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By Yvette T. Doran, MBA, FACMPE, MGMA Board Chair
Amid all the competing challenges you may face in physician group practice, one of the more foundational aspects of successful leadership may not be top of mind but should be a regular consideration in your work: organizational governance.
While revenue generation, cost controls, provider recruitment and technology are all significant issues that shift at a rapid pace, medical groups require leadership that can navigate various corporate structures, board compositions and tax implications that can have a profound impact on a business.
The frenzy of mergers and acquisitions (M&A) and other partnerships across the healthcare industry in recent years is clear evidence that practice leaders should routinely consider the market realities and ownership and legal structures — whether they will enable or inhibit the type of growth desired.
While megadeals between pharmacy giants, insurers and even new players on the healthcare front (Amazon, Berkshire Hathaway and JPMorgan Chase, for example) garner headlines even if they are months and sometimes years from fruition, the reality for group practice leaders is that the decision to remain independent, merge or be acquired is immediate and has effects that reach every aspect of the practice.
As outlined in the May 2018 issue of MGMA Connection magazine, major changes are happening by way of consolidation and the rise of value-based payments and risk-sharing agreements. Large health systems are getting even larger, reaching a tipping point in which they have the means to invest in advanced EHRs and care management staff in pursuit of evolving reimbursement thresholds, as outlined by Gary W. Herschman, JD, member, Epstein Becker Green, Newark, N.J.
There is no one-size-fits-all ownership and legal structure that makes sense for today’s practices or the healthcare industry of five, 10 or 20 years from now. What is important, however, is that you possess the skills to recognize these trends, understand the implications of potential M&A activity and use that knowledge to set a strategic path for your organization — a plan that recognizes goals for growth, capital needs, and strong engagement and collaboration from both physician and administrative leaders. Those capital needs and growth can often be accomplished through a strategic partnership with a private equity firm, which is detailed by MGMA staff member Christian Green, MA.
As MGMA consultant Nick A. Fabrizio, PhD, FACMPE, FACHE, notes in his Objective Advice article, many private medical group owners have decided to sell in recent years “to relieve themselves of the burdens of running a medical group” yet “the truth is that the healthcare marketplace cannot function” without administrators building strong committees with engaged physicians to responsibly lead initiatives, whether it is population health, becoming an accountable care organization or transforming care delivery through new technology. This is an essential concept, whether your intent is maintaining a strong, independent practice or having a confident set of organizational leaders who perform their due diligence in considering a merger or acquisition.
MGMA has helpful resources — such as the M&A checklist by MGMA industry advisor Cristy Good, MPH, MBA — that outline the ramifications of looking at governance structures and ownership changes, from employee/benefit documents, financial records, claims and insurance policies to contracts, assets and facility issues.
You may be confidently leading an independent practice with healthy margins and happy physicians, but success is no reason for not keeping up with shifts in the industry and having an open mind for the opportunities that exist. As the healthcare industry continually pushes change, organizational governance models offer strategies and a directional framework for practices. Whether you remain independent or make a change through a sale or merger, it’s your awareness, preparedness and nimbleness as a leader that will directly influence the future state of your practice.
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