Hospitals slowing the rate of private practice acquisition

Hospital acquisition of private practicesAfter years of impending doom, it might be possible to take private practice off the endangered list.

At least that’s the way it’s been looking lately, as hospitals have slowed their rate of acquiring new independent practices. If continued, it would be a big reversal of the acquisition boom of the past 10 years, fueled by

  • private practices struggling to keep up with federal record-keeping requirements
  • growth of insurers into mega-companies, leaving private practices with little clout in negotiations
  • medical students expressing less interest in running their own businesses
  • hospitals desiring to bolster primary care staff and high-margin specialties to secure additional revenue from tests, procedures and referrals.

Acquiring private practices has its challenges for hospitals

Amid these trends, Medical Economics just published a brief report on the future landscape of hospital acquisitions of private practices. To be sure, there are numerous reasons for hospitals to continue such acquisitions.

But incorporating private practices into existing hospital operations so far hasn’t been a piece of cake. The biggest issue? Here’s Peter Angood, MD, CEO of the American Association for Physician Leadership:

Physicians often enter hospital employment because they want to decrease their bureaucratic burden, focus on patient care, get better compensation, and have a better work-life balance. They may make the mistake of thinking they’ll get all of that and still maintain their autonomy and decision-making power. So it’s a shock when that doesn’t happen.

Medicare reimbursements may provide new incentive to remain independent

Experts now say that hospitals in many parts of the country have as many practices as they can handle. Moreover, Medicare began reimbursing private physicians for certain services at the same rate as hospital physicians, a policy that began in January this year. If Medicare continues moving in this direction, it will provide private practices with an additional financial incentive to remain independent.

Let’s hope so. Independent practices are an indispensable part of the health care landscape, providing excellent care at an affordable price.

Something we need a bit more of.

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