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How do docs really feel about being acquired by hospitals?

October 29, 2009
by kate
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At the recent MGMA conference, I attended a session that addressed the main concerns physician practices have about being acquired by hospitals, as well as the motivations some docs have for selling their practice.

Speaking to an audience made up mostly of physician practitioners, David Cook, chief administrative officer at Waukesha Elmbrook Health Care (Waukesha, Wis.) asked why practices are considering selling to a hospital, and got some interesting responses:

1. Money, in the form of a one-time “cash cow” (for baby boomers who have built practices and physician groups from the ground up, this may be their last chance to cash out)

2. Money, but for long-term security (particularly in competitive areas)

3. Less of a workload — the grind is too much on small practices

4. Being employed by the hospital can help solidify referrals (One physician, however, warned that this may backfire, as some independent physicians may not want to deal with big health systems)

5. Rising costs of professional liability

6. Wanting to work under the structure of a large organization (which, to some, means more pay and less of a time investment)

Interestingly, a lot of physicians in this particular session seemed to feel like IDNs are like giants roaming the earth, and physicians have to choose a side. “Join up with one of them or get squashed,” was how one attendee put it.

And along those same lines, another physician expressed fear that if her practice is acquired by a hospital, she and the other physicians will be the organization’s last priority in terms of IT implementations, upgrades and technical support (about 99 percent of the room started nodded their heads vigorously before she even got the sentence out).

These are types of concerns that hospital leaders need to know about — whether their organization has acquired a practice or is just considering it. And it’s a discussion that the entire C-suite needs to be part of.

As for physicians, Cook urged those in the session to think long and hard about the relationship that they want to have with the hospital or health system — beyond the initial acquisition — and offered advice on how to structure an agreement that works for both parties. It’s extremely important, he says, that providers discuss and understand all of the key issues involved, from whether they need to adopt the hospital’s current EMR system (and who will fund it), to governance and HR issues.

Cook likened this type of deal to the phenomenon where people are so focused the excitement of the wedding day that they don’t think about the actual marriage. It’s in the best interest of both parties, he says, when everything is ironed out from the start.

In other words, look before you leap — or you could get burned. And that goes both ways.

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