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Survival Tips for Physician Practice Consolidation

Analysis  |  By Christopher Cheney  
   April 10, 2017

As merger and acquisition activity consumes independent physician practices, medical doctors need to weigh their options, says Nicholas Grosso, MD, president of The Centers for Advanced Orthopaedics in Bethesda, MD.

In addition to leading the orthopedics practice, which has more than 170 physicians, Grosso is a practicing orthopedic surgeon.

Orthos Top Physician Compensation List in 2017

He recently shared his perspectives with HealthLeaders on the wave of M&A activity inundating independent physician practices across the country. The transcript below has been lightly edited.

HL: For independent physician practices, what is the minimum scale and set of capabilities needed to maintain financial sustainability?

Grosso: It's hard to give a minimum, because the biggest challenge facing small practices today is the increasing burden of regulatory compliance.

There's no question that practices with less than 15 physicians will have difficulties with the costs associated with MACRA and MIPS compliance. For example, a Government Accountability Office report found the cost to be close to $40,000 per doctor.

Physicians will need to decide whether these expenses are sustainable or whether they need to join a health system or larger private-practice organization, as many practices are doing.

HL: For independent practices with at least a dozen physicians, what are the primary factors to consider when joining a large physician organization?

Grosso: As with any business venture, you have to look at increased revenue and decreased costs. How would joining a larger organization benefit you?

For example, private practices interested in joining The Centers for Advanced Orthopaedics look closely at the efficiencies and savings we can provide with commercial payer contracts, medical malpractice insurance, data mining technology investments, purchasing contracts, and compliance management.

It's also important for practices to consider whether joining an organization such as The Centers for Advanced Orthopaedics would offer a clearer pathway to retaining their patient base or finding a new patient base.

The concern is that as hospitals buy up primary care providers, they'll create narrower networks. At The Centers, we work hard to maintain that patient funnel for our physicians.

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.

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