Becker's ASC Review

43 Executive Briefing: Physician Practice Acquisition & Integration Trends Sponsored by Physician Control Physician Contro r l M edical practice acquisition and integration is becoming commonplace in healthcare. Independent physicians, faced with regulatory changes, find advantages in join- ing a larger group or becoming employed by the hospital. The health services sector merger and acquisition activity in- creased 25 percent in the first quarter of 2015 when compared with the same period last year. Disclosed transactions are up 19 percent, with the value up 92 percent overall, according to a PwC report. The physician medical group sector saw strong interest from out- side companies in the first quarter, and there was nearly $3.2 bil- lion spent on physician groups last year, according to the "2015 Health Care Services Acquisition Report." There were 100 trans- actions in the hospital sector. Last year, 60 percent of the ASC company respondents to HealthCare Appraisers' ASC Valuation Survey reported they planned to purchase one to five ASCs in 2015; another 25 per- cent said they'd purchase six to 10 ASCs this year. Most of the companies would be willing to pay a premium for ASCs in certif- icate-of-need states. "Right now we are seeing quite a bit of activity in the market," says Stephen Rosenbaum, CEO of Interventional Management Services. "I see the transactions and consolidations trends con- tinuing for a while." The key factors driving consolidation in healthcare include: • Lower reimbursements for procedures • Increasing overhead • Electronic medical record purchase • Narrow networks/accountable care organizations • Providers taking on more risk "The way the landscape is shaping out, there is strength in num- bers," says Gaylon Willis, VP of Business Development for In- terventional Management Services. "It's difficult to survive as an independent practitioner without representing a larger number of patient lives. It's hard to have the leverage you need for a sustain- able practice. It can be done, but there is strength in numbers which helps the physicians to be able to withstand the ups and downs of reimbursement changes and to subsequently enjoy a better quality of life." There are more hospitals today acquiring physician practices and extending employment contracts to physician owners. But hospi- tal employment isn't the only option; more entrepreneurial-minded physicians are joining larger physician practice networks or cor- porate entities. There are multiple companies and models available among cor- porate partners, including Interventional Management Services, which acquires interventional pain-focused practices and inte- grates the physicians into the larger organization. "In our business, physicians are integrally involved in how the business works. They have a say in how they run their business," says Mr. Rosenbaum. "Our preference is to partner with the physi- cians. Once the physicians join our group, they have access to a certain scale where they can take advantage of new opportunities and mitigate risk. Physicians are more engaged when they are partners in the business." There are some hospitals and management companies that pur- chase 100 percent of the surgery center, but that isn't always the right situation to keep the ASC efficient. "If a physician is a Healthcare M&A is Here to Stay — 7 Key Thoughts for Medical Practice Owners By Laura Dyrda "The way the landscape is shaping out, there is strength in numbers. It's difficult to survive as an independent practitioner without representing a larger number of patient lives. It's hard to have the leverage you need for a sustainable practice." — Gaylon Willis, VP of Business Development for Interventional Management Services

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