Alternatives to Selling Medical Practice

Large number of medical groups frustrated and pressured by new Medicare cuts have sold or contemplate selling their practices to hospitals and health systems. There are viable alternatives to selling a medical practice in trying economic times.
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Medical Group Management

Philadelphia - Pennsylvania - US

June 15, 2010 - PRLog -- There are very practical, effective and profitable alternatives to selling a medical practice to a hospital. At the outset, if the past has taught us any thing about selling medical practices to hospitals/health systems is that in long run it does not work for physicians and sometimes for the buyer. Eventually, the physicians end up buying the practice back. Although, selling a medical practice to a larger organization may provide immediate relief to the physician group from pressing challenges of operating a medical practice; it does not provide physicians or the group with freedom and flexibility of owning and controlling their practice. At best the relationship between a hospital and employed physicians and independent practitioners is like the difference between living in a rental house and a house you own. Most people would like to live in a house they own and similarly most physicians happen to desire owning their medical practice. The question is how to implement this goal.

There is no single solution to accomplish the goal of maintaining your medical practice and not to go bankrupt or to sell the practice.

OPTION ONE – Hiring Consultants?
There are plenty of medical practice consultants out there who offer advice to physicians about operating various segments of a medical practice. Now, would hiring a consultant really help a medical practice to be sustainable and more profitable and give enough incentives to physicians not to sell their practice? Perhaps. Depending on the consultant, it is very much possible that a medical practice can improve its operations and bottom-line with consultant advice. However, there needs to be a “competent business leader”* in-house to effectively incorporate the consultant’s advice.

Hire a consultant without a competent in-house business leader and the chances are high that you would be wasting your money, time and effort.

*Who is or can be the “competent business leader” is a subject for another article.

OPTION TWO – Outsourcing Administrator/CEO?
There are a growing number of firms offering physician groups to outsource their top administrative personnel, such as Practice Administrator/Executive Director/CEO and COO. This option may allow the physician group to contract with a company to place in an executive to lead their practice/organization. Companies providing this type of services usually have various levels of expertise and professional who can help substantially improve administration of a medical practice. This option is advisable for those physician groups who recognize a need to have highly competent business professionals to lead and manage their practice.

OPTION THREE – Complete Outsourcing of Administrative function?
This option should be seriously considered by physician groups prior to selling their practice to a hospital/health system, because it does provide very similar result while physicians maintain the control and ownership of their practice. Under the complete outsourcing the contracting company takes over all of the administrative functions of the practice and may hire some, most or all of the group’s employees and place them under its payroll. The major difference between this option and hospital owned and operated practice is that under this option the physicians continue 100% control of their practice and pay a fee to a management company to run the administrative functions for them.

This option can be ideal for physicians who desire to focus on practicing medicine and leave the nitty-gritty operations of a business to those well qualified to handle such matters.
Source:Abe Kohan
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Tags:Medical Group Management
Location:Philadelphia - Pennsylvania - United States
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