Over the past few decades, many areas of healthcare have felt a movement toward consolidation. Once a largely fragmented industry, the ongoing transition to value-based care has led to increased integration of different entities throughout the world of healthcare.
One of the biggest results of this shift is that private equity firms have become more eager to invest in medical practices, creating a new world of opportunities for practices to sell, grow, and expand. With the help of investors, medical organizations can boost revenues, enhance care quality and reduce administrative burden, creating wins for investors, clinicians, and most importantly – patients.
“It’s really a fascinating time in the physician world, with all the changes that are going on from a regulatory environment and from a consolidation perspective,” said Richard Blann, Managing Director at Cantor Fitzgerald, a global financial services firm.
This consolidation, achieved by selling your practice to a larger group, or joining an MSO or other investor-backed organization, can have immense benefits for your practice. But in order to so, practices should increase their value as much as possible to make it more appealing for all parties involved. So what are some best practices to increase your practice’s value to best succeed in an era of consolidation?
1. Assess Where Your Organization Currently Is
Whether or not selling the practice is top of mind for the near future, steps to increase the value of your practice can and should always be taken. Start by looking at clinical, financial, and operational performance indicators to assess how your practice is performing.
For example, considering running EHR reports to assess your current costs, your patient base, and where they’re coming from, as well as trends in your patient population. In addition, consider using your EHR and other tools like dashboards to gather data about your practice’s population health and care management performance.
On the financial and operational side, look at HR reports and other data to determine your practice’s performance in administrative areas. Taken together, all these KPIs will allow you to
2. Understand the Market Situation for Your Practice
Regardless of your specialty, and regardless of your organization’s size, it’s a good idea to understand what’s going on in the marketplace today and to help prepare for the future. The reality is – location, specialty, and size aside – consolidation is going to create competition and challenges for groups who choose to stay independent.
For this reason, more and more practices have been exploring the option of selling, even certain sub-specialty groups which traditionally got little interest from private equity groups. Orthopedics, dental, urology, ophthalmology, and mental and behavioral health practices are some of the sectors seeing the most interest from private equity groups in today’s market.
3. Educate Yourself: Ask Potential Investors About What They’ll Bring
As healthcare continues to move toward value-based care and delivering better and better outcomes, organizations are requiring more and more resources and support to do so – thus, the increased need for investors and financial support.
But not all private equity and MSO groups are created equal. If your practice has been contacted by a group looking to purchase, or is simply exploring doing so, don’t hesitate to ask questions. How will this group’s financial resources be employed in the practice? Will the group provide assistance with overhead management, billing and coding workflows, and other backend processes? Will resources be made available for the optimization of EHRs and other in-practice tools, software and otherwise?
Remember, educating yourself on these points will result in a better relationship with a potential group in the long run – after all, your success will be their success, too.
4. Remember that You’re Their Biggest Asset
Lastly and most importantly, remember that the physician – and not the practice – are the biggest asset private equity groups are looking to invest in, so put your best foot forward. Don’t worry if you don’t have everything figured out to a T, but have a long term plan for success and growth of your practice and a general understanding of what it will take to get there, and investors will recognize that.
Work everyday to implement best practices in clinical, financial and operational workflows in your practice. Look at the technology in your office, at your financials, at your payer mix, and at trends in patient acquisition and retention. Do everything you can to maximize efficiency and continue to provide better care – because investors will look favorably on that down the road if you ultimately do decide to sell.
Medical Advantage Can Help
“Most physicians out there get into medicine to help people, to improve patient care, and to provide help and support for people in a multitude of scenario,” said Peter McCann, Vice President of Medical Advantage. “That’s what we want to support, and that’s what this investment in these groups is supporting. It really helps everyone along the chain – it helps the investor from a return on investment, but it really helps patients, because these organizations are now empowered with the resources and technology to deliver better care.”
For more information on how Medical Advantage’s experts can assist your practice with maximizing its value, contact one of our consultants today.