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I recommend that physicians think long and hard before selling to hospitals. In the meantime, here are a few steps they can take to maintain their independence.
“The reports of my death have been greatly exaggerated.” Much like Mark Twain, the death of private practice has been greatly exaggerated.
Rumors of its demise began in the early 1990s, when a wave of hospital practice purchasing took place. In this first wave, hospitals only looked at the referral revenue and missed the bigger picture of having to actually run and grow these practices. As the misstep was realized, these business deals quickly unwound, often at a great loss to both parties.
More recently, declining insurance reimbursement and increasing government regulations are pushing many physicians and their practices toward hospital ownership and employment. While this has some positive aspects, many of the negatives will come out later. And, similar to what occurred after the first wave in the early 1990s, I believe that private practice will again make a comeback.
As a result, I recommend that physicians think long and hard before selling to hospitals. In the meantime, here are a few steps they can take to maintain their independence:
1. Know your total value
It’s not just what you collect in the office. Think about the X-rays, labs, and referrals you send out. Without the physician, these sources of revenue do not exist. According to recent surveys, the average physician brings 1.45 million dollars a year to its affiliated hospital. These numbers can go up to 3 million to 4 million for some specialties, such as orthopedics and interventional cardiology.
2. Keep your value
Your goal is to keep as much of the revenue in your pockets. not the hospitals'. Add X-ray, add lab testing, and other ancillary services. The initial investment cost will be paid shortly in additional revenue. Also, keeping these services in house makes for happier patients who now don’t have to travel all over the place for these services.
3. Grow your value through service
The average patient does not know the quality of the actual medical care he receives. They do know the quality of the service they receive. We all need to give quality care but it is the outstanding service that will make your practice thrive.
4. Offer extended hours
Nine to five should only exist as an old movie. Be there for your patients.
5. Personalize your routine tasks
Call at least a few patients yourself with routine lab results. This surprise phone call will result in them telling 10 of their friends about your call, and therefore, boost your referrals.
6. Double your value
Join with other like-minded independent physicians. The economy of scale benefits all business. Partnerships can be a challenge but the benefits far outweigh the negatives. Group practices further build on the economy of scale benefits while often relieving physicians of the day-to-day task of running a business. Do you lose your independence in a group? Some, but not as much as you would by answering to the VP of your local hospital.