Thinking About Selling Your Practice to a Healthcare System?
Recently, I was walking to lunch and ran into a longtime physician friend waiting for a table. Surprised to see him I asked my friend if he had he opened a new office downtown. He replied, “No, I sold my practice and now that I have lunch breaks I’ve decided to try a new place every day.”
In the last 5 years I have noticed this same scenario playing out among my friends whom are private practice physicians. They have grown tired of the stress of managing staff, dealing with insurance companies, and having uncertain on-call schedules.
Healthcare systems are interested in purchasing private practice physicians for multiple reasons. And if you are thinking about selling your practice to a hospital you need to consider the following:
- Be sure that your potential bosses are interested in your practice for the right reasons.
- Although important to assess and evaluate your practice, be wary if the healthcare system focuses solely on your patient volume and payer mix.
The number one reason my friends decided to sell their practices to a healthcare system was that it provided a sense of stability in the uncertain and uncharted world of politicized healthcare. Trading independence for a paycheck can be a relief and unnerving at the same time. Before deciding if this move if right for you, it is important to ask the healthcare system about their long-term strategic vision and objective for your practice.
On the other hand, the number one reason my friends were apprehensive about selling their practices was the loss of the ability to control day-to-day practice management. They were concerned that the healthcare systems would value profit over people. My hesitant friends believed that the hospital would dictate which procedures they performed, when they performed them, how they performed them, and they would have reduced or no say in the hiring and firing of loyal employees. With that said, during the due diligence phase, make sure to discuss these concerns and be certain that you contractually have a say in the management of your practice after the acquisition.
Remember you are interviewing THEM to be your future boss.
Here are some helpful questions to ask:
- What is the healthcare systems main reason for wanting the acquisition? Is it to acquire talent, expanding services or geographic coverage?
- How will employee issues be addressed?
- How much vacation time is allotted per year?
- What benefit will your patients receive? Will you have access to technology, time saving processes, etc. as a result of partnering?
- Is there a cultural fit between you and the healthcare system?
There are many reasons for wanting to sell your practice to a healthcare system, however it is important that you weigh the benefits against the risks before making a decision.