Ashes to a New Radiology Practice

People often ask me what I think will/does happen when private equity groups fail. The answer I’ve always said is it probably depends.

The work needs to get done, so there are three big options:

1. Direct hospital/system employment probably with locums in the short term
2. New private practice
3. Outsourced to teleradiology firm (potentially with IR/DR split and locus/direct employment for on-site procedural work)

There was a story this past summer in Radiology Business that I don’t think I shared here: to my knowledge, Mid Atlantic Radiology Consultants is the first completely new group to form to take back work from a reportedly unsatisfying Radiology Partner’s owned practice:

[President and CEO of Trinity Health Mid-Atlantic] “Woodward declined to identify the “large scale” imaging group to the publication, citing contract confidentiality requirements. But he shared a personal belief that such PE-backed provider groups “serve their shareholders’ interest, not the patients’ and doctors’ and hospitals’ interests.

Radiologists he spoke with conveyed a dissatisfaction with investor-backed groups that “come in and forget about the patients.”

This is an example of a hospital that chose to help create an independent group instead of trying to bring everyone in-house. Now, it’s worth noting this is probably not charity. They may have realized they’d have a harder time recruiting in the market with direct employment. They may not have had enough outpatient work to fully justify the numbers of rads they’d need to cover the on-site call pool. They may have preferred an external entity that they could blame when things go wrong or pressure, which wouldn’t be possible the same way for employed rads. The accountability calculus is simply different.

Regardless of the reason, it happened. I know some other hospitals, like some in Chicago, have shifted rads in-house. Still others, like one in Tulsa, have resorted to teleradiology.