one would argue that private equity is ignoring the bottom line. But paying attention to financial sustainability is what any financial institution does, including those we have used for years to finance our solo private practices. How about we stop judging PE-backed practices by their bank? Let’s rather judge them by their backbone—who is making the decisions, who is running the practice, who is setting the values? Forefront is run by doctors, focused on serving our patients, and our thoughtful partnership with our bank provides us the resources to support happy doctors delivering superior patient care.
I can’t speak to the intricacies of all PE practices, but I can speak to those of my group. At Forefront, private equity has helped us build solutions to external pressures, and that has enabled me and our physicians to regain control of our practice.
When PE acts like a bank and doctors provide the backbone, the doctors drive the decision making which results in more accessible, less stressful, high-quality patient care.
 Emily Margosian, “Feeling the Burn: Sources of dermatologist burnout and mitigating strategies.” Dermatology World (September 2017): 44-52.