Trend Watch: Medical Practice Consolidation and its Benefits

Is your practice considering merging with or acquiring another medical practice? You’re not alone. We’re seeing it happen across the board, from university systems to localized specialized physician groups working together to provide the right care to their patients. Medical practice consolidation is a great way to generate more revenue while combining overheads and reducing costs.

Let’s explore why medical practice consolidation is a hot trend.

Improved Negotiating Power

Practice consolidation allows you to take advantage of economies of scale. Typically, the more physicians who work at your practice, the more bargaining power you have for negotiating contract terms, reimbursement rates, and hospital access. The pooled resources of consolidated providers, together with the fact that there will be fewer competitors in the market, means that insurers have fewer providers to negotiate with – giving your practice the upper hand.

Operational Efficiency

Larger practices have larger staffing bodies to tap into, allowing them to assign specialized roles to employees. For example, billers can concentrate on specific payers or providers when processing claims, leading to a more efficient billing process. This is true across other functions. Additionally, post-consolidation, you’re less likely to have staff who are under- or over-utilized. The result is more flexibility, consistency, and efficiency.

Larger Resource Pool

All physicians are trying to find a way to maximize the quality of care without increasing costs. This means finding ways to upgrade and expand the availability of equipment and services, to name just a few benefits. Teaming up with other practitioners gives physicians access to the talent, knowledge, and financial resources required to build a market-leading practice. Systems and processes that would be too expensive for a smaller practice become viable for a larger one– AI-supported medical billing tools, for example.

Medical Practice Consolidation Considerations

There are many benefits to consolidating a medical practice, but it’s essential to do your due diligence before taking the leap. Before proceeding, consider the impact on your current practice, physicians, and patients and whether their needs will continue to be met. Carefully review any contracts to ensure that you understand your responsibilities – including financial ones such as potential capital calls. It’s also vital to undertake a thorough financial analysis to see the impact of the consolidation on your insurance premiums, staffing budgets, and electronic medical records software licenses.

If consolidating makes sense from a business and patient service perspective, consider just how you want it to proceed from a logistical standpoint. For some consolidations, it may make sense to move to one single office and combine diagnostic equipment, ancillary services, and supply ordering. In other cases, it may make more sense to take a partnership approach, with several strategically located offices all under the same brand umbrella throughout the market area.

If you’ve made the decision to consolidate your practice and are looking for the ideal space, get in touch with GZ realty. Our expert team can help you find a space that meets the needs of your practice.