Your anesthesia group has just been acquired... now what?


Practice consolidation is picking up momentum in the anesthesia practice sector. Does this mean an acquired practice will necessarily have new economies of scale, resulting in a reduction in cost along with improved patient care outcomes and a better patient experience? No, it doesn't.

The hospital, as the sponsor of the anesthesia service, should conduct a thorough due diligence study on the acquiring company, checking on the following issues before assigning the hospital contract:

  • How will the acquisition of the practice impact the subsidy cost over a three to four year period? Will the subsidy go up or be reduced?

  • Since most anesthesia practices receive a subsidy because operating expenses exceed net collections, how does the acquirer plan to achieve a return on its investment, which is the fully loaded acquisition cost?

  • Will the acquirer's restructuring of the practice's operating cost include provider compensation and benefits cost to achieve their targeted ROI, and will this ultimately impact the stability of the practice, which could have a direct impact on the future quality of care, as well as the subsidy cost, by undermining the group's stability?

  • What has been the acquirer's track record in enhancing and improving the Anesthesia service operations, improving the quality of care, while providing the service in a more cost effective manner?

These are just a few questions that should be answered before a hospital assigns its existing contract to an outside practice management company. You can enhance the hospital's odds of having a good outcome by conducting a thorough study of the acquiring company.

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