The Right Mix
Consolidations and mergers are becoming a reality for many practices. What changes can you expect, and how can you make the process smoother for everyone involved?
This isn’t news to you: health care is changing. Reimbursements are decreasing, value is king, and competition is high.
In order to adapt, some practices are choosing to ally themselves with other practices or hospitals through mergers, consolidations, or acquisitions. Changing the size of your group can have implications for everyone — leadership, employees, other physician colleagues, and patients. With a growing number of practices opting to join together, radiologists share the issues they’ve encountered and the strategies they’ve developed to make change easier for everyone involved.
Unsurprisingly, uniting with hospitals or other organizations can often inject new life into radiology groups. Radiological Associates of Sacramento (RAS) was recently acquired by the health system Sutter Health. Jonathan Breslau, MD, FACR, former president of RAS, says that he’s found the acquisition process to be positive for his practice, in which all of the radiologists transitioned to employment within Sutter Medical Group. One of the best changes has been closer collaboration with his clinicians. Because the radiologists are now working in the same medical group as their referring physicians, they’re better able to understand some of the issues their clinicians face. "We’re seeing some of the challenges they face in their clinics, such as how they deal with their patients and their resources. I’ve been able to talk with them and get a sense of the issues that they’re facing with compensation too. It’s given me a better perspective of how the imaging department can deliver value to them," he adds.
Despite these positives, acquisitions and mergers can be challenging, especially if you are acquiring more people or becoming part of a larger system. You may have to face increased bureaucracy. Everything becomes more complicated and time consuming when you’re part of a larger group, notes Breslau. "It’s extremely frustrating at first," he says. "It takes months to execute on certain initiatives because there are many stakeholders who have to be brought into the decision-making and implementation." According to Breslau, that bureaucracy also makes it harder for the department to take risks with certain innovations it might want to try.
But red tape and risk management also hold some advantages. Syed F. Zaidi, MD, whose group is pursuing a divisional merger with other radiology groups (an arrangement in which practices agree to share the costs of certain services, such as imaging and transcription, but maintain autonomy in other key actions, such as marketing), says that becoming a larger group can help cut certain expenses, such as overhead and malpractice insurance costs. Staffing costs can also change. If you're becoming a larger practice, you may be able to consolidate your business management or office staff. And becoming part of a hospital means that you likely won't pay these costs at all. Breslau adds, "We now have access to the full range of specialized back office functions that you would expect from a multi-billion dollar system like Sutter Health, including HR, compliance, IT, legal support, and billing. The risk of not doing those things well over time will undoubtedly increase."
The culture of your practice is also going to change. Are you merging with a practice that values speed whereas yours prefers to take more time to ensure quality? How do your ideals about work-life balance fit with those of the health system or practice you are coming into? Cynthia S. Sherry, MD, FACR, observed this friction when her practice merged with another to become Radiology Associates of North Texas several years ago. When practices merge or consolidate, there will initially be a cultural clash, she notes. For example, quality and service may mean different things to different groups, so it's important to be sure everyone is on the same page, Sherry says.
Radiologists may also have to address the shift from a small group to a large one. Sherry notes that employees and leadership in small groups are often accustomed to having a loud and clear voice on how the group is run. She adds, "In a large group or a hospital, the needs or wants of each individual can no longer always be met — or sometimes even considered."
A merger may also bring a shift in the leadership structure of the group. For Breslau, that meant going from the president of RAS to an employee of Sutter Medical Group, and having several bosses. "I definitely went through the stages of grieving — complete with lying under the workstation in a fetal position," he jokes. "It's certainly different. But I needed to ensure that our 60 doctors and hundreds of employees had a secure future, and this was the way to do it."
And sometimes, notes Zaidi, a change in leadership can be a good thing. "It's understandable that you want to keep the same leadership," he says. "You have a voice, and there's stability in knowing that you have a say in your day-to-day practice and know exactly how decisions will turn out. But it's also worth considering that while your leadership may have had success with your older model of business, they may not be as successful in this new territory. A new, diverse group of voices may do better."
The leadership of your practice may change, but it's possible to take the lead in other ways by helping facilitate change and make the adjustment easier for the rest of your practice. As you encounter issues, put them into perspective, suggests Breslau. Although he and his colleagues were concerned about the changes ahead, Breslau says that he considered what he believed to be the alternative: gradual unemployment. "We did a lot of scenario planning before moving forward and ultimately decided this was best for our interests. The planning helped change our perspectives and made things clearer for a lot of people," he notes.
It's also important that you communicate well, says Zaidi. Your staff may be concerned about job security or benefit changes, and leadership should be very clear about what is happening on those ends, says Sherry. Prioritize maintaining morale and get your human resources department involved in assuring stability. Some practices offer retention bonuses to keep valuable employees. And continue to reassure employees that you ultimately have their best interest in mind by doing what you can for those that might separate from the practice during your merger, Sherry says. Make sure they know you will act as a reference should they look for another position. You want to make everyone feel supported during what may be a challenging time.hh
Communicating well with the other group is important too. In the case of nebulous terms like quality and service, you should spell out what these things mean to your group up front, so that each practice can be clear about the other's goals before merging. And don't expect one perspective to necessarily win over the other; refusal to compromise could potentially cause a divide between your practice and the system with which you are merging.
Consolidation is a reality for many groups, but how the process goes is ultimately up to each member of the practice. "Allying with other groups is an opportunity and a risk," says Zaidi. "How well it goes depends on how your group reacts to it." Breslau adds, "No matter how difficult it is at first, remember that you all have the same goal. Your goal is to provide quality care for your patients, and working together will allow you to achieve it."
For more information about practice changes, check out the ACR 2015 session "Mergers, Alliances, and Pressures Mandating Growth." Acquisition by a larger health system is not the only option; participants will learn the various affiliations their practices might pursue to protect and grow their business, as well as the benefits and pitfalls for those options.
By Meghan Edwards, copywriter for the ACR Bulletin