Key Pre-Merger Decisions

May 10, 2019

During the merger process, the doctors as a group will need to make numerous decisions about certain aspects and elements of the new group practice. Many of these key decision areas are listed below. Some of these decisions are so important that a failure to properly address them could cause harm to the potential success of the merger. Some potential mergers are called off because the doctors could not agree on how to address certain topics. This demonstrates the importance of handling these issues.

Select a New Name for the Group Practice

The merging physicians will need to settle on the new practice’s name. This decision should not be taken lightly because a new name creates the “identity” of the new group practice. Keep in mind the marketing strategies when selecting a new group name.

Personnel Decisions

This is one area where doctors will definitely disagree. The first step is to select the “organizational chart” for the new merged entity. The doctors will also need to compare the number of employees in each individual practice, their salaries, and the benefits they receive. Using the organizational chart as a guide, the doctors will then need to decide who will participate in administration, who will participate in billing and collection, who will participate in clinical activities, etc. If multiple office sites exist, the doctors will need to decide who will work at each site. The decision on whether or not to keep employees is one of the most difficult decisions the doctors will face.

Employee Benefits and Policies

Besides deciding on employees and their salaries, the merging doctors will also need to decide what additional benefits to provide to the employee group and decide what other employee policies to implement. These issues are more difficult than you might think. When the doctors finally agree on a benefit package and employee policies, there is a good chance some employees lose benefits while others may have access to benefits they did not have before.

Billing and Collection Decisions

Another key decision involves billing and collection activities. The doctors must adopt a common set of billing and collection policies. We all know that integration is a key to a successful merger and this includes an integration of common billing and collection policies. There should be common policies for each practice site (i.e., front desk collections) and centralized or common billing and collection personnel (i.e., insurance follow up policy).

If the doctors are not willing to integrate their practices, I question whether or not the merger should even take place. In other words, you “can’t be a little bit pregnant” as they say.

Selecting a Computer System

 The doctors must also decide which medical billing software system to use to bill and collect for the new group’s medical services. Each practice usually has its own medical billing software system and more than likely, each practice will think its billings system is the best. This fact alone makes selecting a single system for the new group a major undertaking. This issue can really be an acute problem for many of the participating groups. Why? Well for one reason, a participating practice may have just purchased or leased a new medical billing system. If the merging doctors decide to use another system, this practice will be extremely unhappy with the thought of losing its investment, not to mention the prospect of enduring another dreaded conversion.

Operational Decisions

Here is a list of the operational decisions that must be addressed:

  • Develop the new group’s fee schedule
  • Select a call schedule
  • Obtain new provider numbers
  • Obtain new tax numbers
  • Notify third party payers of merger and related new practice information
  • Set up electronic billing
  • Obtain a line of credit at a banking institution
  • Select a banking institution
  • Select a malpractice carrier for the new group
  • Select other insurances
  • Select professional advisors
  • Decide on a medical charting system – EMR?
  • Select outside services
  • Order new forms
  • Select internal accounting/accounts payable system
  • Create a central business office, if applicable.

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