We’ve been defining the independent physician landscape wrong—here’s a new approach

Physician groups and their funders—you've been thinking about their  relationship wrong

We’ve historically divided the physician landscape in two parts: hospital-employed or independent. But over time, the “independent” segment has become more complex and inclusive of more types of groups who don’t fit the traditional definition of shareholder-owned and shareholder-governed. Even true independent groups don’t look like they once did, adapting in ways like receiving funding from a range of investors or adding more employed physicians.

So our standard way of thinking—hospital-employed or independent—has become obsolete. It’s time for a more nuanced approach to a diversified market.

When the pace of investment and aggregation in the independent space picked up, we conceptualized the changes primarily in terms of funder: private equity, a health plan, a health system, or another independent group.

That made sense at the time because each type of funder was using similar methods to partner with groups—health systems acquired, private equity invested directly in the independent group, and so forth.

But the market has shifted such that remaining independent groups are both stronger and more committed to independence. So organizations who want to partner with these groups have had to refine and diversify their value propositions—and often times are doing so without all-out acquisition. For more information on themes within these funder organizations, see our companion blog.

We set out to make sense of an ever-changing independent physician landscape in a way that would make it easier to understand for both independent groups and for those who work with them. Instead of dividing the landscape by funder, we assessed organizations based on their level of autonomy vs. integration, their growth model, and their geographic reach.

The map above has five physician practice archetypes and is oriented around two axes: local to national and autonomy to integration. The four archetypes on the top are larger in scale than a traditional independent medical group, often moving regionally and then nationally.

The archetypes are also ordered based on the degree of physician and practice autonomy, with organizations on the right using more of an integrated and standardized model for care delivery and sharing a brand identity.

So far, we’ve tracked two types of trends within this landscape. First, independent groups partner with national archetypes in one of two ways. Either the groups continue to exist as both independent groups and as part of the corporate identity OR they get integrated into the corporate entity. The exception is that we have not seen national chains integrate existing medical groups—though they may in the future.

The other trend we have seen is the evolution of some of these archetypes. We currently see service partners in the market shift to look more like coalitions. We assume we may see coalitions that start to look more like aggregators, and we know many aggregators have ambitions to function more like national chains. 

Below you will find a brief description of each archetype as well as a more robust table of key characteristics.

Definitions of physician archetypes

Independent medical group

Independent medical groups are traditional shareholder-owned, shareholder-governed practices. They are governed by a board of physician shareholders, and shareholders derive direct profits from the group.

Service partner

A service partner is an organization whose primary ambition is to make profits through providing a service, such as technology, data, or billing infrastructure, to physician groups. This type of partner may create some sort of alignment between practices since it sells to like-minded practices (e.g., those deep in value-based care, within the same specialty), but that alignment is more of a byproduct than the primary goal.

Coalition

Coalitions are formed from physician practices who want to get benefits of scale without giving up any individual autonomy. They join a national organization to share resources, data, and/or knowledge, but each practice also retains its individual local identity and branding. Common coalition models include IPAs, ACOs, and membership models.

Aggregator

Aggregators are the most traditional approach to getting scale from independent medical groups. They acquire practices and usually employ their physicians. The range of aggregators is very diverse. It includes health plans, health systems, private equity investors, and independent medical groups who have shifted to become aggregators themselves.

National chain

We have historically referred to national chains as disruptors, but that name is inclusive of many organizations who are not physician practices and what qualifies as “disruptive” is ever-changing—so we needed a new name that better suited these groups. National chains are corporate organizations who develop a model (e.g., consumerism, value-based care, virtual health) and bring that model to scale, usually by building new practices or hiring new providers. These are highly integrated organizations, with each new location using the same care delivery model and infrastructure.

As the independent physician landscape evolves, it has implications not only for independent groups but for those who work with them. We hope that a shared terminology helps bridge some of the gaps in understanding this complex landscape.

For those who partner with independent groups, we’d suggest reading our companion blog for our take on the three biggest funders and questions to ask yourself to work successful with today’s physician groups.

How would “Medicare at 60” impact health system margins?

https://mailchi.mp/26f8e4c5cc02/the-weekly-gist-july-16-2021?e=d1e747d2d8

An estimate from the Partnership for America’s Healthcare Future predicts that nearly four out of five 60- to 64-year-olds would enroll in Medicare, with two-thirds transitioning from existing commercial plans, if “Medicare at 60” becomes a reality.

In the graphic above, we’ve modeled the financial impact this shift would have on a “typical” five-hospital health system, with $1B in revenue and an industry-average two percent operating margin. 

If just over half of commercially insured 60- to 64-year-olds switch to Medicare, the health system would see a $61M loss in commercial revenue.

There would be some revenue gains, especially from patients who switch from Medicaid, but the net result of the payer mix shift among the 60 to 64 population would be a loss of $30M, or three percent of annual revenue, large enough to push operating margin into the red, assuming no changes in cost structure. (Our analysis assumed a conservative estimate for commercial payment rates at 240 percent of Medicare—systems with more generous commercial payment would take a larger hit.)

Coming out of the pandemic, hospitals face rising labor costs and unpredictable volume in a more competitive marketplace. While “Medicare at 60” could provide access to lower-cost coverage for a large segment of consumers, it would force a financial reckoning for many hospitals, especially standalone hospitals and smaller systems.

‘I only see the potential for massive financial loss’: Former Spectrum CFO doubts value of Beaumont merger

I only see the potential for massive financial loss': Former Spectrum CFO  doubts value of Beaumont merger

Michael Freed, the former CFO of Spectrum Health, said he was “stunned” when he heard that the Grand Rapids, Mich.-based system plans to pursue a merger with Southfield, Mich.-based Beaumont Health, for myriad reasons. 

In a June 24 open letter to Spectrum’s board of directors, Mr. Freed said during his tenure they discussed possible mergers routinely and that a Spectrum-Beaumont combination “brought nothing new with it” and wouldn’t enhance value. 

“The markets didn’t overlap, so there were no significant administrative savings opportunities. The ability of each hospital to grow wasn’t enhanced by adding the other to the ‘system,'” Mr. Freed wrote. “In short, I never saw how such a merger could improve health, enhance value or make care more affordable. I still don’t.”

Mr. Freed was Spectrum’s CFO from May 1995 to December 2013. During his tenure, he helped oversee the formation of Spectrum and a substantive period of growth for the Michigan system. Mr. Freed also served as CEO of Spectrum’s health plan, Priority Health, from May 2012 until he retired in January 2016.

In his letter, Mr. Freed outlined several reasons he was “stunned” by the pursuit of the merger that would create a health system with 22 hospitals, 305 outpatient centers and about $13 billion in operating revenue.

Mr. Freed wrote that the merger with Beaumont, which is based in Southfield, Mich., may not be in the best interest of West Michigan. He said the combination of the two systems raises questions about whether governance truly will remain in the region and with Spectrum, if financial transparency will continue and if Spectrum will continue to honor the consent decree it signed in 1997 establishing a set of operational guidelines. 

If the merger moves forward, “debt can be placed on the books of West Michigan while investments EARNED IN West Michigan could be spent in SE Michigan … and vice versa,” Mr. Freed wrote. “If this entity should someday merge with other out-of-state entities, West Michigan could find itself investing in healthcare in other states as well, rather than in its own health.”

Mr. Freed raised concerns over the agreement between Spectrum and Beaumont to create a 16-person board of directors, seven of whom would come from Spectrum and seven from Beaumont. The CEO would come from Spectrum, and one new board member will be appointed. 

“While this structure looks to favor Spectrum Health initially, it would only take the hiring of a board member more favorable to Beaumont Health and the replacement of the CEO (in favor of Beaumont Health) for Spectrum Health to find itself outvoted 9 to 7 on key issues,” Mr. Freed said.

Additionally, Mr. Freed noted that the merger has the potential for massive financial losses to West Michigan. In particular, Mr. Freed said losses would stem from the financial assets of Spectrum and Priority Health no longer residing in West Michigan. 

“I’ll admit, I don’t see any value in this merger,” Mr. Freed wrote. “I only see the potential for massive financial loss, both historically and an undetermined amount going forward, to the region that produced all of Spectrum Health.” 

Mr. Freed urged the Spectrum board to take a few steps before moving forward with the merger, including selling or divesting Priority Health. 

“When you sign the documents that will permanently change this region, your signature will forever hold you accountable for the repercussions,” Mr. Freed wrote. “Please sign carefully.” 

Spectrum Health told MiBiz it remains committed to the commitments in the 1997 consent agreement and that it “remains enthusiastic” about the merger.

“Spectrum Health is fully committed to fulfilling its consent decree obligations and will continue to uphold its tenets,” the health system said. “We remain confident that creating a new system not only meets our current obligations to our local communities but will also improve the health of individuals in West Michigan and throughout the state.”

Access the full letter here

Tenet to sell 5 Florida hospitals for $1.1B as it doubles down on surgery centers

Simultaneous Surgeries: Both Sides of the Debate Double Down

Dive Brief:

  • Tenet, a major U.S. health system, has agreed to sell five hospitals in the Miami-Dade area for $1.1 billion to Steward Health Care System, a physician-owned hospital operator and health network.
  • The deal also includes the hospitals’ associated physician practices. Dallas-based Steward has agreed to continue using Tenet’s revenue cycle management firm, Conifer Health Solutions, following the completion of the deal, which is expected to close in the third quarter.
  • Further underscoring Tenet’s strategic focus, the sale will not include Tenet’s ambulatory surgery centers in Florida. Tenet will hold onto those assets as its ambulatory business becomes a bigger focus for the legacy hospital operator.  

Dive Insight:

Dallas-based Tenet continues to bet on its ambulatory surgery business.

It’s noteworthy that this latest billion-dollar sale does not include any of its surgery centers in Florida, but half of its hospitals. Jefferies analyst Brian Tanquilut said the ambulatory segment now becomes even more important as it will contribute a majority of consolidated earnings in the near term. 

That’s a significant leap from 2014 when earnings from the ambulatory unit represented about 4% of the company’s earnings. 

The money generated from the sale could also pay for more ASCs, under Tenet’s unit, United Surgical Partners International (USPI), further bulking up Tenet’s ASC portfolio that already outnumbers its competitors.  

Tenet is traditionally viewed as a hospital operator, even though its surgery center footprint dwarfs its hospital portfolio. Tenet operates 310 ASCs following a $1.1 billion deal in December to acquire 45 centers from SurgCenter Development. Tenet said Wednesday it operates 65 hospitals.  

Of Tenet’s 10 Florida hospitals, Steward will buy up half, including Coral Gables Hospital, Florida Medical Center, Hialeah Hospital, North Shore Medical Center and Palmetto General Hospital.

Tanquilut said that leaves Tenet in control of its “core” south Florida business in the Boca and Palm Beach market, located about 75 miles north of the Miami area where Tenet is selling its hospitals.

During the volatile year of 2020, Tenet was able to post a profit of $399 million for the full year, which includes provider relief funding. As recovery continues, Tenet posted a profit of $97 million during the first quarter, which also includes federal relief due to the pandemic.

The folly of fighting over board seats

https://mailchi.mp/3e9af44fcab8/the-weekly-gist-march-26-2021?e=d1e747d2d8

The Importance Of Board Seats During Fundraising

In our work over the years advising health systems on M&A, we’ve been struck by how often “social issues” cause deals that are otherwise strategically sound to go off the rails.

Of course, it’s an old chestnut that “culture eats strategy for breakfast”, but what’s been notable, especially recently, is how early in the process hot-button governance and leadership issues enter the discussions.

Where is the headquarters going to be? Who’s going to be the CEO of the combined entity? And most vexingly, how many board seats is each organization going to get? That last issue is particularly troublesome, as it’s often where negotiations get bogged down. But as one health system board member recently pointed out to us, getting hung up on whether board seats are split 7-6 or 8-5 is just silly—in her words, “If you’re in a position where board decisions turn on that close of a margin, you’ve got much bigger strategic problems.” 

It’s an excellent point. While boards shouldn’t just rubber stamp decisions made by management, it’s incumbent on the CEO and senior leaders to enfranchise and collaborate with the board in setting strategy, and critical decisions should rarely, if ever, come down to razor-thin vote tallies.

If a merger makes sense on its merits, and the strategic vision for the combined organization is clear, quibbling over how many seats each legacy system “gets” seems foolishNo board should go into a merger anticipating a future in which small majorities determine the outcome of big decisions.

Back to “a deal for every doc”?

https://mailchi.mp/b0535f4b12b6/the-weekly-gist-march-12-2021?e=d1e747d2d8

Hospital Physician Partners and Lock Haven Hospital Announce New Emergency  Department Partnership

Many physician practices weathered 2020 better than they would have predicted last spring. We had anticipated many doctors would look to health systems or payers for support, but the Paycheck Protection Program (PPP) loans kept practices going until patient volume returned. But as they now see an end to the pandemic, many doctors are experiencing a new round of uncertainty about the future. Post-pandemic fatigue, coupled with a long-anticipated wave of retiring Baby Boomer partners, is leading many more independent practices to consider their options. And layered on top of this, private equity investors are injecting a ton of money into the physician market, extending offers that leave some doctors feeling, according to one doctor we spoke with, that “you’d have to be an idiot to say no to a deal this good”.
 
2021 is already shaping up to be a record year for physician practice deals. But some of our recent conversations made us wonder if we had time-traveled back to the early 2000s, when hospital-physician partnerships were dominated by bespoke financial arrangements aimed at securing call coverage and referrals. Some health system leaders are flustered by specialist practices wanting a quick response to an investor proposal. Hospitals worry the joint ventures or co-management agreements that seemed to work well for years may not be enough, and wonder if they should begin recruiting new doctors or courting competitors, “just in case” current partners might jump ship for a better deal. 

In contrast to other areas of strategy, where a ten-year vision can guide today’s decisions, it has always been hard for health systems to take the long view with physician partnerships.

When most “strategies” are really just responses to the fires of the day, health systems run the risk of relationships devolving to mere economic terms. Health systems may find themselves once again with a messy patchwork of doctors aligned by contractual relationships, rather than a tight network of physician partners who can work together to move care forward.

Paying due attention to the “why” of strategy

https://mailchi.mp/41540f595c92/the-weekly-gist-february-12-2021?e=d1e747d2d8

Image result for the why of strategy

We spend a lot of our time helping health system executives craft and communicate enterprise-level strategy: entering new markets or businesses, developing new services, responding to competitive threats, exploring partnership opportunities. Strategy is about the “what” and “when”—what moves are we going to make, and when is the right time to make them? Answering those questions requires an understanding of industry and market forces, organizational capabilities, and consumer needs. But there’s another important component that often goes missing in the rush to get to the “how” of strategy execution: the “why”.

Yet understanding why we’re pursuing one path and not another is critical for aligning stakeholders: physicians, operators, and (importantly) the board. Joan Didion famously wrote that “we tell ourselves stories in order to live”, and we’d agree; the “why” is about storytelling. What’s the strategic narrative, or story, that frames our intended actions? Making sure that everyone involved—including our patients and consumers—has a clear understanding of why we’re opening a new facility, or launching a new service, or entering into a new partnership, is a key to success.

It’s about sharing the vision of our desired role as a system, and the part we see ourselves playing in improving healthcare. We’re sometimes criticized for spending so much time on “framing” and drawing “pretty graphics”, but we’ve come to believe that the ability to succinctly and compellingly describe the “why” of strategy is as important as coming up with the vision in the first place. And then, of course, delivering on the “why”—a job made easier if all involved are clear on just what it is.

Pandemic propels health systems to mull insurer acquisitions, partnerships

4 Reasons Strategic Partnerships are Important for Business - Glympse

Nearly a year after the first confirmed case of COVID-19 in the U.S., some of the nation’s largest health systems made a case for the need to accelerate toward value-based arrangements and potentially acquiring or partnering with health plans to become an integrated system.

Amid new records for deaths and cases from the novel coronavirus, executives gathered virtually for J.P. Morgan’s 39th annual healthcare conference, which typically draws prominent healthcare leaders to San Francisco at the start of each year.

The pandemic has been a heavily discussed topic during the digital gathering. One theme has been health systems either acknowledging they are on the hunt for health insurer acquisitions and partnerships or advocating for such arrangements as result of the challenges.

Anu Singh, managing director and the leader of the mergers, acquisitions and partnerships practice at consultancy Kaufman Hall, said it’s a natural migration for health systems, though it does come with some risk.

“If you want to move into the realm of being a population health manager, and take greater responsibility for your patient bases, you’re going to have to be thinking about maintaining their health,” Singh said. “And that’s typically something that, at least traditionally and historically, has been driven a little bit more by the health plan.”

For Utah’s Intermountain Healthcare, the lessons of the pandemic are clear: The industry needs to move away from a system that rewards volume. Intermountain is a fully integrated system that manages both providers and an insurance unit.

“It is becoming increasingly apparent that systems that are well integrated, especially systems that understand how to take risks, have prospered in the face of the terrible burden, caring for people in the midst of the first pandemic in 100 years,” Intermountain CEO Marc Harrison said Monday.

From his vantage point, Harrison said it has been interesting to watch the consternation around telehealth visits.

“Lots of folks who are really still caught in the volume-based system are actively switching patients back from tele- or distance to in-person visits so they can maximize revenue,” he said. “I understand that. But that’s a really great example of poorly aligned incentives.”

Intermountain has managed to stay in the black as many other systems have struggled financially as a result of the pandemic driving down patient volumes. It reported net income of $167 million through the first nine months of 2020, compared with $919 million the year prior.

Another integrated system, Baylor Scott and White Health, the largest nonprofit system in Texas, said such diversification has helped buoy its finances as hospital and clinic operations bottomed out in the spring due to the virus.

Baylor Scott and White illustrated this point by showing how operating income for its clinical segment took a nosedive in the spring while operating income for its health plan remained relatively steady.

The theme of integrated health systems also seemed to be on the minds of investors. CommonSpirit Health executives were asked during their presentation if buying or creating a health plan was on their radar as the system has a sizable footprint of 140 hospitals across the country.

“I think this is a interesting question, one that of course we’ve discussed many times strategically,” CFO Daniel Morissette said, noting the system does have a number of regional plans. “At this time, we have no plan of having a national CommonSpirit branded plan.” However, Morissette said the system would consider a partnership opportunity.

On the other hand, Midwest-based Advocate Aurora Health said it is actively on the hunt for a potential insurer deal as part of its long-term strategy.

“We do believe that having health plan capability, not necessarily having our own, but partnering for health plan capability, is going to be critical to our success, and we are taking steps to do that,” CEO Jim Skogsbergh said during the virtual conference.

Kaufman Hall said in its latest report that it expects more payer-provider partnerships as a result of the pandemic. “Limitations on fee-for-service payment structures exposed by the pandemic may increase the number of payer-provider partnerships around new payment and care delivery models,” according to the report.

Singh of Kaufman Hall said it’s not surprising that some may lean more toward a partnership due to the risks of starting a new venture, especially an insurance unit that can have “catastrophic loss”. Systems with less experience of moving toward implementing value-based initiatives may be more vulnerable to such risk.

It’s why he thinks partnerships may be a good fit, at least at first. Payers and providers can work together to improve the health of certain populations and then share in the cost savings.

Hackensack, RWJBarnabas and Horizon strategically partner to own Medicare Advantage insurer

https://www.healthcarefinancenews.com/news/hackensack-rwjbarnabas-and-horizon-own-new-medicare-advantage-plan-braven-health

New Jersey | Capital, Population, Map, History, & Facts | Britannica

Braven Health teams two of the largest provider systems in New Jersey with one of the largest insurers in the state.

Hackensack Meridian Health and Horizon Blue Cross Blue Shield of New Jersey have teamed up as equal provider and payer owners of the newly-created Medicare Advantage business, Braven Health. 

RJWBarnabas Health in New Jersey, is about to come onboard as a 10% minority owner, subject to state approvals.

“A lot of organizations have a provider and payer partnership,” said Patrick Young, president of Population Health at Hackensack. “The payer is still the payer and the provider is still the provider. This transcends that.”

While Medicare accounts for a large portion of hospital revenue – about 40% – providers do not reap the rewards that Medicare Advantage plans do.

“We don’t do well financially for care to a Medicare member because the rates are low,” said Young, who formerly worked for Aetna. “The Medicare population is the fastest growing, but there’s no advantage to being the provider. The only organizations making money are the insurers.”

Hackensack felt that getting into the insurance space specifically around Medicare was strategic for growth. 

“Medicare is the fastest growing population,” Young said, adding, “It’s the fastest growing population we lose money on.” 

Hackensack went looking for a payer partner in the complicated and highly regulated insurance market. The health system sent requests for proposals, looking not only for experience in the market, but for an organization whose value-based goals aligned with its own. 

“We have value-based arrangements with all the major payers,” Young said.

It chose Horizon as its strategic partner.

Braven Health teams two of the largest provider systems in New Jersey with one of the largest insurers in the state.

Starting January 1, Braven Health’s Medicare Advantage plans will be available in eight counties: Bergen, Essex, Hudson, Middlesex, Monmouth, Ocean, Passaic and Union.

WHY THIS MATTERS

Insurers and pharmacies have long been elbowing into the healthcare space.

UnitedHealth Group has been buying physician practices and is reportedly one of the nation’s largest employers of doctors. CVS Health, owner of Aetna, launched Health Hubs within its pharmacies. Walmart recently announced an expansion of its health clinics.

The move by Hackensack could be seen as another battle in the arms race to regain competitive ground. But it also recognizes the need for providers to work collaboratively with payers to get claims and other data needed to improve outcomes and lower cost in the move to value-based care.

Joint ventures are the next logical progression of payment models, moving away from fee-for-service and toward value, shared risk and accountability arrangements. 

The integration model of provider and payer isn’t new.

The Geisinger Health System, Highmark Health in Pennsylvania and Kaiser Permanente in California are three of the largest and best-known integrated systems.

Horizon competitors such as Aetna, Cigna and Oscar and other Blue plans such as Highmark are in provider/payer partnerships. 

One of the nation’s largest nonprofit health systems, Ascension, and health payer Centene are also among the joint ventures offering Medicare Advantage plans. In 2018, there were about 28 joint venture plans in the United States, with at least nine of these offering MA plans, according to DRG.

BRAVEN HEALTH

Braven Health plans use Horizon BCBSNJ’s existing Medicare Advantage managed care networks, meaning that every doctor and hospital that participates in these networks will also be in-network for comparable Braven Health plans. 

This gives Braven Health Medicare Advantage members access to more than 51,000 providers and 82 network hospitals in the Hackensack and RWJBarnabas systems in New Jersey. 

As a Blue Cross Blue Shield plan, Braven Health’s members choosing a PPO plan will also have access to the BCBS national Medicare Advantage PPO network. 

Braven is a separate legal entity with its own board. It also has a Practitioner Council, made up of physicians representing various specialties, that will provide recommendations to the Braven Health CEO and board of directors on ways to improve the plan from the practitioner’s perspective.

It’s still early in the open enrollment process, but so far Braven Health CEO Luisa Y. Charbonneau said she is encouraged by the response to the plans. Braven creates a closer, collaborative relationship for better health, based in part on the exchange of data, according to Charbonneau.

“You can make the best decisions when there is transparent data between all parties, as well as have innovation,” Charbonneau said. “I think we see across the United States, where physicians, providers and the insurer are all aligned to be patient-centered, that’s where we’re going to see the best outcomes and financial outcomes.”

THE LARGER TREND

Close to 40% of Medicare members now choose a Medicare Advantage plan over traditional Medicare, as the plans run by private insurers offer additional benefits and some, including Braven Health, are offering zero premiums in specific 2021 plans.

The market is only expected to grow as baby boomers age into retirement.

Warren Buffett: An appreciation

https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/warren-buffett-an-appreciation?cid=other-eml-alt-mip-mck&hlkid=500c2a923cdd4ff19d66acac00e2a9fa&hctky=9502524&hdpid=e758f2ed-7de7-4263-9faa-7daf7b3bdaa7

Celebrating Warren Buffett on his 90th birthday | McKinsey

As Warren Buffett turns 90, the story of one of America’s most influential and wealthy business leaders is a study in the logic and discipline of understanding future value.

Patience, caution, and consistency. In volatile times such as these, it may be difficult for executives to keep those attributes in mind when making decisions. But there are immense advantages to doing so. For proof, just look at the steady genius of now-nonagenarian Warren Buffett. The legendary investor and Berkshire Hathaway founder and CEO has earned millions of dollars for investors over several decades (exhibit). But very few of Buffett’s investment decisions have been reactionary; instead, his choices and communications have been—and remain—grounded in logic and value.

Buffett learned his craft from “the father of value investing,” Columbia University professor and British economist Benjamin Graham. Perhaps as a result, Buffett typically doesn’t invest in opportunities in which he can’t reasonably estimate future value—there are no social-media companies, for instance, or cryptocurrency ventures in his portfolio. Instead, he banks on businesses that have steady cash flows and will generate high returns and low risk. And he lets those businesses stick to their knitting. Ever since Buffett bought See’s Candy Shops in 1972, for instance, the company has generated an ROI of more than 160 percent per year —and not because of significant changes to operations, target customer base, or product mix. The company didn’t stop doing what it did well just so it could grow faster. Instead, it sends excess cash flows back to the parent company for reinvestment—which points to a lesson for many listed companies: it’s OK to grow in line with your product markets if you aren’t confident that you can redeploy the cash flows you’re generating any better than your investor can.

As Peter Kunhardt, director of the HBO documentary Becoming Warren Buffett, said in a 2017 interview, Buffett understands that “you don’t have to trade things all the time; you can sit on things, too. You don’t have to make many decisions in life to make a lot of money.” And Buffett’s theory (roughly paraphrased) that the quality of a company’s senior leadership can signal whether the business would be a good investment or not has been proved time and time again. “See how [managers] treat themselves versus how they treat the shareholders .…The poor managers also turn out to be the ones that really don’t think that much about the shareholders. The two often go hand in hand,” Buffett explains.

Every few years or so, critics will poke holes in Buffett’s approach to investing. It’s outdated, they say, not proactive enough in a world in which digital business and economic uncertainty reign. For instance, during the 2008 credit crisis, pundits suggested that his portfolio moves were mistimed, he held on to some assets for far too long, and he released others too early, not getting enough in return. And it’s true that Buffett has made some mistakes; his decision making is not infallible. His approach to technology investments works for him, but that doesn’t mean other investors shouldn’t seize opportunities to back digital tools, platforms, and start-ups—particularly now that the COVID-19 pandemic has accelerated global companies’ digital transformations.

Still, many of Buffett’s theories continue to win the day. A good number of the so-called inadvisable deals he pursued in the wake of the 2008 downturn ended paying off in the longer term. And press reports suggest that Berkshire Hathaway’s profits are rebounding in the midst of the current economic downturn prompted by the global pandemic.

At age 90, Buffett is still waging campaigns—for instance, speaking out against eliminating the estate tax and against the release of quarterly earnings guidance. Of the latter, he has said that it promotes an unhealthy focus on short-term profits at the expense of long-term performance.

“Clear communication of a company’s strategic goals—along with metrics that can be evaluated over time—will always be critical to shareholders. But this information … should be provided on a timeline deemed appropriate for the needs of each specific company and its investors, whether annual or otherwise,” he and Jamie Dimon wrote in the Wall Street Journal.

Yes, volatile times call for quick responses and fast action. But as Warren Buffett has shown, there are also significant advantages to keeping the long term in mind, as well. Specifically, there is value in consistency, caution, and patience and in simply trusting the math—in good times and bad.