As the consolidation trend sweeps over the healthcare industry, many medical groups are considering strategic mergers with other groups in their region and/or specialty. In our experience, many physicians do not want their organizations to grow into larger entities (because of the increase in complexity, loss of autonomy, etc.). However, more and more groups recognize that in today's marketplace, bigger is often better in terms of providing cost-effective care and creating negotiating clout with managed care companies.
Typically merger efforts begin with friendly and general discussions about shared interests and possibilities. Unfortunately, the merger effort often bogs down because either the groups do not know what to do next, or because of the lack of an organized effort.
In order to be successful, physicians that embark on a merger effort should always make sure they get the answers to the following questions:
- Why should we consider a merger?
- What are the costs and risks associated with merging?
- How does a merger process typically work?
- What are the key issues usually addressed in a merger process?
- Who participates in the merger process?
- How do we get started?