Subscriber response to physicians selling practices to hospitals

In the last issue of my newsletter, I wrote an article about physicians selling their medical practices to hospitals. Just thought I’d share this feedback and commentary from a subscriber. John makes some good points………

Greetings,

I have enjoyed your pubilcation over the years and have garnered some very helpful information and insights. I know that your article regarding selling a practice to a hospital is summary by nature, yet I think a couple of points are overstated unless a practice is dealing with a hospital that has a significant track-record (10 years +) and a well-developed, separate physician management organization.

Many smaller, regional systems are getting into the physician employment/practice ownership game that simply do not have credible managemenmt experience or infrastructure. No significant depth or experience exists in many smaller organizations and management/leadership has been promoted from
within (ie - hospital experience). Likewise, in these smaller, less developed systems, physician billing experience is extremely limited or non-existent unless acquired from a well developed physician practice. If a separate outpatient physician practice management organization/corporation has not been well-defined, in addition to management and billing challenges, an acquired practice can suddenly find itself subjected to all kinds of "hospital" policies and procedures, not the least of which is Joint Commission. Not to say this is necessarily a bad thing - sometimes it is helpful in risk management - but it can be somewhat burdensome and overwhelming to a previously privately owned practice. The challenges to physician practices in these scenarios are substantial and upsetting at least.

In addition to asking the kinds of questions you suggest, another suggestion I would make to a physician practice considering acquisition by a hospital is to ensure that any "productivity bonus" built into their compensation plan is Work RVU driven, and not determined by collections. MGMA can
provide data for calculating a reasonable and mutually agreeable per-WRVU bonus payment method. This will allow the physician to truly conduct medicine without concern to the hospital's billing and collection experience, or to any management imposition on scheduling and/or payer mix.

Respectfully,
John Swartzbaugh

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About the Author

Reed Tinsley CPA

This article is written by Reed Tinsley, a Houston, TX-based CPA with over 30 years of experience advising physicians and medical practices across Texas and the United States. Reed holds certifications as a Certified Valuation Analyst (CVA), Certified Healthcare Business Consultant (CHBC), and Certified Financial Planner (CFP), specializing exclusively in the healthcare sector. He is a published author, nationally recognized speaker, and trusted advisor to physicians on accounting & tax, practice management, and financial planning. Schedule a Free Consultation.