Where is Your Medical Practice in a Vertically Integrated Organization?

In today's health care environment, it can be tempting to accept an offer to become part of a vertically integrated organization, primarily due to the financial support that comes with such a move.  However, there are some important considerations to take into account before doing so in order to ensure that your practice doesn't get lost in the parent company.

 

One factor to consider is the size of your medical practice relative to the size of the potential parent organization.  The larger in proportion the company you're considering joining is relative to the size of your existing practice, the greater the chance of your small office becoming lost.  Since smaller practices typically provide less income for the overarching organization compared to larger integrated groups, your practice's negotiating power may be severely restricted if you join a much larger company.  Research the other practices in the corporation as well as its overall size before proceeding with negotiations so you'll know how your practice will fit into the existing structure if a sale takes place.

 

Given that the parent organization will be footing the bill for your practice's expenses, your physician(s) can expect to lose significant power in terms of decision-making once you've been vertically integrated.  This stands to reason – the parent company is taking the risk, so it will have control.  But it's still a good idea to speak to physicians at length who've already been integrated so you're prepared for the new company culture.  It can be very jarring for doctors with an entrepreneurial mindset to work within a bureaucracy.

 

A vertically integrated organization should provide a stable income and offer new opportunities for your office, physician(s), and staff – but you'll need to get details on exactly what those opportunities will be.  Look at the company's existing promotional materials and employee benefits (including time off).  Find out exactly how expenses, such as rent, payroll, an EMR system, etc. will be paid.  Make sure that what the corporation has to offer is really better than what your practice can get on its own.  If the parent company uses an outdated EMR system, for example, your practice's existing efficiency could be severely compromised.

 

The sale of your practice to a parent company will mean the purchase of all of your assets by the company.  After the sale takes place, every piece of equipment in your office, from computers to exam tables to office chairs to telephones, will be owned by the corporation.  You'll no longer decide when additional or upgraded equipment is purchased.  Negotiate the best price you can for your assets, and be sure that your contract includes anticipated replacement dates for your current equipment.  Visit medical offices owned by the company to be sure they aren't suffering from outdated, inefficient or inadequate equipment.

 

Don't allow any changes, such as the installation of new equipment or the hiring of additional staff, to be made while you are in negotiations to become absorbed by a vertically integrated organization.  Be sure you have a complete understanding of all aspects of your purchase contract, including non-compete agreements and how your physical location will be maintained, before signing on the dotted line.  The decision to become part of a vertically integrated organization could be extremely positive for your practice, but it should be made with extreme care.

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About the Author

Practice Manager Network is an online community of healthcare practice managers who have come together for purposes of sharing ideas, learning how to balance home and work life, and getting advice from experts on managing their personal and professional lives more effectively. To find out more please visit: http://www.practicemanagernetwork.com/ or call 877-315-3338 and we will be happy to assist you.

Adding Products and Services to Your Practice

 

If you're a practice manager who's concerned about dwindling patient revenues, you've probably already considered adding products and services to your medical practice. But many practice managers stop there because they don't know how to decide which products and services are appropriate for their practices. There are myriad options for expanding your practice offerings, and sifting through them can become an overwhelming chore. Here are some criteria to consider when adding products and services to your practice.

First, let's consider products. It's best if your new product offerings relate to your specialty, of course, as well as any existing product offerings. Make a list of the products your practice already offers and build from there. For example, an ophthalmologist may already offer contact lenses and products related to their care. A podiatrist probably has a range of foot care products available. Options include: 

 

• Making existing products more easily available by allowing patients to reorder them via your website
• Carrying other products from the brand your practice carries, or introducing products from a competing brand so that patients have a choice
• Investigating an arrangement with a retail store, such as one that sells eyeglasses, for referral fees
• Introducing complementary products, such as vitamins for eye health or to enhance circulation in the above examples

If your practice offers products, it's critical that your physician, you, and your staff are well-versed in their application and effects and can converse about them easily with patients. If patients ask questions you or any representative of your practice can't answer, the credibility of your medical practice as well as the physician will be called into question.

Office staff will also need to be able to intelligently answer questions and assuage patient concerns about any ancillary services your medical practice offers. As with products, try to complement existing services with those patients have asked about or for which you have observed a need. Patients will take note of seemingly inconsistent offers and wonder if your primary concern is making money instead of providing the best care – not the impression you want to give.

Investigate the equipment and/or staff you will need when offering ancillary services carefully before committing to the idea. You'll need to determine whether or not there is a need for such services as well as whether or not your practice can recoup its investment in an acceptable amount of time. For example, suppose you are considering adding physical therapy services to your practice. Questions to find the answers to include:

• Do current patients want/need/ask for this service?
• Do other medical practices in your area offer this service, and has their experience with it been positive?
• Can you recruit new patients to your practice by offering this service?
• Are medical reimbursements positive for this service?
• Does your current location have space for this service?
• What equipment would you need to purchase/lease to offer this service? Are long-term contracts required?
• What staff would you need to hire to offer this service?
• Will your existing practice management software need to change to accommodate offering this new service? If so, what is the cost?
• Would your practice be better-served by entering into a referral agreement with another provider (consider the legalities of doing this as well)?

Adding products and services to your medical practice is an excellent way of increasing patient revenues after careful consideration of the costs and benefits. As with many other revenue-enhancing options, knowledge of your patient base and local market as well as conducting proper research are key factors in your decision-making process.

To comment on this article please visit: 

http://www.practicemanagernetwork.com/Blog/HC-Trends/Adding-Products-and-Services-to-Your-Practice.html

About the Author

Welcome to Practice Manager Network; an online community of healthcare practice managers who have come together for purposes of sharing ideas, learning how to balance home and work life, and getting advice from experts on managing their personal and professional lives more effectively. To join or find out more please visit: http://www.practicemanagernetwork.com/ or call 877-315-3338 and one of our representatives we will be happy to assist you and answer any questions you might have.