As reported by Radiology Business, S&P has downgraded Rad Partners’ credit rating from B- to CCC+ (from vulnerable to speculative/junk)

The full descriptions of those ratings are here:

An obligation rated ‘B’ is more vulnerable to nonpayment than obligations rated ‘BB’, but the obligor currently has the capacity to meet its financial commitment on the obligation. Adverse business, financial, or economic conditions will likely impair the obligor’s capacity or willingness to meet its financial commitment on the obligation.

An obligation rated ‘CCC’ is currently vulnerable to nonpayment, and is dependent upon favorable business, financial, and economic conditions for the obligor to meet its financial commitment on the obligation. In the event of adverse business, financial, or economic conditions, the obligor is not likely to have the capacity to meet its financial commitment on the obligation.

As in, S&P doesn’t really believe RP can meet its debt obligations unless “favorable” conditions arise. I’ve reported on RP’s financial/PR problems before, including delays in profit-sharing just last week.

There was a great line referenced in the RBJ article that I’m not sure was intended as written or just an amazing Freudian slip (emphasis mine):

“That said, we also understand Radiology Partners’ cost saving initiatives, increased focus on organic growth rather than acquisitions, continued efforts to manage labor market conditions and ability to increase subsidies from providers, will eventually improve profitability and credit metrics,” analysts noted.

Assuredly RP is trying to get subsidies from its hospital contracts, but I suppose in many ways they are also keen on extracting subsidies from their radiologists as well.

Perhaps the recent management resignations (including the Senior VP of Finance and VP of Human Resources so far) are no coincidence either:

S&P said its downgrade also reflects RP’s corporate decision-making, which “prioritizes the interests of the controlling owners, in line with our view of the majority of rated entities owned by private-equity sponsors.”

You can read S&P’s announcement here.

I appreciate that not everyone is on Twitter—and frankly that’s probably for the best since it’s largely a toxic dumpster fire—but I did want to share this tweet/thread about a real situation unfolding at the American College of Radiology, the largest and most important radiology organization in the US. Among other things, the ACR sets standards for imaging center accreditation, creates the appropriateness criteria and incidental findings white papers we all love, influences reimbursement, and performs congressional lobbying on behalf of radiologists.

BREAKING: Did newly elected ACR board member violate election COI policy, failing to disclose that he works for @Rad_Partners? Here's a snip from the election manual indicating that he works for a medical school. Just another ACR academic insider, right? A thread…you decide. pic.twitter.com/6OANwAV8Yo

— American College of Radiology Partners (paRADee) (@ACRpartners) May 27, 2023

[Update: it looks like the ExitACR account got banned again. People involved in organized radiology like the ABR and ACR like to unfairly flag his/her content. The story shared in the thread was that RadPartner’s Associate Chief Medical Officer and head of Clinical Research and Education was elected to ACR leadership with his RP relationship functionally undisclosed to most voters.]

Insofar as anything involving organized radiology is newsworthy, this is news.

Who knows whether transparency here would have affected the election outcome. But we do know that this disclosure issue was debated fiercely a couple years ago, and this situation is exactly what people had in mind. I don’t know this radiologist, but it’s not just a paper relationship: he apparently went straight from the ACR annual meeting to be on stage at the RP Leadership Summit.

That said, this isn’t really a “private equity is just the worst” issue, because he apparently made the disclosures he had to make in order to follow the rules. It’s more of a problem/oversight with the ACR’s internal process compliance. However, it does reinforce how important these PE companies feel it is to infiltrate professional organizations (and especially to be high in the ACR leadership). It helps control the narrative and steer policy.

Every big democratic institution at least voices that it cares a lot about transparency and conflicts of interest. On that front, this is a big miss.

I posted two tweets the other day that deserve some further discussion:

RadPartners is now behind on paying its “unique” “profit sharing” proceeds to its “partners.” pic.twitter.com/KGCiTL87MK

— Ben White, MD (@benwhitemd) May 26, 2023

I’ve since by told by another source at RP that this is actually the third quarter in a row that profit-sharing has been delayed.

These “unique” payments are the ubiquitous practice of a group putting money in your 401k. “Profit sharing” is just the actual term used by the IRS. Practically, these contributions are just a portion of your compensation that is tax-deferred. For reference, my group contributes to my 401k on a monthly basis.

In other assuredly unrelated news, RP’s SVP of finance is resigning. pic.twitter.com/MbW3lOtDap

— Ben White, MD (@benwhitemd) May 26, 2023

Now, I am obviously not privy to RP’s internal workings, but I suspect these delays are twofold.

One, RP is suffering from cashflow/liquidity issues. That’s what they essentially say in the email snippet I’ve shared above.

Two, businesses have an incentive to delay payments/hold onto cash thanks to the time value of money: having money now instead of later is itself worth money–because you can invest it. By holding onto their radiologists’ money for longer, they can keep these funds earning interest, which helps their bottom line. This is a big reason why insurance companies delay care through denials and prior auths even for the things they know they will eventually cover. It’s also why Starbucks is basically a bank that sells coffee: they have over $1 billion in giftcards. Starbucks gets to invest all of that prepaid money before they incur the cost of actually giving you that delicious brown sugar oat milk shaken espresso.

The easiest way to make money is to have your money work for you.

RP needs (or believes they need) to do this now. Also note, these delays also started around the time RP laid off some of its nonclinical workforce.

This feels like part of a story.

When a “Partner” isn’t a Partner

The other word we need to address is partner.

It should almost go without saying that I can’t vouch for how every contract looks, but here’s the language for one of RadPartner’s “partnership” employment agreements:

Partnership Designation:
During the Term, the relationship between Physician and Practice shall be that of employee and employer and shall not modify or affect the physician/patient privilege or relationship. Unless otherwise directed in writing by the Chief Executive Officer of Practice, the Physician may refer to himself/herself as a “Partner”, allow others to refer to him/her as a “Partner” and refer to such other employees of Practice who have executed this Form of Employment Agreement with Practice as his/her “Partner”, provided, however, that the designation of “Partner” shall be in name only and the Physician shall not be an owner/partner of Practice under the law. Further, Physician shall not have any power or authority to bind Practice in any way, to pledge its credit or to render it financially liable for any purpose unless formally appointed an officer of Practice with such authority pursuant to Practice’s governing procedures and law or authorized in writing by the Chief Executive Officer of Practice.

You are a “partner” in name only.

This is the inescapable reality of choosing a “partnership” track job with an RP group. You are putting in the work in order to take on the responsibility of running the practice without actually owning the practice. It’s just verbal sleight of hand.

Evaluating “Partnership” Opportunities

Sometimes people reach out to me with employment offers and other quandaries for my opinion. (NB: Please note that I am a Person on the Internet and not an expert on most things including contract review).

A reader recently reached out asking for my thoughts on their partnership-track teleradiology-only employment offer with an RP-owned group. The offer included a decent workup salary with high productivity demands that I doubted most people fresh in practice would be comfortable hitting. As in, the W2 sounded very competitive on paper but was actually still pretty extractive taking into account the desired production. That’s not really news. All practices function this way at least to some extent. Partners make money on their employees.

The job also promised “full partnership” in two years with “equal profit sharing.” And this is the crux:

It’s true that whether you work at an independent practice or a private equity-owned group, the “profits” can always be zero. But the profits at an independent group are the profits (revenues minus costs). The profits at an RP group are something else. As United Healthcare argued in its recent lawsuit:

In exchange for these services, Radiology Partners siphons off large amounts of revenue from the medical groups. Indeed, on information and belief, the affiliated medical groups no longer retain any profits resulting from the radiology services that they provide, and all profits are instead kept by Radiology Partners.

An equal share of zero is still zero.

The stock offered to new RP employees is also almost certainly worthless. Don’t view the chance to catch a falling knife as a growth opportunity.

*  *  *

I promise I don’t begrudge anybody their career choices.

And you absolutely don’t need to consider what Random Guy with a Website says.

But if I were considering a job offer at an RP group, I would consider only the workup/employee salary and not make a decision based on the possibility of future increased income as a “partner.” I keep annoyingly using air quotes here for the same reason RP does: There are no partners. There is no partnership.

In each group, there are people who make less money and people who make more money, but they are all employees, and none of them are really actually entitled to much of anything. I won’t pretend to tell you what fraction of groups are happy with their sales and what fraction of groups are making good money and what, if anything, reliably differentiates the successful groups from the struggling ones. That kind of granularity is something that only RP knows, if anyone knows at all. But this much is undeniable: the partners are just employees who are usually paid more. 

*  *  *

If trainees flock instead to independent groups, then radiology private practice will stabilize and the independent model will survive. If they instead take one of the infinite positions offered by RP and their ilk, then they are casting votes for the corporate practice of medicine. I don’t have a crystal ball, but I remain concerned that the downstream consequences of that often understandable individual choice made en masse will be the tacit endorsement of the funding model and the acceleration of falling reimbursement and radiologist replacement.

If you want to work for RP, another PE company like Envision, USRS, or Lucid, or ride the current wave of teleradiology positions that pay relatively well, then you can do that. You don’t owe the field of radiology more than you owe yourself or your family. But it would probably be wise to assume that it is a temporary play and that some component of your job, either the money itself or the quantity of work asked of you, will change in the coming years. Radiology is in the middle of a nationwide shortage that will morph into a big unpredictable shift. Lots of radiologists change jobs, so you certainly won’t be alone.

Some of these are undeniably good employee positions right now. But don’t think for a second that a private equity partnership means you own the business. Because you don’t.

Here is the video for the American Board of Radiology’s town hall discussion about the new oral boards, which are coming to a computer near you in 2028:

Some highlights:

1. The ABR would like you to know that discussions about revamping the Certifying Exam started internally and “did not arise from an assumption that there was something wrong with the Certifying Exam.” (There is.) They did acknowledge that “nuance is lacking in the current exam.”
2. Any interesting formats such as simulation-based assessments weren’t possible due to “practical constraints.”
3. With regard to data about the effectiveness of either the old oral boards format or the current exams, Executive Director Dr. Wagner said: “We have no data that it DOES work.” He went on to say that proving the ABR exams have an impact “would be a difficult experiment to run.”
4. The initial timing will be during the second half of fellowships (first offered in 2028), but while the format is set, the timing would “not be hard to change” in the future if needed.
5. They will send out a “mock session” in the next few weeks apparently. I hope they also intend on releasing sample cases with sample scoring rubrics as well.
6. When asked about exam preparation/support from fellowships, Dr. Wagner said: “The ABR doesn’t really have a position on that, as to how a candidate should prepare.”
7. In the following discussion, the implication was that likely most preparation would take place during the fourth year of residency. It was not specified as to why it should be deep into fellowship (the phrase “the least bad choice” was used.) When asked why not just offer the Core and Certifying exams simultaneously or back to back, the ABR’s answer was that they were not interested in changing the need to pass the Core exam first in order to take the Certifying Exam, and the Core Exam takes time to grade. (But, yes, we could, again, in principle, just have written and oral exams like we used to.)
8. There will be no “hardcore” physics or non-interpretive skills.
9. The plan is for 7 25-min sessions with 10 min breaks between each. There will be an extra session (“recovery block”) at the end in order to deal with internet failures during the exam day.
10. The ABR currently spends more than $200 per item to develop its multiple-choice question collection. This exam won’t cost more, because no one will travel, the number of items is far smaller, and the judges are volunteering. In reality, this exam will be much cheaper. But also: no, they won’t be dropping fees.

Want more? Here is my initial discussion of the coming change.