Why aren’t more physicians merging? There are benefits!

There is a myriad of strategic options for physicians who want to increase their capability to address and control what is occurring in today’s healthcare market. One “scared” option is to run towards hospital employment. But I believe a better option is to expand the size of your practice by merging with another practice and/or medical group. Physicians who merge their practices usually hope to gain a number of benefits. These often include many of the following:

• Improved negotiating power with managed care organizations and
  hospitals;
• Preservation of clinical autonomy;
• Freedom from handling the “business aspects” of their practices;
• Increased access to capital needed to expand services;
• Access to human capital and management expertise to improve performance;
• Increased opportunities to collaboratively manage patient care;
• Enhanced lifestyle with better call coverage, scheduling, and support
  services; and
• Improved opportunities to increase sources of revenue through expansion
  of services such as ancillaries and the use of physician extenders.

However, I find that market realities are typically the major impetus for most practice mergers. Physicians merge their practices to improve their position in a market that is changing or that they anticipate will be changing. Practice mergers generally improve the practices’ positions in the market by
providing the size, geography, and infrastructure necessary to compete more effectively. The increased size and clout gained by a medical group as the result of a merger can also influence relations with hospitals and other organizations in the community. But even on a more basic level, a group is more
likely to survive managed care’s continued shakedown on physician reimbursement simply because it has greater clinical, operational, and management capabilities than a solo practitioner or small group.

About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.