With 85% of cardiologists now employed by health systems, it may seem like the days of independent cardiology practice are long gone, but Atria Health is looking to reverse this trend with the help of a unique private equity model.
- The shift towards corporate and hospital-owned cardiology groups stems from a long list of factors like falling reimbursements, rising costs, and partners who want an exit.
- However, many cardiologists aren’t happy with their hospital employment and might be more likely to look for a partner to help their shift towards “independent” practice.
This is the niche Atria aims to fill, with their new business model seeking out cardiologists in hospital-owned groups (10-15 docs and up) who are looking to go independent.
- As part of the model, Atria uses PE to help carve out and fund the new cardiology practices while ensuring the docs keep at least 40% ownership, and keep getting paid until their practices get off the ground.
- Atria’s money also goes into the tech and infrastructure needed for high-ROI assets like cardiac imaging, cath labs, and EP labs.
- Because it builds these practices from scratch, Atria avoids tech debt and the hurdles of integrating different acquired practices.
That sounds like a pretty good deal for the docs, but it’s still a PE partnership, and Atria also makes it clear that the physicians can’t sell the practice once it’s established.
- Instead, Atria acts as a financial backstop to get physicians out from under their hospital employers and then takes about half of the profits.
But it’s not open season for Atria, as the company will have to compete with traditional PE and other practice growth-supporting companies like CardioOne.
- Atria differs from typical PE models by its focus on hospital-employed groups, and its shared ownership strategy .
- Perhaps most of all, Atria will have to overcome many physicians’ negative perceptions of PE.
The Takeaway
Whether or not Atria will succeed depends on outcomes for both physicians and patients. If the docs are happier and the patients are healthier, then Atria’s alternative private equity model that invests in – but does not completely own – independent practices could be a viable way forward.
