SCALE’s Top 10 Predictions for Physician Group Evolution in 2020

This is a collaborative piece written by:
Roy Bejarano, Co-Founder & CEO of Scale Physician Group
Jason Schifman, Co-Founder & President of Scale Physician Group

We are looking forward to a productive year in 2020 as we continue to partner with Physician Groups to help them scale for success and thrive in an increasingly complicated marketplace.  As we enter a new decade, we have prepared our viewpoint on the state of the industry and where it is headed.

Our experience in the field, mentoring at the most prestigious educational institutions, trading insights at key forums, and connecting and understanding Physicians and the challenges that they face allows us to provide real-time predictive knowledge on the industry.  The only thing constant in our industry is change.  Therefore, we will continually review these predictions, measure their accuracy, and adjust accordingly as we continue to work with complex provider platforms.

SCALE Top 10 Predictions:

1. High-Quality Operational Service: Levels of “strategic” competition will increase as private equity funded platforms start to mature into full-service management companies (true MSOs) versus initially platform practices. Quality of operational service will be a key variable in determining success – organized to execute and positioned to offer Physicians and other stakeholders something of value.  For example, differentiation will emerge between those who extract value from scale versus simply grow.

2. Avoid Difficult to Integrate Growth for the Sake of Growth: Platforms that grow too large too quickly will lose appeal amongst meaningful portions of the market as word spreads of discontentment amongst providers and other stakeholders. Successful Physician groups will increasingly need to demonstrate an ability to balance a desire for growth, service expansion, and augmented value proposition with continued discipline and measured growth that can be smoothly integrated – maintaining broad goodwill will be critical key to success.

3. New Versions of Multispecialty Platforms Emerge: A more organized form of multispecialty platforms will grow in popularity whereby single specialty “sub-platforms” exist under a multispecialty platform umbrella. Each specialty will be able to retain the benefits of a single specialty MSO while also participating in the benefits and opportunities of a multispecialty platform.  One way in which this may manifest is that we will see a current single specialty MSO acquire another single specialty MSO within a different specialty. We are entering a laboratory phase where new business models and strategies are being created before our eyes.

4. Strategic Partnerships / Alliances: We will see more emphasis on the concept of formal strategic partnerships over informal referral relationships. One form this may take is the above multispecialty platform concept, but we will eventually see regulatory changes that facilitate expanded partnership opportunities between different practices and sites-of-service in the interest of driving better coordinated holistic care. Performance based at-risk payment models will only help to accelerate these partnerships.

5. Reinvention of the Hospital: Large hospital systems will continue to struggle for the foreseeable future as other sites-of-service and entity structures expand to offer increasingly attractive higher quality/lower cost, more-nimble, performance driven alternatives. An industry wide reinvention of what it means to be a hospital will eventually be required, assume smaller hospital footprints and anomaly hospital systems that rush in the opposite direction i.e. extreme national size supporting too much infrastructure.

6. Minority Ownership: As practices become more sophisticated and older generations of MDs retire and the next wave of MDs mature, there will be greater selectivity by Physicians with regard to majority control MSO sales. As a result, an opportunity will emerge for those who are able to offer minority ownership structures at the MSO level.

7. Allow Room to Maneuver With A Flexible Balance Sheet: Platforms with excessive leverage will face a competitive disadvantage due to reduced margin for error and room to maneuver. Healthcare is subject to meaningful, and sometimes overnight, changes/volatility, including regulatory and reimbursement shifts that can rapidly and materially impact financials.  It pays to remain conservative with balance sheets.

8. Add-On / Complementary Specialties: Specialties and sub-specialties that are currently deemed as “less attractive” platform candidates will go through their own version of market consolidation and investment interest. These niche markets will look to “organize” in advance of becoming add-on complementary specialties to another platform and / or entering into formal partnerships with these platforms.  g., vascular, nephrology, neurosurgery, plastics, fertility, and more. Early adopting, risk seeking sponsors will be the first to enter these categories.

9. Broader Applicability of Value-Based Care: The overarching topic of value-based care will continue to motivate market movements and serve as a lubricant for future market convergence. However, not all players who pursue value-based care will emerge as winners and the definition of value-based care will continue to evolve to include broader applicability beyond primary care, as well as beyond only the largest of platforms within a given specialty. Anticipate a rapid growth in resource allocation towards these initiatives.

10. Platform Complexity: Provider platforms will continue to grow in complexity. Platforms will need to draw upon a broader portfolio of proven expertise. There are opportunities for platforms across all specialties to “win,” but operational wherewithal – i.e., the ability to execute efficiently and effectively – will increasingly be the variable that distinguishes those winners.  A supporting services ecosystem will continue to emerge and mature in the provider platform market to augment in-house management teams, solve for specialist expertise and fill current execution voids.

Where can SCALE take you? Let’s find out together.

We invite you to Contact Us to continue this conversation and look forward to an exciting year ahead.


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