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Live From AMGA: Making the Case for Change

Elyas Bakhtiari, for HealthLeaders Media, March 4, 2009

I've written several times in the last year or so about market trends that are forcing more groups to consider merging in order to grow or stay afloat in their market, which was why I decided to check out an AMGA panel discussion about how three medical groups merged without a "burning platform" for change.

Before becoming one entity in January 2008, the three California groups—Camino Medical Group, Palo Alto Medical Clinic, and Santa Cruz Medical Clinic—were financially stable and functioning pretty well on their own. The idea of integration actually came from the not-for-profit medical foundation that contracted with each of the groups (a situation that is unique to California because of its laws regulating the corporate practice of medicine), and that made the merger a harder sell to physicians.

Without an urgent need pushing the process, leaders representing the three groups instead opted to “pull” the change along by developing a vision statement for what the groups hoped to accomplish with the merger. The vision included many of the benefits generally seen in mergers: Improved quality through better coordination, enhanced financial performance through economies of scale, and greater influence with payers and reduced competition.

And with that, the leaders began reaching out to each of the nearly 800 physicians in the three groups before a vote on the proposed merger.

The merger was approved, but not without some obvious snags, most notable of which was reconciling the different cultures in the different groups.

It is a little early to tell if the merger was a complete success, but the new group has a guiding document for measuring its goals in the form of the vision statement that started the process. If nothing else, the physicians were at least able to merge on their own terms, without being forced by a changing market or other externalities.


Elyas Bakhtiari is a managing editor with HealthLeaders Media. He can be reached at ebakhtiari@healthleadersmedia.com.

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