The pandemic at hand has taken an economic toll on all businesses, including physician practices. As noted in the article above, independent physicians may soon be faced with a tough choice – to close for good or sell to a larger health system to stay open – as they face dwindling patient volumes and halted non-emergency services.
Feeling locked into one of those options can induce panic and fear in physicians. The good news is they can be better prepared for this decision by understanding their options beyond that binary.
Examining how other physicians have been going about M&A in non-crisis situations can serve as a guideline to protect a practice’s best interests. We’ve seen a trend in practices we work with where physicians increasingly seek to be acquired, and now that trend will likely skyrocket as more physicians face potential closure. In between selling altogether or closing for good is the emergence of nontraditional agreements:
– Joining a physician-owned group
– Joint venture agreements
– Minority investments
– Clinical affiliations
– Timeshare agreements
All these have grown in popularity over the last few years because they prioritize the needs of the smaller organization. While the potential for price gouging is the main critique of healthcare M&A activity, these agreements have been shown to lead to an increase in value-based care, better access to clinical services, lowered administrative costs, and improved physician-patient relationships.
If a practice needs to consider alternatives to closure, looking into the latest Stark Law changes and understanding their assets’ worth will help to decide which arrangement will best suit their current and prospective needs.
Following existing trends in changing times can bring a sense of agency and normalcy to anyone overwhelmed by crisis. By examining all their options, at-risk physicians can stay strong and maintain power.