In a recent fireside chat hosted by the Nashville Health Care Council, the discussion centered on the complex dynamics between health systems and investor-backed medical groups. The conversation explored the opportunities and tensions that come with these partnerships—highlighting the limitations of capital, the operational and cultural challenges that often surface post-transaction, and the critical role of alignment across clinical and administrative teams. Attendees gained a candid look at what it takes to build resilient, high-performing organizations in today’s rapidly evolving healthcare environment.
At a time when healthcare is being redefined by capital shifts, evolving reimbursement models, and increasing pressure to improve outcomes and reduce costs, one thing remains clear: progress doesn’t happen in isolation. It requires alignment, collaboration, and a willingness to confront complex internal and external challenges.
During a recent fireside chat, Katie Fellin, Partner at ECG Management Consultants, sat down with Robbie Allen, CEO, Us Heart and Vascular with deep experience leading private equity-backed provider organizations. Their conversation pulled back the curtain on the realities of forming—and sustaining—effective partnerships between health systems and investor-backed medical groups. From the limitations of capital to the growing importance of internal alignment, their dialogue offered a candid view of what it really takes to build something durable in today’s environment.
Referencing a recent Becker’s headline that read “The One Thing PE Can’t Fix”, Allen emphasized a key challenge often overlooked in healthcare transactions: the internal dynamics of physician practices.
Money empowers and accelerates dysfunction, he said.
While private equity (PE) can bring speed, infrastructure, and operational sophistication, Allen was quick to point out that no amount of capital can resolve longstanding cultural or generational differences within physician groups. In many cases, the financial pressures and growth expectations that come with a transaction can actually magnify existing issues.
Fellin echoed the concern, noting that the challenge isn’t exclusive to PE. “These dynamics exist whether the partner is a health system or an investor,” she said. “But the stakes—and the spotlight—are often higher in private equity deals.”
In other words, capital alone doesn’t create alignment. That work has to happen from within.
The conversation turned to the shifting roles hospitals are playing in this evolving landscape. Increasingly, hospitals and health systems are not just strategic collaborators but potential investors or joint venture partners with PE-backed groups.
Allen attributed this trend in part to site neutrality efforts and CMS reimbursement changes that aim to eliminate the payment differential between office-based and hospital-owned outpatient services. As systems rethink their physician enterprise strategies, they are seeking more agile, focused approaches to delivering care—especially in the outpatient and specialty space.
We are always going to be more agile when we are focused around a vertical silo, Allen noted. The days of being everything to everyone are behind us. Policymakers and patients are expecting us to work together across the system.
This evolution is also reshaping the traditional PE model. Long criticized for short-term investment timelines, some private equity firms are now exploring longer-hold vehicles or infrastructure funds. At the same time, health systems are being pushed to move faster and deliver results within shorter strategic cycles. As both sides adapt, the historical misalignment of time horizons is beginning to narrow.
Allen outlined three core elements that help determine whether a partnership—between a system and a private equity-backed provider—has the potential to succeed:
Fellin added that systems pursuing too many initiatives at once often struggle to build deep, impactful partnerships. Instead, those that focus on doing fewer things better—especially in areas where they have a unique advantage—are more likely to see success.
As healthcare continues to shift toward value-based models, many conversations inevitably turn toward Medicaid and Medicare populations. Fellin asked Allen whether alignment between government payers and the private sector is possible—or inevitable.
Allen’s response? Both.
CMS is forcing more of these partnerships through policy changes, but they’re also showing a real openness to collaboration, he shared. What they want is true cost reduction and better outcomes—not just business models that squeeze margin from inefficiency.
He urged providers and health systems to engage CMS and other public payers proactively, bringing forward ideas that drive value rather than simply preserve existing revenue streams.
The session closed with a conversation about the growing number of specialty care organizations that are built specifically to perform in value-based environments. These organizations—many of them backed by private equity—are often laser-focused on managing chronic conditions more efficiently and effectively than traditional care models.
While this trend presents exciting potential, both Allen and Fellin acknowledged its limitations.
“We also still really need these hospitals and health systems to be here,” Fellin said. “Specialty-focused models can improve parts of the puzzle, but they can’t replace the acute and high-complexity care infrastructure.”
Allen agreed, noting that success in value-based care will increasingly depend on collaboration across the continuum. No single organization—regardless of its capital backing or specialization—can do it all alone.
If there was one clear message in the conversation between Katie Fellin and Robbie Allen, it was this: strong partnerships in healthcare are built on more than just capital. They require cultural alignment, leadership commitment, and a shared belief in the mission of improving care. Whether between hospitals and private equity, or across payer and provider lines, the future of healthcare will depend on our ability to break down silos and work together toward a common goal.
Katie Fellin and Robbie Allen during the Council's Fireside chat: Private Equity's Healthcare Playbook.