The second installment in a new series focused on medical practice survival tactics and opportunities, “Beyond Survive & Advance,” covers a range of ideas for practice leaders to consider in today’s evolving healthcare landscape. From going out of network to learning how to get the most out of your payor contracts, and beyond, we want to help practice leaders move out of “survive-and-advance” mode and back into growing and thriving.
Recently, I was asked by an internist if the practice he worked for should consider merging with a nearby pediatric practice. The pediatric practice had approached several other practices in the area, and none of them were related by specialty. Effectively, the pediatric practice was looking to create a multi-specialty group without formally creating a multi-specialty group. By combining groups, the pediatric practice had hoped to capitalize on the economies of scale of a larger, more diverse group.
The internist went on to tell me that his group had been struggling financially over the last several years and that they had looked at several strategies to deal with the financial headwinds affecting the practice. They were giving serious consideration to the pediatric practice’s offer.
With that, I shared that I put together the exact same model several years ago as a practice executive. I brought together several groups of dissimilar specialties and created a multi-specialty practice with an emphasis on patient experience, efficiency, and increased profitability for all members. I also shared that the financial and operational goals we achieved were far greater than we anticipated.
Here are nine key benefits and considerations for practices exploring this approach:
- Financial Benefits: Merging with a different specialty can help create a more financially stable practice for all parties. By combining resources, the practices are often able to reduce overhead costs, share administrative functions, and achieve better economies of scale. This can be particularly useful in areas like staffing, technology, and billing.
- Patient Convenience: Offering multiple types of care under one roof can improve patient experience. For example, a dermatology practice merging with a plastic surgery or aesthetic medicine practice can provide more comprehensive services to patients who need both care types.
- Increased Referrals: Practices that aren't direct competitors can refer patients to each other. A merger might increase the number of patients each practice sees by broadening the range of specialties available, leading to cross-referrals. For example, a family medicine practice could merge with an orthopedic practice to offer a complete care package to patients who might need both primary care and musculoskeletal treatment.
- Access to New Markets or Populations: Different specialties often serve different patient demographics or geographic areas. By merging, practices can expand their patient base or enter new markets they might not have been able to reach on their own. For example, a pediatric practice merging with a geriatric care practice might allow both to serve a wider age range of patients.
- Streamlined Operations and Support Services: Merging with a non-similar specialty could help streamline administrative functions such as scheduling, billing, and marketing. Both practices can share the cost of hiring support staff, including medical billers, receptionists, and managers, which can lead to more efficient operations.
- Risk Diversification: Different medical specialties can be subject to different kinds of financial risks or liabilities. By merging with a practice in a distinct field, a practice can spread its risk. For example, a surgery center that is dependent on elective procedures could merge with a primary care practice, which may see more stable, non-elective patient visits.
- Access to Capital or Investment: Merging with a larger or more financially stable practice or group can provide access to more capital for expansion, new technology, or investments in better facilities. Non-similar specialties may also have different insurance reimbursement rates and combining these can balance financial flows.
- Shared Technology and Innovation: Joining forces can also allow both practices to invest in advanced medical technologies together, which might have been cost-prohibitive for each practice individually. For example, a radiology group could merge with a cardiology group to share diagnostic imaging equipment.
- Compliance and Risk Management: Healthcare regulations and compliance requirements are complex. Combining practices can help them better manage these challenges by pooling resources to stay compliant with laws and regulations that might affect each specialty differently. This reduces the burden of compliance on individual practices.
While mergers between non-similar specialties aren’t the norm, these factors can make them a beneficial option for practices looking to grow, improve efficiency, increase profitability, and better serve their patients. In the context of options available to medical practices, especially in rural areas and smaller markets (but also in metropolitan areas), this can be a viable option, and one worth pursuing.
To find out more and learn how Curi Advisory’s Practice Consulting team can help your practice explore the idea of merging with a practice of another specialty, contact me at jeff.hollis@curi.com.
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