Selling your practice to a hospital

June 10, 2012

With the pressures on private practices continuing to grow, more physicians are considering selling to hospitals and healthcare systems. As with any decision, it pays to think things through.

Key Points

So if you're considering selling to a hospital or healthcare system, you're not alone. As with any major decision, however, it pays to think things through so you're happy with the outcome.

WHY HEALTHCARE SYSTEMS WANT TO ACQUIRE PRIVATE PRACTICES

An old healthcare adage states, "Administrators don't put patients in hospital beds; physicians do." Indeed, physicians are critically important to a healthcare system's success. So one of the main motivations for a hospital to get into the acquisition business is to stabilize its medical staff. Physicians under stress-from stagnant or decreasing compensation, or from overwhelming bureaucracy-tend to seek relief, which may not exist in the current market. To avoid losing top talent, which tend to be the first physicians to go, hospitals are willing to step in.

The jury is still out on whether a full accountable care organization (ACO) model will emerge in healthcare, but every rational executive recognizes that reimbursements will be tied increasingly to improved quality and outcomes. We should all applaud this-it's about time-but the current fragmented state of the industry makes coordination of care and resources a huge challenge. The Centers for Medicare and Medicaid Services' ACO pilot projects have proven that, to have any chance of success inside this model, care must be highly integrated and organized.

This point brings us to the second major driving force behind practice acquisitions: hospitals' desire to create integrated healthcare delivery systems. More on that topic later.

Regardless of the specific reimbursement model, having a larger number of patients (or potential patients) in your system is better than having fewer. Primary care, more than any other specialty, can deliver patient populations to an IDS. Hospitals recognize this fact and, therefore, are eager to build their primary care panels.