Today I was talking with a vendor of EHR conversion services. I’ll be writing a lot more about our conversation soon, but I wasn’t surprised by his comment that mane of the EHR conversions that they’re doing are due to physician practice acquisition. Whether it’s a large hospital system acquiring the practice or a group practice acquiring a practice, there’s often the desire to move that practice to the same EHR platform.
As I thought about the trend of acquired physician practices, I ran across a whitepaper by athenahealth which asked the question: Physician Acquisition: Is It The Right Strategy For Your Health System? The whitepaper highlights how varying interpretations of the Affordable Care Act (Obamacare), the launch of Accountable Care Organizations (ACO), bundled payment pilots, and the persistent pressure on commercial reimbursement rates makes planning for healthcare leaders a challenging task. However, what does seem clear is that doing the same thing you’ve always done won’t be a viable long term strategy.
All of these pressures are driving the physician acquisition strategy of most organizations. Does anyone see these pressures changing anytime soon? I don’t see any changes in this regard on the horizon.
Despite the widespread physician acquisitions that are happening, there are legal barriers (antitrust) that prevent a clinic from controlling all of healthcare in a community. What does this mean for an organization? How do they integrate with providers that they haven’t acquired? Plus, it’s naive to think that the acquired physicians are going to remain with your organization forever. We have seen the cycle before where acquired doctors leave the mothership and venture out on their own again. Organizations without a strong external strategy are going to be in a difficult position.
The whitepaper does make an interesting case for clinical integration versus full on practice acquisition. This is a great concept that every organization should consider. Can you clinically integrate with an organization that you don’t own? How would that clinical integration work? I think these integrations are still evolving, but the whitepaper had two case studies from organizations that were working on it.
What’s the right strategy for health systems when it comes to physician acquisition?
I know a number of docs who have “sold out” to their local hospital.
It has been interesting to watch, because the initial euphoria (which seems to last until the first annual review) is intense.
The docs almost brag about how they don’t have to deal with this or that anymore, the hospital takes care of that.
The that first annual review comes up and the docs run into an issue of getting pressed for better numbers, etc etc.
All of a sudden they realize they are working for someone else.
2 of the 3 I personally know quit the hospital and went out and restarted their private practice again.
Generally selling one’s practice would be considered part of their retirement process, and if a hospital is making a good offer a few years before you are ready to retire, it may be worth it.
Just like any other business, getting bought out can be good or bad.
This is the downside of forced EMR conversion. My PCP retired early and sold his practice to the hospital, primarily because he felt he was getting into a system over which he had little control — he wasn’t practicing medicine anymore.
The complexity of EMRs with their government-mandated requirements forces doctors into a collective arrangement in order to make a living — once step away from independent private practice and one step closer to an HMO.
I have nothing against EMRs, HMOs, or combined practices. But essentially closing the option of a profitable independent practice bothers me. I foresee fewer students choosing to become medical doctors. We’ll see more nurse practitioners to make up the difference.
It’s definitely an interesting cycle that doctors go through. I just wonder if that cycle’s going to change as being a solo doctor becomes more difficult. Will they come up with new models?
I hadn’t thought about a retiring physician selling to a hospital. Interesting.