Ah, January! A full year ahead full of goals and objectives just waiting to be achieved. For some physicians, that may include getting serious about selling their practice. Historically, many physicians passed down their practice to a physician son or daughter, staying on board for a year – or many – to ease the transition or experience the satisfaction of working with one’s adult children. Anecdotally, I’m seeing less of that trend, though, either because there are no physician offspring or because the physician offspring’s specialty is different from the parent.
An option that has been popular in recent years, but one I haven’t written much about, is healthcare systems purchasing physician practices. The immediate or near-term payoff is significant, and benefits include, well – benefits! Malpractice insurance is covered by the health system when a purchase is made, as are health and other insured benefits, workers compensation, life insurance and likely a 401 (k) match. You’ll likely receive a lump sum payment plus a percentage of the profits each year you remain employed with the practice. It all sounds so enticing! And for some it likely truly is – and turns out to be the right decision.
There’s an operative word that I need to emphasize, though: employed. As in employee; as in no longer independent, entrepreneurial or free to call the shots in your medical practice. And your name possibly will no longer be on the practice door – the health system’s name will be. A blow to the ego? Perhaps, but also a subtle loss to the community, as patients seek the comfort that comes from a particular physician’s care built on the legacy of a name.
Are you a PCMH? Your new practice may be called a medical home, but it’s likely not designed with the team-based, coordinated care you may have established in your independent practice. While PCMH practices typically get a financial boost for strong quality scores, it can be an investment of time and money to achieve and retain PCMH status. That can be counter to the goals of the health system that purchased your practice. Ditto on hours. You’ll follow health-system dictated hours rather than the hours that you originally set to enhance access to care.
And needless to say, because the health system purchase is motivated largely by the desire to increase hospital referrals and diagnostic testing services owned by the health system, you’ll be hampered in your ability to refer patients outside of the network – and patients may be paying facility fees they weren’t paying when referred to other independent providers.
Do you have family members employed in your practice? Watch for nepotism policies that forbid such working relationships, especially when they are supervisory. In recent years, former physician members of my organization had to say goodbye to children or spouses in their new health system practice – but didn’t know that until after they signed all the legal documents. Side point; if you do sell your practice, please don’t do so without a thorough review of the agreement from an attorney familiar with physician practice transactions. While it seems obvious, I personally know physicians who went solo in the negotiation process then called an attorney (and me) when taken by surprise by what was no longer available to them.
“Wait a minute,” you are likely saying; as the CEO of a physician organization (patient care organization), I have a vested interest in keeping physician practices independent and in the fold. Of course, I do. But I also feel an obligation to the physician community and the patients they serve to share my experiences of the pros and cons of joining a large health system. I’ve personally known about ten physicians in the past few years who have sold their practices to a large entity. The perks are tangible, but on net, they regretted it. Perhaps that will change as they adjust to their new life as employed physicians. I welcome comments from my physician readers on this topic – and health systems, too.