Practice acquisitions slowdown

A number of factors have contributed to a recent slowdown in the number of practice acquisitions by larger hospital systems. New facility fees and new options for independent physicians who want to remain independent are slowing the acquisition trend seen in recent years.

The Centers for Medicare & Medicaid Services (CMS) released a new fee schedule that became effective January 1, 2017, reducing the facility fee for outpatient services at a hospital. The fee had been an incentive of sorts for hospitals to acquire independent practices that would perform these outpatient services. The hospital could then bill for reimbursement for the facility fee in addition to the fee for services rendered by the independent physician.

The new ruling reduced the facility fee by 50% for outpatient services not provided on a hospital’s main campus. Given these lowered fees, the idea of acquiring independent practices is no longer quite as attractive to the hospital. In addition, independent physicians who want to be acquired may find it more of a challenge to find a hospital that will take them on.

Many independent physicians are choosing to remain independent and that is also slowing the acquisition rate. Another option for independent practices that has grown in popularity is the Independent Physician Association (IPA), which helps physicians to benefit from being part of a larger group, primarily for the purposes of contracting with third parties, for pursuing business ventures, and for reducing overhead costs, while retaining their independence.

Elation Health is focused on helping these independent physicians with task such as practice management and patient communication, so they can concentrate more fully on what they do best, providing quality healthcare to their patients. At Elation, we understand the independent physicians’ needs, particularly the need to have the necessary tools that will help them run efficient practices so they can remain independent.