Healthcare’s Consolidation Landscape

Christopher Cheney, June 1, 2017

DuPage features facilities and equipment that small physician practices would struggle to finance one their own, he says.

"If you look at some of our subspecialties, we have a radiation-oncology center, we have multiple surgery centers, and we buy equipment that is specific to the needs of the individual physicians. For those physicians—if they were trying to stay within a small physician practice—it would be very difficult to produce the resources to buy the equipment necessary to do surgical procedures. When some of these practices try to do it on their own, they take on an inordinate amount of debt that overleverages their practice. By pooling economics, we are able to offer these services without the individual physician taking on the full brunt of the financial responsibility."

Examples of costly equipment purchases at DuPage include 3T MRI scanners that generate high-strength magnetic fields and two Varian TrueBeam x-ray linear accelerators, which deliver radiation therapy featuring real-time tumor imaging.

Outpatient-service capabilities are a key element of DuPage’s growth strategy.

"As we go into new markets—and even in the markets we are in today—we try to make sure we are providing as many services as possible in the outpatient continuum. The validation we get from that process is not just the cost savings. There is clinical outcome improvement as well; because when all of our service information gets contained within one medical record, it creates a lot more power as it relates to our doctors having more information at their disposal to make clinical decisions.

"A robust EMR capability supports cost-effective patient care," he says.

''If we can’t go in and help a practice grow and help the physicians from a compensation perspective to remain whole or enhance their economics, and if we can’t establish a retained earnings model, then we shy away from those types of deals."

"Through Epic, there are numerous clinical benefits, including the ability for providers to have a holistic view of their patient’s health information at all times. This reduces unnecessary medical testing and medical errors and facilitates highly coordinated care with a strong focus on ongoing communication between providers. For patients, MyChart—Epic’s secure, online patient portal—offers a place to securely view medical records, request or schedule appointments, and communicate with physicians."

When DuPage acquires a physician practice, the targeted entity has to meet a minimum set of scale and financial criteria, Kasper says. "We are seeing some practices trying to individually grow their practices. They will go into a community and try to cobble together several practices. That is not our model. We like to go into markets where there is some base of physicians—there is a group of reasonable size of 35 to 50 physicians. We have shied away from markets where we would have to start from scratch to put together a medical group."

ROI also is a key consideration in DuPage’s acquisition deals.

Christopher Cheney

Christopher Cheney is the senior finance editor at HealthLeaders Media.

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