What do clunky insurance networks and subscription-style doctor care have in common? According to Preston Alexander, they’re both part of the same fixable puzzle.

Healthcare advocate, writer, and author of The Healthcare Breakdown, Preston joins Dr. Michael Jerkins to explore where the U.S. healthcare system is broken and the quiet, practitioner-led shift already underway.

They dig into how insurance-driven incentives frustrate doctors and patients, why employers hold untapped power to change costs, and the growing appeal of subscription models like direct primary care. Preston shares how technology can make care more direct and transparent, how large health systems’ misaligned incentives hold progress back, and why physician voices are essential in decision-making.

From legislative barriers to the business skills doctors need to thrive, this conversation blends big-picture strategy with actionable ideas for building patient-centered, sustainable practices. Whether you’re a physician, employer, or simply curious about what’s driving healthcare costs, you’ll walk away with a clear-eyed view of what’s broken and what’s working.

Here are five takeaways from the conversation with Preston Alexander:

1. The Fixable Flaws in the U.S. Healthcare System

Preston highlights the insurance model as a major flaw in the healthcare system, emphasizing the potential for reform through employer-driven changes in healthcare spending.

2. Rise of Subscription-Based Care Models

More physicians are transitioning to subscription-based models like direct primary care, which offer a more straightforward value exchange and reduce the stress associated with traditional insurance.

3. Challenges and Opportunities in Private Practice

They discuss the resurgence of private practice as a viable path for physicians seeking independence, discussing the impact of private equity and the future of physician-owned practices.

4. Physician Involvement in Decision-Making

Preston stresses the importance of doctors being involved in healthcare decision-making processes to improve patient care and address the financial incentives that often devalue their work.

5. The Role of Technology in Healthcare

Technology is seen as a key enabler for replacing outdated systems and facilitating direct transactions between patients and healthcare providers, empowering both employers and physicians.

Transcript

Preston Alexander:

They use it to keep clinicians stuck because then you also, if they’re losing money on me, how can I go do my own thing? Because I’m gonna lose money.

Dr. Michael Jerkins:
Welcome back to another episode of The Podcast for Doctors (By Doctors). I am Dr. Michael Jerkins running solo again without Dr. Ned Palmer. But fun fact is I think he’s hosting without me next. So if you’re tired of me, just listen to the next episode. Skip ahead so you can have Dr. Ned Palmer as your host. But today I’m excited because it’s not often that we have a non-doctor joining us for practice, being an independent practice owner, starting a practice—all of the things it takes for a doctor to walk through a very important and also very difficult decision.

And if you’re listening and you’re like, “Hey, I’m not going to be a practice owner, this is stupid,” I would encourage you to still stick around because there are a lot of aspects of healthcare—on the business of healthcare—that this guest is an expert on and is going to talk to and talk through that also might affect you as well. So with that being said, I’d like to welcome our guest, Mr. Preston Alexander.

Preston Alexander is on a mission to help physicians regain their independence. After working as a product manager for global medical device companies, he became a founder, launching and eventually selling a medical device company. Preston then turned his attention to writing about the business of healthcare in a newsletter, The Healthcare Breakdown. There he found the need for more physicians to be equipped to thrive in the challenging environment of private practice and independence. With the healthcare system placing undue pressure on both physicians and patients, there is no better way to fix the systems and put the doctors back in the driver’s seat. Love that sentence. Preston, welcome to the podcast.

PA:
Thank you for having me. Great to be here. I’m excited.

MJ:
This is awesome. So I said this in the intro I recorded before you came on, but we don’t often have a lot of non-doctors join the podcast. So we really love the folks who are not doctors like yourself that fight the good fight and do a lot of work on behalf of our community. And that doesn’t go unnoticed. So appreciate that.

But because of your expertise, it’s interesting, right? You have a lot of perspectives that we naturally do not as doctors. So let me just start kind of high level and then we’ll narrow down this conversation as we go. What’s a part of the U.S. healthcare system that you think is most broken but is actually fixable?

PA:
Most broken, but fixable. I sort of think that the insurance model is the most broken, but fixable. And that’s definitely the biggest one. So I say it for a couple of reasons. The biggest reason that I say why from the fix—we all know why it’s broken. We don’t have to go into all that. Everyone listening knows why it’s broken. But why it’s fixable is for a couple of reasons.

One big one is that employers in the United States—because we all know that insurance is by and large linked to employment, unless you’re on Medicare and Medicaid or some other federal programs—employers control about a trillion dollars of healthcare spend. That’s how much the commercial employed market spends on healthcare.

And so, the mechanism of that is that, in simple terms, there’s more to it, but a big company says, “All right, I need healthcare for all my employees.” They go one of two routes. They either go, “I’m going to just hire UnitedHealthcare to be the plan.” And they just say, “All right, we use UnitedHealthcare. Everyone’s on UnitedHealthcare.” And then it’s like, whatever. The company pays their percentage. The employee pays their portion of it. It all goes through United.

The other way is self-funding. So the employer pays 100% of everything. They take on the whole risk profile for their employees. So if there’s an employee portion, they pay it, but they pay it to—instead of to United—they pay it to the employer because they’re covering it. They are the self-funded plan.

And so that’s where, on both sides, really the opportunity is. Because typically what happens if you work with a BUKA, you’re just wholesale outsourcing your plan and you have no control. You have no idea what they’re charging. You’re just at their mercy. All this stuff. And so that’s a trillion dollars just flowing through to these BUKAs with no real controls or mechanisms.

And if employers stop and say, “Wait a second,” and they looked at their self-funding and where all their dollars were going and where their employees were going and looked at the whole ecosystem, they’d realize they have much more control. They can help steer. They can help find lower costs of care sites. They can find higher quality physicians to work with—all these different things that can really drive cost savings but also improve outcomes.

Again, it’s a fifth of healthcare spending. And if enough started to shift and change in that market, I think we’d see a significant improvement. And it’s the first steps to really changing. I mean, right, a trillion dollars worth of spend. And then, you know, if you want to talk about insurance and like they own PBMs, and that’s like a different segment, but same kind of principles apply. It’s just when these groups can step up and say, “Hang on a second. I want to be in charge of my dollar spent on healthcare and be a good steward for my employees,” I think things change a lot.

MJ:
Yeah, the PBM piece—we had Mark Cuban on who obviously talks a lot about that. I’m interested. Well, questions. One might be kind of dumb. Can you explain what a BUKA is? Two, describe to us the kind of employers that are saying, “You know what? We want to be fully funded. Do this ourselves.” That seems like a lot of work, right? Especially if you’re a smaller business. I don’t even know what the right size would be for you to have a self-funded plan. But what’s the value prop to the business to say, “Actually, I think this is a better idea than just totally outsourcing this to one of the big BUKAs,” which I’m about to learn what that is.

PA:
It’s not a dumb question. BUKA is an acronym for Blue Cross, United, Cigna, Aetna, Humana. It’s just the acronym.

MJ:
Got it. We’re gonna put that in the show notes to make sure everyone knows—all the big five.

PA:
So yeah, there’s definitely people who are more qualified to talk about the ins and outs of plan design and self-funding. From what I understand and from what I’ve heard and the people I talk to, I’ve honestly seen self-funding happen in companies with five employees—like very small. And it’s very specific and very targeted. And then obviously all the way upwards at any large company.

Large companies have been doing it forever. Huge Fortune 500 companies—they self-fund already. They just outsource their TPA, which is their third-party administrator to administer the health plan, to the BUKAs—to United or Humana or whomever they choose. And so there’s an opportunity even there to look for the right TPA to make sure that everything is going right. You’re again designing a plan that helps your employees find the best sites of care and get the best care while saving money.

And then all the other parts of it, right? A PBM, which Mark Cuban has talked about. Cool that you had Mark Cuban on the show, by the way.

MJ:
He was fun. Yeah, he was fun, definitely.

PA:

I met him once actually. He’s a super nice guy. Yeah, really easy to talk to. So yeah, I think there’s a misconception. And in fact, I think it can sometimes be harder for larger employers because if you think about healthcare, it’s a hyper-local thing. Like I just started physical therapy recently—today. My arm is very sore, but my physical therapist I used to use moved his office like 35 minutes away. And I was like, there’s 74 other physical therapists within 12 minutes of where I live. I’m just going to go to one of them.

So there’s a huge geography element to healthcare. And as a larger employer, if you have employees all over the country, it becomes increasingly challenging to build a network with all of the different places they could potentially go. So in some ways, it becomes much easier if you just have employees in one state or one city to do these self-designed plans. You can really cherry-pick which hospital, which doctor groups, which ASCs—all the different things—and build a plan.

It’s not impossible for the large ones. People do it for sure. And again, the TPA is a big piece of that. But the other part of what I was saying earlier, before I cut myself off, was that’s the other exciting piece and why the employer market is what can change insurance—because of the technology now.

Insurance companies basically just own networks, which is basically just contracting with a lot of different people. So if there’s technology out there that can replace an old-school building of contractual networks and help transact more directly between physicians or hospitals and patients, that’s all we’re talking about.

Insurance companies are supposed to spread risk and do whatever, but if an employer is already self-funding, they carry the risk. And if there’s a transaction mechanism for when you’re on vacation in La Jolla to go to Scripps because they can transact on a platform and you don’t need to go through some alternate contract, then great—you can get care anywhere at the right plan rate that you’ve agreed upon based on contracted rates you can access through different platforms.

MJ:
Super interesting stuff. I’d love to hear your opinion on this, but because we see more and more doctors fleeing insurance and just saying, “Hey, I don’t want to mess with the system anymore.” I might be employed or maybe I own my own practice, but I don’t want to deal with this. And that can look different ways, but one of those is a subscription-based model, whether it be direct primary care or even specialty kind of subscriptions. Can you walk us through the trends you’re seeing with doctors doing that?

And specifically also recently the change with HSA dollars being able to be used—at least with direct primary care or subscription care. Are you seeing more and more doctors switching to a subscription-based care model?

PA:
Yeah, 100%, because for a couple of reasons. One—and I don’t mean this in a flippant or talking-down kind of way—but it’s easier. For all the right reasons. Insurance makes it increasingly hard just to practice and just to provide care because you don’t know if you’re going to get paid. And you’re supporting the nurse that works for you and the MA and the front desk and all these people. You need to make payroll, and insurance is off playing games with the money that you’ve earned by seeing patients.

So in that way, it’s easier. It’s less stressful. There’s no reason. It’s a more direct and better value exchange. Insurance says you can spend 15 minutes with a patient and I’m going to pay you 70 bucks or whatever. And it’s also a big misconception I always like to point out—everyone probably listening to this podcast knows—is that $70, in case someone doesn’t know, isn’t money they hand to you and you go home and walk away with 70 bucks. That’s top-line revenue that goes into the practice to pay overhead and salaries and all these different things.

So you have a better value exchange. And also because it’s membership-based, you’re reversing incentives. It works really great in primary care because then it’s available if you need it. You’ve already bought it. It’s not fee-for-service. It’s actual capitation.

So yeah, I think more and more people are going into it. And it ends up being great for patients. I’ve not heard of any patient—I’m sure there’s some—who are like, “Man, I really hated that direct primary care experience. So frustrating that my doctor spent 28 minutes with me or an hour and 50 minutes.” The doctor’s happier.

Concierge too. For example, we’re helping a doctor launch a concierge practice. He’ll take insurance and we’re doing the enrollments and contracts for him, but he can open anyway, right? Anytime. Because his revenue source is not dependent on getting in-network with whomever and waiting four months for that. And then all the mess that always happens when they’re like, “You’re not on contract,” and you’re like, “Yes, we are,” and it’s back and forth. And then they don’t pay you for three months.

He can just open, and we’ll take care of all that stuff on the backend. It just makes so much sense to go that route for so many doctors.

MJ:
As a primary care doctor myself, you get no patient complaints when we can answer their calls after hours, on the weekends, or when we can see them whenever they want or spend more time with them. That’s all of the pieces why patients want a subscription-based model. The tricky part is on the other end. The worry I have is what does that do for access for all those patients who can’t afford a subscription-based model?

On one hand, I obviously advocate for doctors to be able to do whatever they can to practice sustainably. We obviously put a lot of time and effort—and debt—into doing this and having our own control over our own practice. This model is great. I just wonder, how does that affect the other patients who can’t afford it? Or maybe does it open up the rest of the system so there’s less throughput and they have more time? I don’t know. What are your thoughts on that?

PA:
Yeah, I have a couple of thoughts on that. There was actually an article that came out sort of recently that was decrying the move into more concierge-based models. People were sort of up in arms—“how dare they,” and “you’re impacting access,” and all those kinds of things. And my response and my feeling about it is: it’s not any physician’s fault or responsibility.

Look at the reasons why they’re going to do it. That’s what you should be mad at and attacking. It’s the insurance company’s fault. It’s the health system’s fault for driving people into the ground. Those are the reasons why there is now a change that may preclude people from getting access to care. Not that our traditional health insurance model doesn’t already preclude people from getting care based on their economic status.

So I think it’s a sort of double misconception from that standpoint. I talked to my parents—they’re on Medicare—and I was like, “You need a direct primary care doctor.” They said, “Why would we pay cash for something?” And I said, “Let’s just do the math. Look at how much you’ll have to pay out of pocket every time for a visit and your monthly whatever. You’re going to save money.” Plus, a lot of them dispense medications at cost, directly.

And then all the upsides that you get with it. So I think there’s a misunderstanding in just the basic math of how much it actually costs a patient versus using their traditional insurance. It’s usually less expensive, and HSA is going to help a lot. And then on the other side, any “exodus” from traditional insurance is traditional insurance’s fault and large health systems’ fault—not doctors.

MJ:
That’s an interesting thing. Doctors, in my opinion—just based on my experience as someone who went through training and obviously still practices—it’s not like this explicit plan anybody has, but what ends up naturally happening is that doctors are made to feel like the superheroes that are going to save the day. Not just for the patient, but the health system.

It’s this whole discussion of, “Is this a job or is this a calling?” It’s probably a little bit of both. But what you’re set up for is: if it’s a calling and it all relies on you, then you have this kind of unhealthy view of, “It’s all up to me to fix everything and help the health system.” And, “I’m going to sacrifice everything for this,” even though there’s a trillion dollars going against me and systems in place that I could literally never have any influence over on an individual basis.

And then it leads to this weird kind of martyrdom that we put ourselves in, I think—not all of us, but some of us. And what you’re hitting on, I think, is people are waking up a little bit to say, “Hey, I love clinical medicine and I want to still practice and see patients. I think being a doctor is an amazing job and calling, but I want to do it on my terms so it’s as sustainable as possible.”

And likely what ends up happening is, when you as a doctor feel better about it, your patients see that. All of us as humans can kind of sense authenticity. And if your doctor is authentically happy and satisfied doing their job, then you’re going to sense that too. And if the contrary is also true, which is encouraging. I love when doctors start to take things into their own hands and, like you said already, put us back in the driver’s seat. I think that’s a recipe for success. The question is: how do we actually do that at scale?

PA:
Yeah, I think the “at scale” part definitely becomes hard. It’s hard in the current system. Changeable? Yes. I think a lot about not necessarily scale, but replication. Like, do we need some giant mega national group? Or do we need the biggest and the most into this and then that? I don’t necessarily think so.

Because again, healthcare is so hyper-local and geographically dependent. I think you can do it for geographies—and they can be pretty large. There are state health plans that have saved millions of dollars with great outcomes, with happy doctors and happy patients—all the things. And then how do you just replicate those things in different places?

So less scale, and you could argue it’s scale, but it’s not really. You have to change it to the contours of the community that you’re serving. You can still get a basic fundamental foundation—the recipe, kind of—and then tweak it to where else you’re going and replicate versus scale.

MJ:
That’s a good point. You work with doctors a lot. What’s the thing they don’t learn about until it’s too late about large systems? Something they might be excited about coming out of residency or fellowship, but they don’t learn until it’s too late—“Hey, this actually isn’t for me.” What’s the aspect of being an employee of a large system that maybe isn’t really evident on day one, but ends up being the reason that drives them out?

PA:
Probably a couple of things—or a lot of things—some of which I can’t really speak to, as I’ve never been an employed doctor in a large health system. It has to do with how much you’re working, how you’re treated, the hierarchy, politics, yada yada yada. But I think there are maybe two things I can speak to, and they’re interrelated.

PA:
First one is the big one—the finances of health systems and what drives them. Because if every doctor walked out of a health system or a hospital tomorrow, the hospital wouldn’t be able to make any more money. Or to be fair, any clinician—PTs, anyone who can bill anything out—if they stop, the money train is over.

As a result of that, and this ties into a lot of different things, that’s why doctors—and I use a crass word—have quotas, which are the RVUs you need to hit before you can get your bonus or whatever. The fact that we incentivize bonuses based on seeing more, doing more, billing more RVUs should be the big blowhorn signal that maybe we need to rethink this whole thing. Shouldn’t we be seeing fewer patients? Shouldn’t people be healthier? Shouldn’t we not want to be doing trauma surgery and all that?

So I think that’s one big piece—seeing the financial picture for what it is and how much profit is actually generated off of your work and realizing, “I’m not sure I like this. This doesn’t feel right.” And those mechanisms lead to needing to work more hours, do more, etc. It also leads to the second part: the devaluing of physicians in large health systems.

And it’s this “stay away from the business, keep out of the whatever” mentality. It’s intentional. What better way to keep the money train going than to have residency spots and work residents to the bone? Then they feel a weird psychological loyalty to the place. And they’re in so much debt that you can say, “Here’s a check for however much money,” and they know exactly what the return is on that check. Then you sign a non-compete. Because where are you going to go? You can’t go within a 15-mile radius of any of our clinics or outpatient centers. So you’re like, “Well, I don’t want to move states.” So then you’re stuck.

PA:
And then they say, “Don’t worry about it. We take care of the money. You don’t need to do that. Just see patients, just take care of people.” So it’s this lessening influence and power of physicians, which I’m a big believer needs to be the opposite. We need clinicians in the decision-making driver’s seat—not kept out of boardrooms and meetings—because patient care is the point. And we’re trying to use patient care as the means, not the end. So that’s what I think.

MJ:
It’s back to the kind of information asymmetry. Like, we’ll give the doctors just enough information so they can see patients. We’re not gonna tell them all this other stuff. And as long as they don’t have that much information, they can’t really wield it against the systems.

But like you said, at the end of the day, if we’re not seeing patients, the system’s not generating any revenue and everything grinds to a halt. So it’s almost like there’s a disincentive for these systems to give us all the information because it might lead to a break in the fee-for-service system. We see fewer patients, we bill fewer RVUs, and thus there’s less revenue—even though the pay… it’s a weird set of incentives.

That leads to the quote—I think I’ve said this before on this podcast, so apologies if you’ve heard it—but it’s like, “Every system is perfectly designed for the output it produces.” And this is the output. We produced a system, a set of incentives, that leads to the brokenness we see today.

And it’s like, how do we actually get doctors back in the driver’s seat? I think part of that is fixing the information asymmetry—just getting the information ourselves. Whether it be informed about compensation, what’s fair for scheduling, understanding insurance payments and all the stuff you talked about at the very beginning. If we had that type of information, then there’s more ability for us to actually advocate on our own behalf.

And the way some people are advocating now is by saying, “Hey, peace. I’m leaving this employed system, and I’m gonna do my own thing.” Which is obviously scary and hard in its own way. But the people who can do it and pull it off and have the right folks in their corner—it seems pretty darn satisfying.

PA:
I think that’s 100% right on. I mean, tell me if you’ve heard this one before: “Primary care doesn’t make us any money. We lose money on primary care.” Right? “Rheumatology loses money for the hospital. The ER is just a money drain.” And we’re just spending… well, okay. If that were true…

MJ:
That is classic.

PA:
And it all depends on how you look at it, right? Let’s take primary care. If you open a specialty practice or a hospital, where do those patients come from? They come from referrals from primary care.

So these hospitals create this asymmetry of information. They’ll say, “Well, your salary is this and we spend this much money.” First of all, that “we spend this much money” is just allocating money they were spending anyway. They can allocate however much they want. And they say, “Here’s your salary amount,” but they don’t tell you about all the revenue they’re generating based on the inflow of patients you sent their way.

Same with the ER. Rheumatology is one of my favorite examples because they bifurcate rheumatology from the amount of infusion scripts they write and the money they print giving infusions to patients. And they say, “We’re losing all this money on you.” Well, that’s because you’re not including any of your infusion revenue. But you’re probably loading a bunch of that infusion center overhead onto the rheumatology practice and saying, “Look at all the money we’re losing.”

So yeah, that asymmetry is big. And they use it to keep clinicians stuck. Because if they’re losing money on me, how can I go do my own thing? Because I’m going to lose money. “My specialty doesn’t make any money”—that’s what the narrative becomes.

MJ:
That’s exactly right. Yeah, I think it’s like this—doctors undervaluing ourselves. We don’t really know what our worth is. And then you’re right. If you’ve been part of this large system, it’s like, “Hey, you’re actually part of a group that just continues to lose money. You should be thankful that we would even offer you a job for such a poor return on investment of being a primary care doctor or rheumatologist.” Don’t mind all those people emailing you and calling you and paging you offering you jobs throughout the country for short-term contracts.

MJ:
They are tricked. We know truly that you don’t make any money. So just be thankful. It’s such a crazy thing. Even hospital divisions too, right? It’s like general internal medicine loses money for the hospital. You’re like, okay, well guess what—we should just stop offering internal medicine services in the hospital then if it loses money. Or the GME groups that tell the residents, “You guys are a money loser. Sorry, we’re doing this because we love education. We’re just bought in to training the next generation of doctors. This is basically charity work. We all feel very good about our not-for-profit charity work and educating the next generation because you guys lose money.” Like come on, all of us know that’s just not true. And it’s disingenuous.

And maybe this is too cynical. I’m normally not this cynical.

PA:
Sorry, I bring it out of people. It’s not you, it’s me.

MJ:
It’s again going back to this information asymmetry and then manipulating doctors and making us feel stuck. And I think again—we’ve said this five times already in this episode—but doctors are like, “Hey, this actually doesn’t make any sense. I’m gonna go do something different.” And some leave medicine altogether and some say, “No, I’m gonna do medicine on my own terms.” So I guess, what advice do you have for those doctors that are still on the inside? They’re still in these large systems—when they’re there, what can they do to try to bring about change within the system that they are working in?

PA:
That’s a really great question. Actually, I did a podcast recently about this geared more towards CMOs in hospitals and health systems. I think there are probably a few different ways. You said it—a system gives exactly what it’s designed to give. And every system is made up of subsystems and subcomponents. Any one little thing—like, I don’t know if you ever watched Curb Your Enthusiasm, but Larry David’s system of putting the DVD in and setting things up—even that is a system.

So within your sphere of influence, what’s the system like? Systems are often invisible until you make them visible. Make your system that you have influence on visible, and then work to improve it and fix it. And then keep going—keep increasing that sphere and keep making the systems more visible, because people will start to see how they can change it.

Working in health systems can be super rough and hard, and the burnout rates are high. But there are also ways to start fixing those systems to make it not as rough as it is. And then, you know, getting involved in any sort of leadership roles—even though it’s hard because no one has the time, I get it. But raising your hand for leadership roles—I’m a big believer in that. Instead of leaving medicine, perhaps there’s an opportunity.

MJ:
If you want to go start a private practice, I’m all for it, obviously. But if you want to leave medicine, maybe there’s more opportunity for non-clinical leadership roles. Maybe jumping into a non-practicing physician role and doing something different. It doesn’t even have to be a CMO role. It could be a totally different business function. It’s a big change, but I think those are the types of things people can do—and that we need—to start getting involved and pushing your way into all of the non-clinical areas of the hospital, into the business side, and bring that clinical perspective.

PA:
Yeah, that’s a really healthy way to look at it. And that might be a good shift. I know several people who have gone into administration or leadership roles who were amazing clinicians too. And the hope is that there are enough of those voices in the room that there could be some push for change.

Talk to me about this—this is always a crazy thing I think doctors have questions about or maybe don’t understand. From what I know, there are no restrictions on attorneys owning a law firm. No restrictions on plumbers owning a plumbing business. But why are there so many restrictions on doctors owning hospitals, as an example?

MJ:
I don’t know if I can explain the logic behind doing it. Well, I suppose I could, but it’s cynical again. I don’t want to keep bringing the cynicism out of you.

PA:
Thank you.

Yeah, the moratorium on hospital ownership by physicians came about during the ACA. Some were grandfathered in. There are some really narrow segments for specialty-type hospitals. But it was just the idea—and the same idea behind the Stark laws and kickback laws. Someone gave me the history about Stark—it’s a person and didn’t sound like a great guy, anyway.

If you wrote it down on paper and assumed that every doctor was corrupt and just wanted to make as much money as possible, then it would make sense. But it doesn’t make sense because that’s just not true. The point of it is that, well, if you own a hospital, doctor, then you have unlimited power pretty much. You could write any prescription, do any case, do anything, look at all the reimbursements and only ever charge the most, see whatever patient, cherry-pick and lemon-drop and do all the things. So you have unlimited power in the hospital.

And then you could go buy a DME company and just write yourself prescription after prescription after prescription—just feed the beast, right? But realistically, that’s not how 99.99% of doctors operate. Are there a few bad actors? Sure. But—

MJ:
Optum is allowed to employ a hundred thousand doctors. Make that make sense. And that’s part of it—the cynical part of me back again. During the ACA, the sausage that is the ACA—it was this really nice whatever thing, but then I’m sure the AHA came to call—the American Hospital Association. AHIP came to call. All of the big lobby organizations.

AHA was probably like, “You really shouldn’t let doctors own hospitals because they’ll just run up the bill,” and da-da-da-da. It’s all these mechanisms. Doctors have always been a punching bag. And all clinicians—I was talking about physical therapists recently—like, we’re really going to bend the healthcare cost curve by cutting physical therapy reimbursement? Instead of getting $7 for every 15 minutes, you only deserve $6.50? That’s going to bring healthcare costs down? No.

But it’s just, again, back to that sort of asymmetry. It’s a power shift too. UnitedHealthcare wants to keep as much money as it can and control as much as it can. The large health systems and AHA do a great job lobbying. And the ACA—Affordable Care Act—used to be this thing. Originally when it was first written, maybe there were some pitfalls to it, whatever. But the only way it could get passed was by playing ball—giving up this little piece, that little corner, this little thing, changing that. It was to please the insurance lobby, the hospital lobby, all these different lobbies.

So that—I guess that was more of a rant than a good explanation.

MJ:
I think it’s great. That helps. Is that changing? Because I feel like you hear some headlines or push that that might be changing—this moratorium. Walk us through any changes that have happened or are on the horizon on the hospital owning specifically.

PA:
I think, again, there’s a lot of sentiment and there has been some push for easing that moratorium on physician-owned hospitals. I think it’s ridiculous, obviously. But a lot’s happening tangentially or in parallel—like a lot of CON laws, certificate of need laws, are getting taken out in different states. South Carolina just got rid of their CON laws. Georgia’s are still bad.

Anyone who doesn’t know, CON—certificate of need—means you have to basically prove that there’s a need for an ASC to be opened or a hospital to be opened or an outpatient facility. An office doesn’t count, but something outpatient in a specific area has to meet a defined medical need in the community.

MJ:
And who defines need, right? Like, how do I—Is it just some random committee that says, “Yeah, there’s a need,” or “No, there isn’t”?

PA:
Yeah, pretty much. You have to do all the legwork and research and spend a lot of money. But then guess what? The hospital can sue you to block your CON. And the state issues them, so they can say there are no CONs available for whatever—like home health. You need a CON in Georgia. And they’re like, “We don’t need any more home health.” And you’re like, “That’s just not true.” And a lot of the home health sucks—because they can, because they have a certificate of need and they’re limiting supply.

MJ:
Yeah, the opposite of a free market.

PA:
100%. So with the easing of CON laws, with the easing of non-competes—which are definitely state by state—and there’s a lot of unfortunate misunderstanding with non-competes, I don’t think any physician or clinician should have a non-compete. I think hospital ownership makes sense. People are working on it. And yeah, unequivocally, it needs to be gotten rid of.

MJ:
On the ownership piece, let’s move to the smaller entity—the private practices or even the MSOs or large groups. Where is private practice heading for physicians specifically? And are there specialties that you predict are going to have more physician ownership as a percentage? Walk us through where you think the space is headed.

PA:
You know, I guess there’s probably a realistic answer and then a more hopeful answer. And my answer will probably be somewhere in between. I think that despite employment going up, sentiment is going in the exact opposite direction. More physicians are suffering from moral injury or burned out or just over it. It doesn’t make sense to do it anymore. So they’re looking for an alternative, and private practice provides that alternative.

I think employment is going to hit a ceiling and probably reverse at some point. The question is: what does that look like? Is it a lot of solo independent physicians? Is it a lot of cash-based? Are people going to get groups together and truly be independent?

And when I say independent, I mean typically not private equity-backed. Working with an MSO—not necessarily a private equity MSO. MSOs can be private equity-backed and basically function as a PE company, or they can just be an MSO and work great for some doctors. So I think it depends, and it’s going to look like a lot of different things.

Regardless of the private equity piece and the MSOs, I think the bigger question is: what’s the private equity role in healthcare in the next 10 years? Oregon just passed legislation preventing private equity from owning any kind of clinic or physician practice. We have corporate practice of medicine laws in most states—or most states ascribe to them—which say that if you’re not a doctor, you can’t own a medical clinic, professional corporation, or PLLC.

But there are ways around that—contracting ways. Thank you, attorneys. So private equity owns a lot of groups now. And I think that becomes the bigger question mark. A lot of it goes back to what’s driving that—and it’s insurance companies playing games, making it harder to practice, making it challenging and confusing and delaying payments.

If an insurance company can just send you a letter that says, “We’re cutting your reimbursement 40%,” and that’s 70% of your patient panel, then what are you going to do? You’re probably going to sell to private equity because they have better contract rates. They’ve been able to buy a lot of these distressed groups, aggregate their leverage, and then contract higher rates from the insurance company.

So I think that becomes the big question mark—how those dynamics continue to shift. And private equity—again, this is a little rambly, I apologize—it’s going to depend. Any specialty that’s strong and can stand on its own—dermatology is a great example. But that also means they’re great targets for private equity acquisition because they want the roll-up, the high multiples, and the strong cash-flowing businesses.

MJ:
That’s the part that stinks. Those that enter into the private practice world in an independent practice are like, “Man, I’m going to be a partner,” then the existing owner sells to PE for some big number and cuts out that opportunity for the new physician. You hear that story all the time. Come on, colleagues.

But take out private equity. Let’s just say, as an example, there are more barriers to private equity doing all these roll-ups. And there’s an environment where doctors are leaving the employed setting, starting their own practice or buying an existing entity and growing it. Is there a specialty flavor that you predict—in the next five years—will have the largest growth in independently owned private practices? Is it cardiology? Is it primary care? What do you think?

PA:
That’s a good question. I think primary care is going to see a lot of growth, but it’s going to be concierge and direct primary care. I think that honestly stands to be the one that’s going to grow the fastest and stay the most independent through those models specifically.

I think there are already around 2,400 DPC practices across the country, and it’s growing every single month. The other ones—it’s hard for me to call a specific specialty. I think orthos always…

PA:
Sort of stood on its own and will continue to do that because more and more people are getting into ASC ownership. That’s already been a boon, and if you can run it correctly, people want to go to ASCs. They’re lower cost but higher profit for the group that owns it.

And again, if you do the right things with employers, you can direct contract and then you don’t have to deal with insurance at all. I mean, look at the Oklahoma Specialty Surgery Center. They’re totally cash-based and they’re doing great. So I think those sort of stand out, but across specialties, I could definitely see the growth coming. I think rheumatology—people in rheumatology—are starting to realize, like, wait a second. They keep telling us we’re losing all this money, but if you can just get a few infusion chairs in the office, you’re set. So I think those two kind of stick out in my mind.

MJ:
Makes sense. I have a few rapid-fire true/false questions as we round third and head to home. These aren’t always rapid, but that’s just what I decided to call it—so, misnomer. True or false: The U.S. has the best healthcare system in the world if you can afford it.

PA:
That was too big of a question to rapid-fire. All right—false.

MJ:
Is there a country that sticks out that actually does have the best healthcare system in the world?

PA:
I don’t know that I’m learned enough to give a good answer to that question.

MJ:
I guess we could ask ChatGPT and then it could tell us. But no, I appreciate your humility and not trying to overextend your knowledge. The key part of that question was taking out the expense side—like, if you actually just had unlimited money, is this system the best for you individually? But it sounds like you would say false.

PA:
Yeah, I think I’d still say false because I’ve watched people with a lot of money still struggle to navigate the system and receive the best care. Even if you go to the best hospital and get the best doctor and all that, you’re still in a very dysfunctional—or maybe well-functioning in its design, but it’s a bad design—you’re still within that system.

PA:
They’re still going to be like, “We didn’t get that fax.” You know what I mean? If you’re a billionaire, someone can still say, “I don’t know, the fax didn’t come through,” which is psychotic to think about, but that’s where we’re at.

MJ:
Yeah, you’re right. “I didn’t get the page on my pager.” Next question. True or false: A doctor’s signature is worth less today than it was 20 years ago.

PA:
Yeah, right? Something—the battery died.

PA:
I’m going to say false with the lens of from a financial perspective. I’m probably narrowly focused on reimbursement rates because the signature obviously still drives a bulwark of the revenue that goes into the system. Taken in the context of, like, okay, as a physician, the thing that is driving revenue and profit is the facility—the facility fees, the hospital, the spread, the markups, all of that. They’re using it as a means.

So I guess you could argue that the answer to that is true, for sure. But I think there’s just been a broad devaluing, like we talked about. And also, from a financial perspective, they’re trying to make it earn as little as possible so that you have to be employed.

MJ:
Next: true or false—the move toward unionization of doctors will fizzle.

PA:

I’m going to say false, because I think it’s just going to stay on the flat soda fizzle level.

MJ:
Like slightly flat Sprite at a restaurant?

PA:
Right? Like you opened it yesterday. You’re like, “Maybe it’s still good.” It’s not bad, but it’s just barely fizzy.

MJ:
It’s not heating up and it won’t just take over the systems—whether it be residencies, fellowships, or health systems. You don’t think there’s too much going against it maybe? Or why do you think that?

PA:
Yeah, I think there’s too much inertia there. And I know people say this—and I don’t say this because I’m uniquely qualified—but that doctors have a hard time organizing and agreeing. I think unions also introduce another middleman into an already middleman-heavy system.

I get it—to send someone to negotiate on behalf of a group. But it’s just like, we need less of that and more real value transaction. I think it does make sense. I’m not anti-union. I just think for some of those reasons, it’s going to stay at the level of the old Sprite—the old open Sprite.

MJ:
I like that description. I don’t necessarily like the actual answer, but the description is great. Well, let me finish up with this. We ask this question to every single person that comes on the show, big or small: What is one thing that you have changed your mind about recently?

PA:
I think I’ve been thinking about this question the whole time. No, I still haven’t totally thought of a good answer for that question. I’ll say—this might sound ridiculous. I’m just going to say it because it’s the only thing I can think of. I think that increasingly—this is going to sound so dumb. I can’t even say this out loud.

MJ:
Did you come up with anything?

MJ:
Can’t wait.

PA:
Dressing nicely and being put together is important for life and how you approach business—perhaps for some of the wrong reasons—but I’ve fought it for most of my life. I’m a t-shirt and jeans kind of guy, even when it’s an important meeting. And I think I’m shedding that belief that it’s not important. Because I think in society, it is. So this is probably the weirdest answer you’ve ever gotten, but it’s the only thing I can think of.

MJ:
How recent is this? Like, if you had done this podcast a month ago, is this you just showing up in a t-shirt with holes in it and jeans?

PA:
Probably, yeah, probably. I am wearing shorts, but we’re on video, so you can only see the upper part of me. But yeah, that is very recent. Like, I ordered new clothes a week ago kind of thing. I’m trying to up my game.

MJ:
I love that answer. I think my answer on my episode—Ned interviewed me—was more ridiculous, but I’ll let you listen to that one. I think yours is good. It makes sense. Actually, in residency, I had my program director—I don’t know if she listens to this or not—but if she did, she might remember having to talk to me multiple times about having holes in my shoes, multiple pairs, and how I dressed for clinic.

MJ:
And I get it. I’m presenting to patients. Patients are meeting me for the first time. They’re making snap judgments on whether I can be trusted, whether I know what I’m doing. I totally get that if your doctor walks in with holes in their shoes, you’re like, “I don’t know who this is, but I think they’re in the wrong place.” So I’ve taken that to heart in my clinics now. Sometimes I go to different clinics where I work, and I’m always the guy with the collared shirt tucked in. No holes. No holes.

But even sometimes the scrubs—I know some people are scrubs people even in outpatient—and that’s totally fine. That’s also kind of like a doctor costume in a way. So it resonates with the patient, like, “Okay, those aren’t pajamas. You actually are a doctor.”

PA:
As comfortable as pajamas though—joke’s on you.

MJ:
Depending on the brand—no plugs here. I still don’t know. I just feel like, to your point, it matters to the patients, and I want to have a good therapeutic relationship. Even if it’s weird, I do think—and there are studies on the white coat. I don’t wear white coats—but even that, weirdly enough, engenders some trust with patients.

I will not, no matter what the data is—I feel like I’m a data-driven person—but there’s not enough data out there to make me wear a white coat.

PA:
No go on the white coat. Maybe that will be one day your changed-mind rapid-fire question.

MJ:
The last time I wore a white coat was my first day of residency at the VA. Students wear a short coat. After that, you wear the long coat. I had to run to a code and had pagers in my pockets and a clipboard and a pocket medicine—very heavy. I felt like it was a cape. I was wearing a cape, clunking around the hospital running. I was like, “This seems absurd. Can’t do this.”

PA:
It’s one of those symbols—like stethoscope around the neck. It’s an immediate sort of, “All right, I know this person.” Because again, I’ve fought it for so long. And I probably do it, right? But I try not to judge people on their appearance. But unconscious, subconscious bias—it’s real.

So it’s something I’ve recently changed my mind about and come to terms with. Because if I’m coming into a meeting with a physician and I’m like, “Trust me with all of your revenue,” and I’m wearing jeans with holes in the knees and a t-shirt, they’re going to be like…

PA:
“Who’s this guy?” You’re either a billionaire and really don’t care—which you wouldn’t be here if that were true—or you don’t have any idea what you’re talking about.

MJ:
That is fair. Well, I appreciate that answer. I want to make sure people listening know this—where can folks find more of you and your writings and all of the great information and work you do for doctors?

PA:
LinkedIn is going to be the primary spot. So find me—Preston Alexander. You can also subscribe to the newly launched Forward Slash Health newsletter, which is on Substack. It’s one weekly insight into running and building thriving independent practices.

MJ:
As someone who’s read your work, highly recommend it. It’s awesome. Great. Very insightful, very pro-doctor approach. So I appreciate all the work you do, Preston. Thanks for joining us on the podcast today.

PA:
Yeah, thank you so much for having me. I really appreciate it. It’s been great.

MJ:

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