Rae Woods: From Advisory Board, we are bringing you a Radio Advisory. My name is Rachel Woods, you can call me Rae. So much has changed in our industry over the last 18 months, but at Advisory Board we've been tracking the potential for disruptive change outside of the pandemic itself. And one of the biggest things we're tracking is the changing physician landscape and all of the non-hospital players that are offering new and maybe even better kinds of partnerships for today's physicians. I brought one of those partners to Radio Advisory. Today, I'm chatting with Mike Flammini Chief Business Development Officer at Privia Health. Hey Mike. Mike Flammini: Hey Rae. How are you? Rae Woods: I am doing very well, just trying to manage through all of this summer heat and humidity. And at this point I'm very happy to not be commuting in this weather right now. How about you? Mike Flammini: Well, I'm working from home today, which is an exception, we're back on the road, meeting in person. So I'm always happy when I can spend a day at home and take care of business like this. Rae Woods: Yeah, you've probably gotten used to it by now. So you're probably savoring these days. Mike Flammini: They're fewer than they were six months ago, but I really enjoy being out in the field. There's so much happening in our industry right now in front of people talking through our model and their needs. Love doing that kind of thing. Rae Woods: And that's exactly what we're going to be doing here today. And your organization is a little bit different than some of the other physician organizations that we talk about on this podcast or that we work with. So I want to start with just handing the mic over to you. What is the Privia model? Mike Flammini: Yeah, thank you. So the Privia Health model is a physician platform that works directly with providers of all specialties, but particularly primary care, but not exclusively. We really are a multi-specialty group. And as part of that platform, we're really focused on what I like to call agency, bringing agency, it's an economic term, bringing agency back to physicians to put them back in control of the day-to-day healthcare between them and their patients. So we believe when that happens, there'll be a better outcome overall, around the quality of care delivered, the cost at which that care is being delivered, the satisfaction of the patient being able to work closely with their physician. And of course, the issues that seem to be more prevalent every day, dealing with things like physician burnout. So as a platform, it was really built to scale and to grow rapidly. We think part of bringing agency decision-making back to these physicians is bringing them together in a really unique model that allows them to continue to be either the small business owners that they are today or to be employees of another organization. Rae Woods: And at the center of this, I keep hearing you use this term agency and using this term platform, when we're talking about a platform model, does that mean you own and employ the physicians? Mike Flammini: Actually, just the opposite. In the Privia model, we don't own any of the physicians or employ them. It was part of the strategy that when we founded the company was one of the guiding principles for us that we thought having physicians become owner members of the medical group, the single 10 medical group that they're all co equal owners, really important around culture and accountability. They don't need to work for Privia, they need to work for themselves as small business owners and they need to work for each other, especially as we're moving them into value-based care. Rae Woods: Now here's the thing, I think it's really interesting that a hallmark of the Privia Health model is not to employ physicians. And this is actually a trend that we've been tracking at Advisory Board for the last couple of years and certainly over the last couple of months, is that the physician ecosystem doesn't cleanly break into two parts. I typically hear there's the small business owner that is really just owning and operating their own practice, or you're employed by a hospital and there's nothing in between. But what I'm hearing you say is that the Privia Health model is maybe just one example of how to think about enabling physicians outside of a W2 relationship. How would you describe the difference between Privia Health and those kinds of standard two models, hospital employment, sheer independence? Mike Flammini: Again, both of those models continue to exist as part of the Privia platform. So think of it as the starting point as a physician or a group of physicians are choosing to join the local Privia medical group and platform. They can either be a group of employed physicians by the hospital that are coming onto our platform, or they can be independent physicians who maintain their autonomy, keep their local name with their patient, keep their teams, but also come on to the platform. There are clearly important distinctions between a W2 relationship and a pure independent relationship. We understand those differences, but at the same time, we are trying to wipe away where there are artificial distinctions between those two kinds of relationship models and say, you choose doctor, whether you want to be employee of a hospital or whether you want to be an independent. Either way, what we want to do is really turn you into a high performing local medical group. Rae Woods: And what is it about Privia Health that allows that to happen? Mike Flammini: It's really back to the architecture of the model itself, highly flexible, single technology platform. As a medical group model, we have one set of common payer contracts and the model itself is considered to be clinically, financially, operationally integrated. So it allows us to have this great flexibility to manage physicians no matter what their starting point is. Rae Woods: So we've talked about what makes Privia different from the typical physician models, independence or employment, but how does Privia Health differ from some of these other middle ground models that are out there? I'm thinking the Aledade's, the Bright Health's, the Oak Street Health's, what's different about your organization? Mike Flammini: Yeah. Great question, Rae. And I won't use any company names, but I think I can illustrate some of those differences in a way that's going to be pretty clear. All of the organizations you just mentioned tend to be more niche focused on certain populations, particularly the Medicare population. So they are not necessarily dealing with the entire panel of a physician's practice. All of the commercial members, Blue Cross and the Aetna Cigna United's of the world, Medicare fee for service, Medicare advantage, Medicaid, they have picked their spots and primarily focus around Medicare, which is an important population, but not all of whom a physician needs to worry about every day in the way that they run their practice. Some of the models that differ from ours are also much more clinic focused, meaning that they tend to build a clinic and go hire physicians to staff it. And then those physicians are focused on a very distinct population. Mike Flammini: Where the Privia model is really starting from the groups that are already out practicing medicine in the community. And we bring them in underneath our platform while they continue to be who they are with respect to their name, their practice, location, all of that remains intact. So ours, we think is a much more capital efficient growth model. We don't have to build clinics, we don't have to employ physicians. We can really put our investment capital into things like technology solutions and hiring the industry's best talent to go out and work side by side with these physicians. So we believe ours is a more scalable model. Rae Woods: And then honestly, there's even more opportunities for potential physician partners. I'm thinking about private equity as a partner for physician groups today. I'm thinking about support from health plans. Let's think for a moment about the entire ecosystem of potential physician partners, those we've talked about and frankly, the ones that we haven't talked about yet, where does Privia sit in that entire ecosystem? Mike Flammini: I'd like to think we sit uniquely first of all, we're uniquely positioned. Our model is very hard to replicate. We just have a great headstart, but by no means, have we figured everything out, but we have been able to now grow the business into six different States plus Washington DC. Each State is different, each State has its own regulations, its own laws, some culture and payer mix. So being able to cross over State lines is a challenge for new startups that are trying to replicate the Privia model. And we also have this fantastic technology platform that I think most will struggle to deal with. So there's a unique aspect to what we do, but then there's this mill you that you're talking about, this ecosystem, there's a lot of noise doctors are getting approached from everybody to say, we are your best partner why don't you come work with us? Rae Woods: Yeah. I am not a physician and I will tell you that on my own LinkedIn, I am getting ads constantly from these third-party, middle-ground physician partners. And I'm going, wow, if they're advertising on LinkedIn, on my LinkedIn, how are they getting out in front of these doctors? Mike Flammini: So we really believe in standing on the results that we've been able to deliver repeatedly over time as our number one selling proposition to physicians. Our best source of growth for Privia adding more physicians to the group are the physicians that we already have in the group and their testimony to their community doctors that say, "Hey, come join this organization, here's why I did it, here's why you should think about doing that." And we are always looking for our physician partners to help us refer new business into the group. And then the results that we've had really stand on their own. I'm not aware of any company that's able to really demonstrate over time across markets and across products, quite like Privia has. Rae Woods: And that's a very important approach to, let's be honest, an extremely competitive landscape, perhaps more, maybe not competitive, but certainly more complex than it has ever been. I'm constantly reminding traditional physician executives that there are more partners out there today for your docs than ever before. So without giving away too much of the secret sauce, when you think about the fact that the landscape is a lot more competitive, what is Privia's growth plan? What is your goal when it comes to growing and continuing to advance this unique model? Mike Flammini: I think it's to continue to do the things that have been successful for us up to this point. So we have a model that we know works really well for independent physicians, we understand how to launch into a new market and to grow that market of independence. We have models that deal with hospital-based systems and the physician alignment strategies that those systems are trying to do better at, go faster. Our model has been one where we've been able to adapt how we think about growing, based on the unique needs of the markets that we're in and the unique needs of the partners that we're working in within those markets. So I'm not going to give you specific numbers today in terms of our growth projections, but we feel very confident that if we continue to evolve, continue to leverage the platform that we've built, continue to hire the very best talent in the industry, then we're very confident and feeling very optimistic about our growth potential over the next few years. Rae Woods: Despite Privia Health's success and despite this overall trend towards these non-equity physician partners, these middle ground physician partners, I continue to see headlines over the last few months, frankly, in the last few weeks, that have data that says that in 2020 and 2021 more physicians are employed by hospitals than ever before. And I don't know about you, but I get frustrated with those headlines because some of those articles even conclude that the pandemic has just pushed all momentum towards hospitals. They are the inevitable winner of the battle over physician talent. What do you have to say about those headlines? Mike Flammini: I would say that there is nothing inevitable in business. It was T.S. Eliot the poet, I think, once said there is no such thing as a lost cause because there's no such thing as a gained cause. And how I apply that to the environment that we're living in is that this goes in cycles, and this has been going on longer than the last few months, last couple of years, it's really probably been more like a five-year cycle where we see physicians being purchased and employed by health systems. Oftentimes that's the only real option for these providers in the markets that they're in. And I think it made good sense for them at the time to consider something like that. With companies like Privia, there are more options now- Rae Woods: That's right. Mike Flammini: To consider. We are also seeing, I wouldn't call it a trend yet, but we are seeing specific areas around the country where physicians are considering leaving employment. Their five-year contracts have expired or are soon to expire, and they are looking for options to move back into private practice. And the other thing I'll point out again, I'm not calling it a trend yet, but we have talked to many health systems that COVID exposed certain financial pressures on these systems going forward. One of the things that they're looking at is the amount of money that they spend annually to employ physicians. Basically, there's a subsidy that they have to cover for their compensation. And we're in many conversations with systems about what can be done to keep the physicians that are currently employed, aligned with us, but to put them in the Privia model where Privia can do what it does so well in terms of the technology and the revenue cycle work and the value based care work. Rae Woods: That is so interesting to me because we talk a lot about individual physicians moving around between partnership types and trying to seek out who's going to be the right partner of choice for me. And as I've said, ad nauseam, at this point, there are a heck of a lot more partners than there have ever been before. But the idea that it's not just an individual decision or that the acquired clinic or acquired practices decision, that it might actually be the health system that is saying we're willing to break some of our W2 relationships. I mean, frankly, Mike, I've been a physician researcher for seven years and that is something that every single year I hear people talk about. And only now am I actually starting to hear those kinds of thoughts actually, maybe move into reality because of exactly what COVID exposed in terms of the financial fragility of our healthcare industry. Mike Flammini: And it's important that Privia be there and be recognized by these health system decision makers as an option that didn't exist before. And what we've heard from them is what they're interested in doing, they hate to cut the doctors and the staff, but for financial reasons, many are forced to go there. And what they're really looking for is a continued relationship with these physicians. What's called alignment. They basically want to make sure that they can work in a clinically integrated way to deal around specialty care and tertiary and coronary care when the patients need it. And they've always been afraid if they let these physicians go, that they're going to end up at the competing health system or that they'll send their referrals elsewhere. And at least the Privia platform is another option to keep these physicians aligned. Rae Woods: Another option is such a good way to describe it because if I'm honest, I think a lot of these organizations defaulted to employment. That's just where they went immediately. And again, they have other options now that perhaps they didn't 10 years ago. Mike Flammini: Yeah. I think that's right. Some organizations do an unbelievably great job at employing the physicians, creating an enterprise where they're all on the same platform. They're doing service level planning, they're focused around the patient experience and patient engagement, and they should continue to do that. Introducing the Privia model, side-by-side really for community physicians that just don't want to become employed or the hospital doesn't think they'd be a good fit within that employment model. I think putting in that Privia model, side-by-side, that's a compliment, what's the doctor choose what the best organization is for them, but still creates that alignment around that health system and all the assets that, that health system have, which are incredibly valuable to these physicians. We talk about that all the time that it's a new choice and one that we're increasingly talking to health system leaders about educating them on the model, how it can work and showing them the results that we've been able to create so far in some of the early instances of these health system relationships that we have. Rae Woods: I wonder if you can give me an example on the employment side, I think it is fairly intuitive and you've gone into some depth about what it means to be a platform and to be a partner for the independent, small business owners. But can you maybe give me an example of what it means in practice to be a partner and a platform for a health system that's still employs its physicians? Mike Flammini: Sure. From the physician's perspective a great example is our partner in Florida Health First, they have 450 plus or minus employed providers, most of whom are physicians, but a fair number of mid-level providers as well. All of those providers remain employees of the health system, that relationship didn't change. All of those providers continue to get their business office services from the local Health First team, but we've established a joint venture actually. So where the Health First team and the Privia team are working side-by-side and we are finding ways to bring value to each other. One of those, Privia where one of our particular strengths lies working directly with these providers and their teams on value-based care. Wasn't a big area of focus for the hospital before the partnership, but one of the gaps they recognized was needing to do more to drive performance. Mike Flammini: They actually own their own health plan, including a Medicare advantage plan. And I think they were struggling with this balance between physician engagement, employment, compensation models, how should all that work ideally going forward. And were progressive enough to identify Privia as their preferred partner. So when we came in working with these physicians, they get to maintain that employment relationship, which they value. But then they also see the benefits of working inside of a value-based care set of products on a platform that was really purpose built for it. And we hope that they're maximizing both outcomes at the same time as part of their relationship. Rae Woods: So the benefit for the health system executives is that they get to advance a business model that they pre identified as a gap. They don't have to start from scratch in terms of actually making advancements there and it sounds like that's also some of the benefit for the frontline provider who's going to be getting the necessary support, which in some cases is going to mean the technology itself as they too change and adapt their model. Mike Flammini: Yes, I think, very well said. And one of the things that we hear from this health system and some others, is that as what you would call these companies in the middle, others have called them disruptors. These disruptors are knocking in the market, they're knocking at their door, they know they're working with the independent providers in the community, they know they're working with the payers. And I think many of them are now choosing to disrupt themselves. Many health systems are choosing to disrupt themselves instead of waiting for someone else to show up and take business from them they're thinking, well, how do I get in front of this? How do I find the right partner that knows how to do this and works very closely with us to push our business model and our strategy forward? Rae Woods: I love this idea of disrupting yourself because I think when people think about that term, their assumption is we have to develop from scratch the perfect solution or the previously unseen solution. But that's not what you're talking about, you're just talking about changing from the status quo, the old way, the defaulting to employment, no matter what, the sticking to the fee for service business model. And you're saying that that self disruption, that positive self disruption can happen with a partner. It doesn't have to be done alone. Mike Flammini: That's right. And I would extend it not only to the employment model that these systems have. Rae Woods: That's right. Mike Flammini: But most systems also have a clinically integrated network or CIN model. Some of them work great and some of them not so great. And I think most systems are evaluating their CIN relationships, the strategies and the outcomes that they've invested in and are stepping back saying, is there a better path forward not to blow up what we have, but to build from what we have to find a partner that fills specific gaps that we think would either take too much time, or we couldn't get the talent to do, or would this just be too expensive and can we find this partner to come in and plug? So previous conversations with systems are really ranging from what to do with the employed group and that might very well be that the employee group is fine sitting on the legacy platform that the systems invested in. And we'll still work with them around things like value based care and patient engagement. Mike Flammini: Then there's the conversation of what to do with the physicians in the community that we need to align with, that we don't want to employ. And then we get into conversations about, well, is a CIN model, the right model? Is the Privia model, the single 10 integrated platform, the right model? And can they co-exist? And the answer is absolutely yes, they can co-exist. So we're very, I think Privia is very good at solutioning for not just health systems, but other stakeholders in the community where we started this conversation. Every market looks different, every partner is different, so we don't come with a one size fits all. We certainly bring templates and a certain know-how, but then it's about how do we make sure that the solution works for our partner and specifically what they're solving for, and then also works for Privia to continue to push our business forward. Rae Woods: Let me ask you a little bit more of a blunt one, because this all sounds great, but I imagine there are hard moments, especially with some of the frontline clinicians. Is there ever any concern that Privia is maybe just a wolf in sheep's clothing? Mike Flammini: I've been called worse. Yeah, absolutely there is. When we started, our models goes back seven years ago, we were exclusively focused on bringing independent providers in underneath this platform and in medical group model. And I think many health systems misinterpreted that as we are competing with them for these doctors, when in fact we believe these doctors were never going to choose employment, as long as they were now given a new model to consider, that was a model that really appealed to them. So we are still working to educate health system leaders, that if we have the right partnership and the right alignment between Privia and the system, then we are here to actually be a force multiplier of their business strategy. I think we can go faster, we can go further and probably do it cheaper than what they're able to do on their own. So this is about repositioning the brand vis-a-vis the health system from used to think of us as a competitor now they should think of us as a partner. Mike Flammini: And once we are able to unpack how the model works and they can appreciate the results that we've been able to generate over the last couple years and the quality of the team that Privia brings to the table, but not all of them see it that way. I think some are out testing, some still prefer to do this on their own. And when they do then I wish them good luck and we'll end up inevitably competing with them in the market. But otherwise we really are trying to redefine for that system that this force multiplier notion is something that they have to consider. Rae Woods: Well, I think we're also at this moment of redefining what the physician ecosystem and physician landscape is. Like I said, it is no longer this binary approach. You are either a private practice or you're part of the health system or hospital machine. And I think it's going to take for a lot of folks, redefining what it means to be a physician partner. So I'm curious, in your mind, if you think about the physician ecosystem more broadly, who are going to be the winners and who are going to be the losers when it comes to physician partnership? Mike Flammini: I think the winners will clearly be organizations that work with physicians to generate better clinical outcomes at a lower total cost. It's what the market is not just asking for, it's what the market is demanding, commercial payers, CMS, self-insured employers, they need solutions that are going to help reduce the trend on total health care. They want solutions that will benefit their members/ employees make the experience of accessing care very different than it is today, much more consumer and technology enabled. And I also believe the winners will be those that are focused on the long-term health of the physician. And I just think in the end to your question of winners and losers, it's going to be a combination of all of those things, delivering value and working with our physicians to ensure that they see their career choice as something that was a great choice and they have passion about, and they continue to work inside of that, to deliver a great quality care to their patients. Rae Woods: And it sounds like the market is actually starting to recognize who might be the winners here, because it does sound to me like if the pandemic has done anything, that there has been an increase maybe, in the number or the types of physicians who want to be part of a model like Privia's. Mike Flammini: We certainly had our best year, last year, right in the middle of the pandemic, in terms of physicians reaching out directly to Privia recognizing that they needed help. And they saw our model as the perfect balance between getting to remain independent and autonomous but at the same time, getting the benefits of our scale safety in numbers, the cultural aspects of being part of something bigger than themselves. So we like to think that the markets, they'll make up their own mind as long as we continue to do our job on our end, which is to show up every day, stay focused on our physician partners and delivering value to them. Then I'm sure in the long run, we'll be fine. Rae Woods: Well, Mike we've spent a lot of time talking about Privia Health, specifically the ins and outs of what makes this model work, but also what it means for the evolving physician landscape more broadly, and the fact that it is not so easy to divide up what is happening in the physician ecosystem. So my final question for you, or my final prompt is to give our listeners one takeaway or one action item, when it comes to the changing physician landscape what's the one thing you want to leave our audience with? Mike Flammini: I like the point about, and assuming your audience here would be mostly health system executives, to think openly about this self disruption point. And I'm not suggesting you blow your core business up and you start over, but clearly the market is heading towards more and more clinical integration. And then it's a question of what choices do physicians have to participate in different networks and to do well in those networks. For me, it's a point of competition and strategy, from a health system executive I should be thinking about where are my points of differentiation? How can I build trust and loyalty with community physicians in particular, in a way that keeps them aligned with my organization over the longterm? Rae Woods: Well, Mike, thanks for coming on Radio Advisory. Mike Flammini: Rae, it was great. I appreciate you having me on. Rae Woods: The physician landscape is evolving rapidly. And if I can take the time to give you my own takeaway it's to not get stuck in an old way of thinking about physician practice. And like Mike said, even as business models and partnerships evolve, we have to make sure that we're supporting the clinicians themselves, because if not, none of our innovations are actually going to get implemented. So remember, as always, we're here to help.