Spinal Surgery, Cement Systems - Orthoworld

PRACTICE MANAGEMENT SOLUTIONS
Let’s Get Together: Reasons why
Orthopaedic Practice Mergers
Can Make Dollars and Sense
Author: Doug Free
The adage about strength in numbers can be applied to the concept
of physician practice mergers. In today’s economic and political
climate, it is becoming increasing difficult and costly for many
orthopaedic surgeons to continue going it alone. While many
surgeons fear the perceived costs of practice mergers, such as some
loss of individual autonomy, more and more are finding that the
benefits far outweigh any supposed disadvantages.
The following is an overview of benefits that can flow from the
merger of two or more solo physician practices into an integrated
group. This article is intended for general information purposes and
should not be considered as legal advice. Individuals who need legal
advice should contact an attorney.
Ancillary Services
Most orthopaedic surgeons may find that developing ancillary
sources of practice revenue is a key component of a financially health
practice. The costs and logistics of offering ancillary services such as
MRI or physical therapy, however, are often beyond the reach of a
solo practitioner. This points up one of the major advantages of
practice integration.
Under the Stark regulations, physicians are able to own and selfrefer
to facilities such as MRI or PT, provided that the services are
rendered in the same building in which the physician otherwise
regularly practices. While it is possible for a solo physician to
accomplish this by developing an ancillary income source within his
building, the costs of doing this independently are often too much for
a solo practitioner, and issues also arise as to whether a solo practitioner
has a sufficient patient flow to support the venture from an
economic standpoint.
By becoming part of a group, a host of advantages becomes
available. Interestingly, under what is known as the “Centralized
Facility Exception” to the Stark regulations, a group is able to own
and operate an MRI or PC facility, for example, in a location other
than the group’s primary office. There are specific rules governing
how this is structured, but this clearly becomes an advantage for
physicians practicing within a group structure.
Managed Care Negotiations
Physicians in solo practice are severely limited with respect to
their options for negotiating with managed care providers and
insurance providers. Under applicable antitrust laws, it is illegal for
non-integrated physicians to jointly negotiate in any way.
On the other hand, a fully-integrated medical group has the ability
to negotiate with managed care organizations. In addition, given the
increased “footprint” that comes with being part of a group, it is
likely that an insurance company or managed care organization will
be considerably more receptive to the needs and requests of a group
as compared to the needs and requests of a solo practitioner.
Capital
It is easy to see why a group of orthopaedic physicians can come
up with more capital (and, therefore, take advantage of more
economic opportunity) than a solo practice physician. This, in turn,
makes it feasible to consider important additions such as EMR or
digital x-ray. Furthermore, due to important economies of scale associated
with practice integration, a properly merged group will typically
discover that many economic redundancies associated with solo
practice have been reduced or eliminated as a result of the merger.
Recruitment Advantages
An additional benefit to practice integration exists with respect to
the ability to attract qualified new potential members of the group.
Increasingly, physicians just out of residency are looking for the
strength, security and prestige of a group, as opposed to looking at
solo practice opportunities.
So, how do we do this?
The first step to investigating whether practice integration might
be for you involves identifying a group of physicians with whom
you share a mutual respect in terms of professional abilities and
training. Once this potential group has been identified, it is often
immensely helpful to set up a meeting for purposes of discussing
whether a feasibility study should be undertaken. If there is
sufficient interest then the feasibility study, which is completely
nonbinding, will flush out a host of important issues aimed at
discovering whether or not practice integration indeed makes sense.
Conclusion
In summary, more and more orthopaedic surgeons find that
being part of a group can offer significant advantages that are simply
not possible through solo practice. With proper planning and
structuring, it is indeed possible to merge two or more solo practices
into a successful Integrated Medical Group that will endure and
prosper for many years to come.
Douglas S. Free is a partner with the firm of Kessenick, Gamma & Free,
LLP, which focuses its practice on the business and health law needs of
physicians and medical groups. Mr. Free can be reached at 415-362-6414.
16 ORTHOPAEDIC PRODUCT NEWS • September/October 2009