Hospitals buying physician practices, selling selves

by Scott Kraft on Apr 5, 2012

Everything has its place in the food chain. Here's a question to ask before selling your practice to a hospital – will the hospital itself change hands in the near future?

Recent data from Irving Lewin Associates and covered by American Medical News suggest that 86 hospitals were either acquired or merged in 2011 -- most in the last decade -- and the trend is expected to increase.

For physician practices, this presents a question to ask when doing delicate partnership or acquisition negotiations with a hospital: Is your new partner -- the one you’re dreaming of a bright future and long-term and prosperous growth with -– storing a parachute for a quick exit?

Their reasons for looking to be acquired are probably the same as yours – economies of scale, reduced profitability in the era of flat insurance payments, higher rates of uninsured patients not paying, etc. The buyers can be other hospitals, broad health systems, even insurers. 

It may not be a bad thing to be a part of a larger health system – any physician practice in a merger and acquisition discussion is already on its way to doing just that. But at least know what you’re getting yourself into, and try to determine if the person across the table is as committed as you are.

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