Pursue Mergers, Affiliations With Both Eyes Open

Tony Hagen @oncobiz
Published: Wednesday, Feb 10, 2016
Cary Presant, MD

Cary Presant, MD

When considering a merger with a larger institution or group of practices, the pitfalls are many for oncology practices. However, finding the right partner can lead to a much higher level of practice for physicians, as well as broader responsibilities that add fulfillment to one’s career, physicians and consultants told Oncology Business Management.

Those who have been through affiliations and mergers, or counseled them, said the best advice is to do your homework and thoroughly scope out the institution you are thinking of joining in order to make sure that the fit will be right for you and your staff. All of the details need to be worked out in advance so that nothing is hidden that might constitute a deal-breaker.

“In general, it is easier culturally when practices join practices, because they’re at least joining together with physicians who understand what life is like and what one’s priorities might be,” said Teri Guidi, president of Oncology Management Consulting Group. “Joining a hospital can be very different. Hospitals have all of their rules and regulations, and they have their personnel policies, so physicians joining hospitals do face a much greater chance of having those cultural lifestyle differences. We’ve seen practices that were acquired by hospitals who agreed to hire a practice’s entire staff and then the physicians learn that they don’t have the right or power to just fire a nurse. They have to go through all of the HR policies and procedures,” she said.

In its report last year on the state of cancer care in America, ASCO indicated that among nearly 1000 US practices surveyed in 2014, one-quarter of communitybased practices said they would likely pursue hospital affiliation over the following 12 months. There are many reasons why practices working independently would seek the embrace of a larger institution, said Cary Presant, MD, past president of the Association of Community Cancer Centers and a practicing hematologist and medical oncologist with City of Hope Medical Group in the greater Los Angeles region. The costs of maintaining a practice with adequate support have risen, compliance requirements are stiffer, there is greater demand for managed care and cost savings, and many oncologists are getting older and finding it harder to interest younger physicians in buying them out, Presant added. “They don’t want to pay a large amount of dollars for a practice that is more challenging today than it was 20 years ago, and so these older physicians are guiding practices very often to being taken over by hospitals.”

With hospitals anxious to extend their territories, having realized the advantage of satellite offices over centralized facilities, the mutual attraction is strong. Despite this, the cultural and administrative fit can feel like an itchy sweater, Presant said. In his position at City of Hope, Presant has seen many independent practices added to the system as the network of owned and affiliated practices has grown. The goal has been to leverage size in order to practice the most advanced oncology and to achieve City of Hope’s mission to extend better care into urban southern California.

Larger institutions tend to have better developed clinical-trials programs that can actually be important revenue generators when they are well managed; for the physicians who join from outlying practices, participation in such activities can supply the feeling that “you’re really keeping up with where oncology is moving in these very tumultuous and exciting years,” Presant said. The alternative may be to continue to practice good, “standard” care in many of the oncologic disciplines in an independent community practice; however, the trade-off is that your program may not have the support necessary to offer the really advanced techniques and opportunities for specialization that, in addition to career advancement, can lead to higher volumes of patients and better overall outcomes, Presant said.

Salary May Be Low, But There Are Other Compensations

Those are some of the benefits that serve to lure physicians who want to improve their oncologic game. On the pay side, as well, it can get complicated, particularly when you throw in all of the compensations that do not strictly amount to salary. These include payments for the acquisition of the independent practice, pay for special duties that are assumed when a physician joins a hospital, and bonuses for meeting targets for attracting and seeing patients. “In some physician practices, their pay goes down, but they’ve been compensated by having an acquisition fee, and in some cases, their pay has gone up because they have received income for running parts of the program. Generally speaking, the benefits from institutional affiliation usually are pretty good with retirement,” Presant said.

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