Strategic Options for Physician Practices in the Changing MarketplaceMGMA February 20, 2019
Gary W. Herschman, Member of the Firm in the Health Care & Life Sciences practice, in the firm’s Newark office, co-authored an article in MGMA, titled “Strategic Options for Physician Practices in the Changing Marketplace.”
Following is an excerpt:
It seems like every week or two there are announcements in industry newsletters and publications about physician groups entering into major transactions – either with hospital systems, large regional medical groups, national physician companies, or private-equity funded groups focused on specialty practices. This transaction activity has increased substantially over the last few years (see Figure 1 below) with no end in sight to this upward trend – and it’s important that physician groups and their executives understand four key questions:
- What is spurring this increased activity?
- How are medical groups “valued” in these transactions?
- How are these transactions structured; and
- What are the pros & cons of these options vs. doing nothing and “maintaining the status quo”? …
A panel of experienced financial and legal professionals will be addressing these questions in great detail during a session on the morning of March 4, 2019 at MGMA’s Financial Conference in Las Vegas. This article contains an “executive summary” of these topics as a preview to that presentation.
It’s hard to deny that transformation is well underway in the healthcare industry, as evidenced by substantial consolidation among hospitals and other providers, a changing reimbursement landscape shifting to value-based payment programs, increased focus on providing care in lower cost outpatient settings, and the greater need for investments in advanced electronic medical records, data analytics, and care coordination capabilities. These changes are impacting the operations, strategy and profitability of physician groups across the country – and there is little doubt that larger, well-capitalized organizations, with seasoned corporate executives and more robust infrastructure, are best positioned to be successful in this changing industry environment.
In sum, the shifting healthcare landscape has created substantial uncertainty regarding how a medical group’s operations, revenues and profitability will look in 3-5 years. Thus, physician groups that are both realistic (with regard to industry changes underway) and sophisticated with respect to how to best position themselves for the future, should be exploring the following potential strategic options …
At 9:15 am on Monday, March 4th 2019, Jeff Swearingen and Gary Herschman will review in further detail these complex and vital issues facing physician practices. As physicians continue to tackle important decisions about the strategic course for their practices in a changing healthcare landscape and a rapidly consolidating market, it is important to understand potential strategic considerations available to them.