Practice Acquisitions and Mergers - Just a Matter of Time?

posted on Thursday, June 28, 2018

Regulatory Changes.
Advanced Healthcare Technology.
Patient-Care Coordination.
Value-Based Payments.
Increased Practice and Provider Risk.

These are just some of the reasons providers are going big or going home. The growing demands and hassles of being able to keep up with the ever-changing healthcare landscape have found some providers bidding farewell to their 'business hats," and returning fulltime to caring for the patient.

Joining a larger healthcare group/system is an attractive option for those looking for stability and more work-life balance. A recent article in Fierce Healthcare indicated regulatory changes and technology demands will continue to drive physician mergers and acquisitions in 2018. Two years ago marked the first time that physician-owned practices were no longer the majority -- with 47.1% of practices being provider-owned.

The Trend Continues

According to a 2017 report from the Bureau of National Affairs Health Law Reporter, 147 practice transactions took place by large health systems and private equity firms, with the majority being purchased by private equity firms. The most common specialties were Primary Care, Dermatology, Ophthalmology, Gastroenterology and Urology.

Types of mergers and acquisitions include those of hospital and hospital-affiliated medical groups, mega-physician groups, public and private national healthcare companies and private equity groups.

The healthcare industry will continue to watch how big of a role private equity groups will play in acquisitions. If the growing trend is any indication, it will play a big role. Why? Capital. Advanced EHRs are not cheap. Patient-care coordination takes a village (staff hires). Profitability -- practices are challenged to collect patient-owed balances with the rise of high-deductible insurance plans. Joining forces with larger groups who have access to different reimbursement models is attractive too.

Only time will tell what the future will bring.