Various business factors and getting older have led some physicians to think about making major changes – like getting out of independent practice. Healthcare Finance News takes a look at some of the options for doctors, which range from continuing on, to merging with other physicians or hospitals, to closing up shop, to retiring.
“When contemplating your future, the first thing to do is make sure you know what you want from your practice and what is important to you personally,” said Kenneth Hertz, principal with the Medical Group Management Association’s healthcare consulting group. “How important is autonomy? Is a steady income the main goal? Am I fed up with medicine and just want to get out? What am I not willing to compromise on and what am I comfortable letting go?”
First, put from your mind that selling your practice will result in a lot of money.
The main asset of the practice, the physician’s rapport with the patients, is not transferable in a sale. Usually the doctor gets their accounts receivable as parting payment. The only other cash you are likely to get is for the current value of real estate and the office’s furniture and equipment.
“The hardest part of selling a practice is spending decades of your life building it up just to see it go away,” said Susanne Madden, president and chief executive officer of the Verden Group in Nyack, N.Y. “This can be emotionally difficult for most doctors.”
To maximize what you take away from your practice, stay involved. By planning ahead, say with a three to five year time frame, it is possible to bring in a younger doctor. After a couple years of working together, and building up trust with the older physician’s patients, a buy out can be arranged.
Alternatively, for those who still want to continue to practice but don’t want to deal with the business side, selling to a hospital is an option, Madden noted. The hospital employs the physician, taking responsibility for billing, human resources and information technology. However, this leads to lost autonomy, as the physician becomes an employee.
Another option that is gaining acceptance is the “super group.” Multiple groups come together to take advantage of economies of scale by consolidating back office functions and malpractice insurance and increasing their negotiating power with payers. They keep their individual names, partners and staff, while still enjoying the benefits of a bigger practice.
“This is a very big decision and one that can be hard to reverse,” Hertz cautioned doctors. “Take your time to decide what you are looking for personally and professionally, know what you need to get from the transaction to meet those goals, and then look at the various models to see what fits best. But keep in mind the wisdom of Yogi Berra: ‘You've got to be very careful if you don't know where you're going, because you might not get there.’”