Physicians reach out to hospitals for merger / acquisition
Most of the physician practice acquisitions we hear about have been hospitals proactively targeting physicians. As the market continues its saturation of mergers and acquisitions we may start to see a shift toward physicians or physician groups reaching out to competing healthcare institutions for employment and acquisition of their practice.
In the past, hospitals would target independent physicians housed in their own properties with direct ties to the hospital. This would help maintain market share within the walls of the hospital. We are now seeing an increase in activity directly in competing hospitals’ properties. In many of these cases, physicians are making the initial contact and reaching out to the competing hospital about employment/purchase. This includes both small practices and larger physician groups.
In both cases, it’s important that the physician or physician group take the necessary steps to identify and show the value of their practice. Tangible and intangible factors will produce the value of the practice. Hospital administrators will do their due diligence to identify the value of the practice. It is also necessary for the physician to be proactive and identify the value of their practice prior to the negotiating process. This allows both parties to compare information gathered independently and quickly identify any discrepancies that may exist in evaluations. Both parties will be working together in the future, so it’s important to minimize any unnecessary strains that can occur during the negotiation process.
Spending a few dollars on the front end by engaging a third party auditing firm can go a long way. Establishing an unbiased view of the practice removes personal influences when discussions heat up.
The purpose of establishing “fair market value” is to identify the amount expressed in terms of money that can be reasonably expected between a willing buyer and a willing seller under no compulsion to buy or sell. The best way to achieve this is for both parties to be proactive during the due diligence process.
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Manage Resource Group, Inc. is a privately owned healthcare equipment management company headquartered in Berea, Ohio. Our client focused services create strategies for each customer to increase profitability on capital equipment. We are industry experts offering the following service lines:
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