In this episode, host Dr. Aparna Baheti interviews Dr. Tarang Patel, diagnostic radiologist and creator of the Doctor Money Matters Podcast, about private equity in radiology, from why to get in to how to get out.

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SHOW NOTES

After getting out of the air force, Dr. Patel didn’t know what to do with the significant salary increase he was given. He had a lot of questions and wanted to learn how to manage his finances as a physician. In 2015, he created a website, which soon developed into a podcast. In doing this, his goal was to speak with guests who were experts in aspects of physician finance so that he could learn. He was also interested in disseminating the information with others, because he knew many physicians had similar questions about finance.

Next, we discuss the private equity (PE) landscape, specifically in Phoenix, where Dr. Patel practices. He is a hospital employee and has never been part of a PE owned practice, but knows many in Phoenix who went through the Rad Partners buyout there. He explains the evolution of the Rad Partners deal. There were three dominant radiology groups that employed over 100 radiologists. They were approached by Rad Partners and decided to sell and become one large group. This resulted in one dominant radiology group in all of Phoenix. These physicians were all locked into a 5 year contract, which ended in late 2022. At this time, there was a mass exodus of radiologists from this group due to their dissatisfaction with the way the practice was run or how their contracts ended up playing out. Dr. Patel explains how they were able to attract so many people by incentivizing the deal with a heavy cash to share ratio. This gave providers a sense of a guarantee, which a higher share buyout would not have provided. This is because the PE company ascribes value to the shares, and it is unknown at onset whether they will financially profit in the long run.

Dr. Patel further explains that joining a PE owned practice is generally a bad deal for young radiologists, because they are offered lower salaries and don’t get any buyout. This has resulted in PE companies failing to hire young doctors. Additionally, many older doctors near retirement use a PE deal as a way to get a large cash payout, work for a few more years, and retire. Dr. Patel believes that due to hiring difficulties and the high debt burden of many PE companies, they will start to close practices, which will open up the market for new practice models. He believes the radiology landscape will be vastly different in 5 years than it is now. Dr. Patel ends by saying you should never trust an offer that advertises low risk and high return. Additionally, for young radiologists looking for jobs out of training, he urges you not to follow the highest offer, but rather find the practice you enjoy going to work at everyday, even if the pay is lower. In the end, you will make the money, and it is worth enjoying your job and your colleagues.

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RESOURCES

Ep. 287 OBL/ASC Reimbursement Update January 2023
https://www.backtable.com/shows/vi/podcasts/287/obl-asc-reimbursement-update-jan-2023