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J Oncol Pract. 2006 May; 2(3): 120–122.
PMCID: PMC2794594

An Interview With Peter Paul Yu, MD: Preserving Independence With Strategic Partnerships

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Peter Paul Yu, MD

JOP: Dr. Yu, before we get into your thoughts on the future of oncology, would you share with us what made you enter medicine in the first place?

PPY: I actually have a diploma in my office from when I graduated from nursery school at age 6. We were asked to declare what we wanted to be, and I wrote that I wanted to be a doctor and take care of sick people, so I think it was hardwired at birth. But since I come from a family of engineers, this may have been a founder mutation.As for the decision to enter oncology, that's more complicated. It's a difficult field and I think everybody wrestles with that decision. For me, it dates to third year medical school at Brown University [Providence, Rhode Island], when I began a fortunate series of relationships with people who went on to become influential within ASCO. In fact, that's when I began my own relationship with the Society.I was rotating in the hospital in internal medicine, and one of my first attendings was Joseph DiBenedetto, who is now an ASCO Board member. I was interested in taking care of his patients, and seeing how he took care of them. That was when I really began to understand the combination of science and caring in community medical practice, and that began my interest in oncology.The interest was further nurtured when I did a fellowship in New York City at Mount Sinai Hospital, and worked with James Holland. Dr. Holland is, of course, past president of ASCO, and a co-founder of the Cancer and Leukemia Group B (CALGB). He was truly my first mentor. That was more than 20 years ago, but I still maintain an affiliation with Mount Sinai, and still participate in CALGB.During that time I also began friendships with Dr. Larry Norton, who would become president of ASCO, and Dr. Edward Ambinder, who would subsequently become an ASCO Board member.I went from there to Memorial Sloan-Kettering Cancer Center [New York, New York], where I did bench research with Dr. John Mendelson, looking at the EGF [epidermal growth factor] receptor and tyrosine kinase signal transduction pathways. So my interest in oncology really derives from a series of strong relationships with key leaders in the field.

JOP: How did you get into your current practice?

PPY: I came to California in 1989 to join a small single-specialty group of three hematologist-oncologists.California leads the country in many trends, including being the toughest area for managed care, and it soon became very difficult for our small practice to deal with the hostile managed care environment. Also, the small single-specialty practice model did not seem to me to be very efficient, nor to have favorable long-term prospects.In our Silicon Valley community in the 1990's, there was a coalescing of primary care groups into a large multispecialty group, and we, too, decided to make that transition. Our practice, Camino Medical Group, is now one of three multispecialty practices, totaling over 600 doctors, within the Palo Alto Medical Foundation, which is itself a member of the Sutter Health System, whose headquarters are in Sacramento.

JOP: That's a very different business model from the small practice.

PPY: Yes, very. This model is a little bit more complicated, but very efficient. First and foremost, we are a medical group run by physicians. We don't use the hospital-based model. Our compensation, for example, is not salaried. We've carried forward the traditional community-practice model, and compensation is based on productivity.When our group first joined the Foundation, we essentially gifted over all of our hard assets because we saw the need for a series of major projects, including electronic medical recordkeeping (EMR), PET [positron emission tomography], and MRI [magnetic resonance imaging] scanners, and a new building. We are able to self-finance these projects because tax laws allow the Foundation to retain earnings that are budgeted for capital improvements.

JOP: Could you give an example?

PPY: About 5 years ago, we instituted EMR throughout our 200-physician group. The transition was smooth because all of our physicians understand the need to work together. We collectively embraced the concept. As a result, we had none of the horror stories that are typical when practices are forced to transition to EMR. It is now 5 years after the fact, and we're 100% paperless: We have no written notes in the chart. All of our notes are dictated, and about 80% are done using voice-recognition technology.

JOP: That's very progressive.

PPY: It is, and it was worth the investment. Instead of having someone sitting there typing charts and prolonging each transcription, the notes appear in real time. All the physician has to do is correct the [Microsoft] Word document. We're now looking at a second generation of EMR. We spend about $15,000 a year per physician on this, and that accounts for 1% to 2% of our total operating budget. It's not insignificant, but it's more accurate and better quality than paper charts.We have also self-insured for malpractice. We have put aside a pool of money, which in effect serves as our own deductible, and then we carry reinsurance for extraordinary costs above several million dollars. The pooled funds generate sufficient interest to pay the premiums on the reinsurance. As a result, we no longer need to budget operating revenues for malpractice premiums.

JOP: How long did that take?

PPY: Five years. It's a great idea, but you need the discipline to retain earnings. The usual desire is, of course, to distribute them among the shareholders.We are also in the process of putting up a new 150,000 square-foot building. We've purchased seven acres of Silicon Valley land, which as you can imagine, was not cheap. We've also purchased a PET scanner and MRI scanner.So our business model has allowed us to really push forward and stay ahead of the game.

JOP: What do you envision as the future of your practice?

PPY: I foresee the oncologists within the three Palo Alto Medical Foundation multispecialty groups working together to establish best practices, common efficiencies, common working models, and common purchasing, accounting, and billing. Instead of duplicating the effort at each place, I would hope we could come up with one model that works best for everybody. In fact, I see this as necessary for survival: We will all have to drive ourselves to be as efficient as possible. We will need to integrate horizontally through the multispecialty group model, creating a subspecialty oncology model nested within the Foundation.

JOP: So you foresee more financial contraction in oncology?

PPY: I think everybody assumes that it will be tighter financially. National organizations like ASCO, and state organizations, too, need to find the leadership to show practices how they can run leaner and meaner. They must also advocate against the negative tide of decreasing reimbursement. Very large forces are aligned against us. On different sides, you have the entire insurance industry, the government's Medicare system, and the hospital systems. Oncologists don't stand a chance if they try to fight on an individual basis. Our only chance is with collective organizations that can represent us on an equal footing.Why do physicians go into medicine? One of the reasons is that they value their independence. They value the ability to think on their feet and be creative in dealing with patients, without regimentation. Physicians don't like standardization because it removes a degree of that personal freedom. This might sound paradoxical, but I think that in order to retain the freedom we cherish, we need to organize. Otherwise, much will be dictated to us.

JOP: You have certainly been active in member organizations. Has it ever been hard for you to maintain your practice?

PPY: It's difficult; it's a struggle. I travel to the East Coast probably once a month on average, but the Internet and EMR have made it possible for me to stay on top of my practice. I have three partners, and they understand the importance of these activities, so I have automatic backup. We rotate call. With EMR, my partners and I can access patient records, and read the chart notes from the same day. We can see what medicines [patients are] on, what allergies, what their problems are, review the x-ray reports. So, covering patients is easier for all of us.I actually generated 5% more RVUs [relative value units] in 2005 than in 2004, despite being president of ANCO and active in ASCO's Clinical Practice and Research committees. I think that means somewhat less sleep—but if you lose touch with your practice, you won't have as good a feel for the needs of clinical oncology. You have to stay in the thick of things. I don't intend to become just an administrator.

JOP: If we could return to your group's capital projects for a moment, is your business guided by a formal strategic plan?

PPY: We're actually in the process of creating an oncology strategic business plan. To move the Foundation to the next level, we will need to coordinate all of the medical groups. We had a strategic meeting [recently] where we talked about various issues ranging from back office function efficiencies, to guideline recommendations for best practices as well as new programs like mid-level providers. We are looking at a programmatic approach, putting in place a system of cancer care delivery, and it may involve a cultural change throughout the organization. In a large and complex organization, one cannot hope to advance one's projects without a sound business plan. So yes, we do strategic planning.

JOP: And meanwhile, is the practice managed internally, or do you outsource that?

PPY: Entirely internally, using physician committees. For example, I'm on the finance committee, and I've been on the retirement committee. One of my partners is on the board of directors. We want to remain physician run, and it is our culture to emphasize physician involvement in running the group.

JOP: Is conflict resolution ever an issue?

PPY: It's not an issue. The way we organize it, the four oncologists and our nurse practitioner function as a mini–medical group within this larger group. So as long as the five of us are working together in sync, there really isn't much opportunity for conflict. When we hire another partner, we make sure that they will fit seamlessly by screening for those attributes. Nor has there been an issue with the larger group, because it's a group model. People join with that understanding, and the willingness to work together.

JOP: How do you hire new associates?

PPY: We invite them to come in and spend a day, to meet the physicians and nurses, and we explain ourselves to them. And if we're satisfied with that initial go-around, we bring the candidate back for a second round of interviews, and then the application goes to a recruitment committee who screen all new candidates. It would be pretty unusual for them to turn down somebody that the subspecialists wanted, but it has happened.After the third review, the candidate is offered a non–shareholder track position. Then, after 2 years, the decision is made whether the person really is the right fit. If they are, they become a full shareholder. The buy-in is a token $100; we don't charge for goodwill or underlying asset value. Many years ago, prospective partners had to buy into the hard assets, but that became way too exorbitant. Since assets now belong to the Foundation, there's nothing to buy into. The partner is simply given shareholder status, and receives an equal stake. I should add that there's no buy-out on the other end, but there are bonuses such as a pension plan, and paid health insurance. They also don't have to worry about liquidating assets, or closing out a business. So this model really takes away a lot of the worries of running a business, and allows the physician to practice medicine.

JOP: Any final thoughts you would care to share?

PPY: I've come to realize from my own practice organization that you really can control your destiny, even in a hostile environment, but you have to be smart about it. You have to be organized and committed. But it is very empowering to have a say in what happens in your career, and it takes away a lot of the negative pessimism many doctors have in feeling like a small fish in a big ocean in the middle of a storm. You have to be involved in some organization. If you don't want to give up your independence as a practice, that's fine, but organizations like ASCO and ANCO will help preserve your ability to run your practice as you please, and still be heard.


Peter Paul Yu, MD, is a medical oncologist with Camino Medical Group, one of three clinical multispecialty practices under the aegis of the Palo Alto Medical Foundation. The Foundation is part of the not-for-profit Sutter Health System of hospitals and multispecialty medical groups, whose members include approximately 1,000 physicians across northern California. In addition to managing a thriving practice, Dr. Yu is a board member of Pathways Homecare and Hospice, and is the immediate past president of the Association of Northern California Oncologists (ANCO). He is also chair-elect of the ASCO Clinical Practice Committee.

Articles from Journal of Oncology Practice are provided here courtesy of American Society of Clinical Oncology