Consolidation is coming to healthcare, more rapidly than ever.
After decades of fragmentation, financial pressures, heightened competition and regulatory changes are contributing to an increase in mergers and acquisitions across the spectrum of healthcare stakeholders—payers, health systems, physician groups and more. According to the 2014 Deloitte Center for Health Solutions study “The Great Consolidation,” the average deal size for hospital acquisitions increased from $42 million in 2007 to $224 million in 2013. Using three separate approaches, Deloitte’s research team found that, by all three estimates, only 50 percent of all current U.S. health systems will remain in 10 years.
While this may be an alarming statistic for physician leaders to digest, a solution has emerged in recent years to combat this trend and keep medicine local. Collaboration among likeminded physician practices has provided an attractive alternative to the recent increase in M&A activity. The collaborative model provides physicians the opportunity to work together to achieve some of the benefits larger industry players enjoy, while keeping medicine local and maintaining a strong connection with the community in which they serve.
The following are three key benefits of this emerging model:
Advanced analytics capabilities
The healthcare industry is gradually understanding the potential power of analytics to improve results and enhance operational and clinical efficiencies. According to a 2015 survey from the Deloitte Center for Health Solutions, more than half of the health systems surveyed identified population health analytics as the top investment focus moving into 2016, and more than three in five reported they will invest in advanced analytics capabilities for clinical and population health functions.
By collaborating with likeminded groups, physician leaders can adopt an advanced analytics platform that leverages structured and unstructured data to track key metrics and improve practice performance in a very cost effective manner. Not only can this data generate actionable insights for practice optimization, but it also can be used to demonstrate a practice’s value to the hospital or health system they serve through tangible information and comparable metrics over time.
As reimbursements continue to decline and the industry continues its shift from fee-for-service to value-based models, it is increasingly important for physician practices to reduce costs and improve productivity to create a leaner organization.
Membership in a group collaborative offers providers the opportunity to create a larger physician network to achieve economies of scale for their practice while maintaining clinical autonomy. By improving purchasing power and pooling resources, practices can better prepare for the future of healthcare and secure their independence despite increased competition. For example, a greater number of physicians within a group network reduces significant practice costs such as medical malpractice insurance. In addition, by tracking key metrics developed in conjunction with their malpractice carrier, physician practices can begin to better understand their risk profile and create a custom risk management program designed to lower their malpractice risk which in turn will decrease costs and ultimately improve the quality of care they provide.
Increased subspecialty access
Increased access to subspecialists has become an important factor for the survival of physician practices as well as being a metric that demonstrates the quality of care they provide. Efficient access to specialists is key to a healthcare organization’s ability to differentiate itself and more effectively compete in its chosen market. A physician practice providing a competitive edge for its health system will bring measurable and intrinsic value to that system.
By joining a collaboration, physician practices can expand their ability to serve their patient population by becoming interconnected remotely with subspecialists throughout their community, state or even region. This can produce better clinical decisions, increased patient safety and improved patient care.
Collaboration among likeminded physician practices has emerged as an attractive alternative for physician leaders seeking to remain independent in an increasingly consolidated and thereby competitive market. To learn more about this business model and its varied benefits, please contact us at ContactIMP@IntegratedMP.com.