Family practices are No. 1 target for hospital acquisitions

March 14, 2013

Family practices top all other specialties as the most in-demand acquisition targets in the eyes of hospital executives, according to a recent survey by a healthcare staffing firm.

top all other specialties as the most in-demand acquisition targets in the eyes of hospital executives, according to a recent survey by a healthcare staffing firm.

Thirty-one percent of executives who completed the survey said they planned to acquire family practices. The next most-desired specialties for hospitals were internal medicine (22%), followed by cardiology and orthopedic surgery, both at 10%, according to Jackson Healthcare.

Overall, 52% of hospital administrators who took the survey said they planned to acquire at least one physician practice in 2013. Forty-four percent said they had acquired a physician practice during the previous year.

As for reasons driving hospitals' acquisitions of physician practices, the top answer (70%) was that physicians have approached hospitals seeking to sell. The next-most cited reasons by hospital administrators were to build a competitive advantage (58%), to augment their physician recruitment strategy (57%), and to form accountable care organizations (30%).

The survey was completed by 118 hospital administrators, 25% of whom were CEOs, according to Jackson Healthcare.

The rise in hospital acquisition activity is certainly not unexpected. Hospital M&A figures should pick up in the coming years for a variety of factors, but the trend is primarily driven by a singular reality: It generally makes financial sense for all parties involved.

For physician practices that get acquired, the deals can bring financial stability, greater operating efficiency and a little insulation against escalating costs and reimbursement pressures. Of course, many physicians are leery of giving up the autonomy they've enjoyed in private practice.

For physician practices that are considering selling themselves to a hospital, healthcare consultant Joel Sauer shared the following advice in a 2012 Medical Economics article:

  • Make sure the healthcare system buying your practice has a strategic plan.

  • Leverage, not loyalty, is what counts in sale negotiations.

  • Don't let emotion affect the monetary value you place on your practice.

Photo from flickr user MichAndrWest

 

 

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