Here's How a Savvy Anesthesia Group Approached Affiliation

Anesthesia group employees discussing affiliation

In today's challenging healthcare environment, it's tough for a small physician partnership to go it alone. Affiliating with a larger group can boost negotiating power, improve hospital relations, and provide valuable resources.

But finding the right partner can be fraught with pitfalls, as one anesthesia group discovered. Morpheus Anesthesia, Inc. (MAI) considered several options before voting to join Vituity

In today's post, MAI President Shale Imeson, MD, describes the journey and the challenges involved.

Perspectives: To start with, can you tell us a little about your group?

Imeson: Sure. We were founded over 50 years ago by four anesthesiologists from Stockton, Calif. We provide anesthesia services for Lodi Memorial Hospital and outpatient surgery centers across the region. At 15 physicians, we're one of the larger anesthesia groups in the area.

Perspectives: What prompted you to consider affiliation?

Imeson: It was part of our long-term strategy. We’ve always had a great, highly functional group and strong relationships with our hospital clients. But we did see a few things on the horizon that we wanted to prepare for.

A big one was the rise of corporate anesthesia groups. As members of a physician partnership, I think we all agree that physicians deliver the best care when they have real ownership over that care. But that's not always top-of-mind for hospital administrators when they're making outsourcing decisions. So we could see that going forward, we'd need more resources and economies of scale in order to compete effectively.

And in general, we felt that affiliation was the best thing to do for our patients. Because of our size, we felt the growing demands of payers, government regulators, and our clients acutely. In order to meet these, we needed more resources and expertise in our corner.

Perspectives: So what options did you look at?

Imeson: We actually got into serious talks with a couple of larger groups. One was a large local group that seemed like what we were looking for. But then we found out that they were planning to merge with a larger national group that was financed by third-party investors.

And that just wasn’t something we were interested in. For one, we wanted to keep running our own show.

Also, there’s a trend toward venture capitalists buying up physician practices. This benefits the practice owners in the short-term. But then the remaining physicians become employees, and the new owners then reduce their pay to "fair market value" and take the difference as revenue. And in five to seven years, once they’ve squeezed all the money out of the business that they can, they sell it.

So in that scenario, the practice gains no long-term benefit. It may actually get worse, because it can’t invest in innovation or pay competitive salaries. For venture capital firms, it’s a quick way of making money. But it definitely wasn't the future we were looking for.

Next, we talked to a national firm. And interestingly, they were also planning to sell in about five to seven years. In this case, they were very up front about it, and they pointed out that as early owners, we’d stand to make a lot of money.

So that was pretty fair of them. But we weren’t looking for short-term gain. We were looking for a long-term affiliation that would make us stronger and more competitive and increase value for our hospitals and patients.

And of course, we wanted to create a great future for ourselves, too. We wanted to maintain a practice environment where we could enjoy great careers and fulfill our noble cause, so to speak.

Perspectives: How did you first connect with Vituity?

Imeson: Our practice administrator Ruth Stephens met Craig Berlinberg, MD, Director of Business Development for Vituity, at a practice management conference. He was actually part of Vituity’s first anesthesia practice. He talked to Ruth about Vituity’s desire to grow that practice line. And Ruth, being a sharp character, sensed this might be a great opportunity for us.

We ended up attending Vituity's annual partnership meeting, and what we saw really blew us away. They just stood out head and shoulders above the other groups we'd been looking at.

This probably sounds really cliché, but for years, I’d been thinking about what a large multispecialty group of physicians should look like. I got to the point where I could picture it in my head. And when Vituity came along, it was almost exactly what I’d imagined.

Perspectives: What impressed you?

Imeson: From the start, we felt that we share the same goals and are driven by the same principles. And these are things that were very fundamental and go back to the founding of both groups.

For one, we believe physicians should lead the care of patients. The industry has been evolving in such a way that more and more things come between providers and patients. Insurance companies and government regulators are intervening more and more in those relationships.

And I think physicians have dropped the ball a bit in that respect, particularly over the last 10 or 20 years. We’ve given in when we shouldn’t have. We’ve failed to exert our influence when it mattered. I can certainly think of examples of that in our own practice.

That’s a shame, because when you talk to patients and ask them who they think should be in charge of their care, they want a medical professional. They don’t want shareholders or business executives calling the shots.

So for us, joining Vituity is our way of picking up the ball and saying, "Hey, things are going to change. We know good medicine. And no outside third party is going to hold us back from delivering the very best care. In the long run, that’s how we’re going to do our best for our patients, our hospitals, and ourselves."

Even payers benefit when physicians are in charge. Because when incentives are aligned toward quality and efficiency, costs tend to go down.

Perspectives: So you voted to become our second anesthesia practice.

Imeson: Second by minutes. The anesthesiologists at Washington Hospital, Fremont, joined the same day. So we can argue about who’s the older twin.

Perspectives: So now you've been with Vituity for several months. I know it's still a bit early, but what are your impressions so far?

So far, so good. Vituity has provided training for our leadership, myself included, in recruiting, marketing, and quality initiatives. It's helping us to make our processes more sophisticated and to add value for our hospital partners. And payer negotiations are a whole different ball game now that we're part of a national organization.

One of the most impressive things has been watching Vituity approach all the challenges in our industry. It's a slick organization, and I mean that in a very positive way. They’ve taken a lot of sound principles from the business world and applied them to the practice of medicine.

Way back in the 70s, they started a medical services organization to handle the administrative side of things. And they later added billing and risk-management to the mix. Between their size, momentum, and abundance of resources, they’re making quite an impact on the physician services marketplace.

It's interesting to see how they're taking some of those same business techniques that corporations use to boost profits and applying them to the care of people. Which is a very worthy application, in my opinion. And it really works.

To learn more about the benefits of partnering with Vituity, visit our Anesthesiology Solutions page.

Last updated Feb. 12, 2019.