The largest emergency medicine groups are in trouble
rethinking the scale of success: why bigger is no longer better in emergency medicine services
By the Core Clinical Partners Team
There’s an old saying in the tech world, unattributed: “No one ever got fired for buying IBM.”
The idea is twofold: one, that mega-vendors are always the safest bet. If nothing else, their size must mean they’ll do the thing, support the organizations, and deliver on their promises. The second point is that once an organization reaches a certain size and level of complexity (for example, a hospital), purchasing decisions become driven less by what the best solution is, and more about what will look best to the various stakeholders within the organization.
In healthcare, executives have long sought to collaborate with the largest emergency medicine physician groups available when it comes to outsourcing services. The rationale was a lot like the above rationals for hiring a vendor like IBM, simple and grounded in logic – with size comes resources, and with resources comes quality.
But as the healthcare landscape continues to evolve under the pressures of reform and digital innovation, this premise is crumbling before our eyes. It’s time to delve deeper into why the scale no longer equates to superiority.
The No Surprises Act: Disrupting the Balance of Power
The No Surprises Act has been a seismic shift under the feet of large physician services groups. This act, formulated to protect patients from unforeseen medical bills, has inadvertently tipped the balance of competitive forces in the field of physician services.
Pricing has always played a pivotal role in choosing emergency medicine partners. However, with the No Surprises Act putting new constraints on the billing practices of physician groups, the rules of the game have changed. The constraints of the NSA have taken a lot of wind out of the sails of the price argument for physician groups when negotiating with hospitals.
For larger physician groups, the altered landscape is unnerving. These groups have traditionally held sway over smaller counterparts by wielding their size in negotiations with insurers. As Core Clinical Partners CEO Dr. Boykin Robinson wrote in his newsletter about the law’s implications:
Remember that a big reason for EM groups to consolidate was to increase their leverage in contract negotiations with insurers. But EM groups have already ceded (or rather, had taken away) at least some substantial part of that leverage. The clear outcome is that, over time, the No Surprises Act will lead to an evening out of rates, so that there is less fluctuation between groups in the same market.
With the Act standardizing billing practices and introducing more uniformity in reimbursement rates, the competitive advantage of the largest emergency medicine groups has been significantly neutralized.
However, every cloud has a silver lining. This pricing shakeup serves as an opportunity for healthcare to shift its focus back to what should always be at its core – patient care. The influence of the No Surprises Act has initiated a move away from price wars and back towards a more patient-centric, quality-focused approach.
The Democratization of AI: Leveling the Tech Field
Another game-changer upending traditional competitive hierarchies is the emergence and advancement of AI in healthcare. AI’s transformative potential has been felt across numerous aspects of healthcare, from diagnostics to administrative tasks.
Historically, larger groups might have claimed that their scale enabled them to create superior in-house tools. But this argument simply doesn’t apply in the new, AI-dominated future.
Consider, for instance, the case of a physician services group attempting to create its own AI coding software internally. This would only result in the tool being trained on their specific charts, yielding a narrow, less effective system. The smarter approach is to invest in an AI coding tool that’s been trained on a comprehensive, industry-wide dataset, offering superior insights and performance. Similarly, companies like Nuance and Augmedix are currently using AI tools to create “ambient documentation” tools that listen to physician-patient interactions and reduce the documentation burden on doctors.
Yet, it’s crucial to remember that these AI-enabled, game-changing software tools will be accessible to all groups, not just big ones. This situation marks a striking reversal of the conventional competitive advantages we once associated with large physician groups.
As we move forward, we’re heading towards an environment where everyone, regardless of size, will be utilizing the same sophisticated tools. We’ll all have access to the same extensive data, and these resources will be devised and maintained by third-party specialists. The size of a physician group, therefore, no longer translates into an exclusive tech advantage as it might have done previously.
Growth Strategy: Organic vs. Acquisition
Finally, consider the significance of a group’s growth strategy in its competitive positioning. The largest emergency medicine groups all got that way as a result of aggressive acquisition strategies, supported by private equity partners. But today, they face challenges related to excessive debt and the interference of external decision-makers. In fact, the largest emergency medicine group in the country recently declared bankruptcy, jeopardizing its ability even to pay its clinicians in a timely manner.
Meanwhile, Core has grown entirely organically and operates independently of any private equity partnerships. This independence liberates the company from the obligations of managing overwhelming debt loads and eliminates the influence of external board members or decision-makers in the administration of the business. It allows for an increased degree of agility, enabling necessary modifications to be made in response to dynamic market conditions.
At the heart of Core’s growth strategy lies a strong commitment to quality. Our continued success and expansion are contingent upon the provision of outstanding hospitalist and emergency medicine services. It’s the positive testimonials and endorsements from hospital administrators that become instrumental in securing future partnerships.
Conclusion: Size is Not a Synonym for Superiority
These disruptive forces—legislative changes, AI democratization, and growth strategies—have fundamentally altered the competitive landscape of emergency medicine services. Today, the traditional belief that large physician groups inherently offer more value is fast becoming a myth.
It’s no longer wise just to buy IBM—and it’s no longer wise to only look at the largest emergency medicine groups for potential partners.
It’s crucial for healthcare executives to recalibrate their decision-making compass. Outsourcing decisions should not rest on the size of the physician group but on its ability to deliver quality care, adapt to change, and efficiently implement innovative technologies. The new touchstone for excellence in emergency medicine services is no longer size or scale, but agility, innovation, and commitment to partnership.